Download - A Turning Point for European Gas Markets
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A Turning Point for European Gas Markets
François-Régis Mouton, Chairman, GasNaturally IFRI
19 May 2015
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GasNaturally: A Unified Voice for Natural Gas
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Perception Challenges for Gas in Europe
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« GAS IS EXPENSIVE »
« WE CANNOT RELY ON
RUSSIAN IMPORTS »
« GAS IS JUST ANOTHER
FOSSIL FUEL »
Competitiveness
Security of supply Sustainability
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A quick look at Security of Gas Supply
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EU + Norway
Third countries
The EU’s Main Gas Supplies
55% of the Gas consumed in Europe is produced in… Europe!
207 BCM EU LNG import capacity – only 23% used in 2014 !
Biogas production is rising every year:
3,4 BCM in 2005, 6,7 BCM in 2009, 16 BCM in 2020.
Source: GIE, Eurogas, European Biogas Association 2014
Energy Security should not be confused with Energy independence New sources of indigenous production should be favoured Energy independence alone may not lead to Energy Security 5
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Global Gas Reserves
6 Europe is within economic reach of 70% of global gas reserves
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Convergence of Asian and European gas prices
7 Source: Platts
Gas price snapshot February 4 (Month ahead, $/MMBtu)
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Jan-15 Feb-15 Mar-15 Apr-15 May-15
$/MMbtu
NBP LT LNG Asia (14% Brent) Spot LNG Asia (JKM)8
5
10
15
20
Jan-14 Apr-14 Jul-14 Oct-14 Jan-15 Apr-15
$/MMbtu
NBP LT LNG Asia (14% Brent) Spot LNG Asia (JKM)
Convergence of Asian and European gas prices
Source: Total Gas&Power Market Analysis, May 2015
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Gas and Renewables: That’s How We Achieve Energy Security
Renewables :
- Intermittency challenge : Need access to flexibility / balancing capacity
Natural Gas:
- The cleanest dispatchable source of energy (can meet demand at any time)
- The most flexible back-up to RES - Can store excess electricity
produced by RES (Power-to-Gas)
‘Gas+RES’ partnership : the perfect backbone for the Energy Union We had the ambition, now we have the solution
Sustainable Efficient Affordable Reliable
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EU’s Agenda on Supply Security
Security of Gas Supply Regulation
– Stress test results were positive: gas system is resilient
Projects of Common Interest list
– Key interconnectors
Diversification of sources
– Southern Gas Corridor, Mediterranean cooperation
LNG Strategy
– We have over 200bcm of LNG import capacity
– Only 40 bcm are used, but even 20% of these are re-exported !
Completion of the Internal Energy Market for more liquidity on the market
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However: Gas Demand is at Risk
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Power Generation in 2014
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In 2014, we built 3.3 GW of new Coal power plants and only 2.3 of new Gas ones!
Source: EWEA 2014 European Statistics
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EU 28 Gas Consumption in decline
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Last 4 years, a new “coal + renewables” paradox in Europe
© 2015 IHS
Total Consumption
(EU-28)
- 13, 67 % (- 68,7 bcm)
Power Sector Consumption
(EU-28)
- 34, 35 %
(- 60,4 bcm)
2008-2013
• The power sector has been a key driver of the decline in total EU-28 gas consumption since 2008. • IHS estimates that coal burn at power plants in the EU-28 only decreased by 5.48% from 2008-2013.
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2013 Emissions power sector EU**
*Source: EUROSTAT
** Estimation on the base of Eurostat data
Power generation mix at 2013 (TWh)*
~3,261
~80% 14%
16%
4%
Total thermo 1,498 TWh
(46%)
13%
27%
26%
-44%
27%
60% of total thermo
A
B
B
Zero emissions
sources (54%)
2013
Nuclear
Power Sector: Europe Goes Black and Green
Coal accounts for 26% of the power production but 80% of the total power sector emissions ! By switching all coal power plants to gas CCGTs, CO₂ emissions would decrease by 400 million tons in the EU
Natural gas 400 gCO₂/kWh
Coal 900 gCO₂/kWh
Lignite 1200-1600 gCO₂/kWh
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Heating Sector: Is Replacing Gas a Good Idea?
45% of EU heating appliances use gas*
41% of natural gas is used for heating**
The EC’s solution?
The European Commission encourages Member States to “Accelerate [the] fuel switch in the heating sector to renewable heating technologies” in order to “displace significant amounts of imported fuels”***.
“1% increase in energy savings cuts gas imports by 2.6%****”
What about the additional costs? What about energy efficiency?
Sources: *:EU Roadmap 2050, 2010 scenario **:Eurostat ***:Communication of the Commission on Energy Security, 2014 ****:Communication on the Energy Union Package, 2015
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In 2014, under current policies, Gas is 3 times cheaper than electricity per kWh !
Further electrification of the heating sector will increase peak demand and infrastructure investments
Speaking about prices, between 2008-2012:
– EU Gas prices rose by +14% – EU Electricity prices rose by +25% – In Germany, they rose respectively by 5,7% and… 39%!
Electrification of heating: best option for consumers?
Source: Eurostat
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Opportunities on the Policy Agenda
Heating & Cooling Strategy
Decarbonisation of Transport
ETS Reform
Power Market Design reform
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Need to recognize the real value of Gas
It’s not just about price, or CO₂, or dependency It’s about the sum of everything
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Where Gas can make a difference
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A Choice Between Two Paths
Spending much less on infrastructure, using and building on existing one
No high-voltage line facing public acceptance issues
Giving consumers access to a cheaper and cleaner energy system
Using a real commodity: Gas can easily be bought, stored and dispatched…
… which partners best with intermittent Renewables
while solving the electricity storage problem
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Phasing out gas from heating and power generation
Spending hundreds of billions on electricity infrastructure
Passing on these costs to the consumers whose heating bills will explode
Relying on an intermittent supply of energy…
… and more polluting coal !
OR
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GasNaturally’s vision for 2030
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A Turning Point for European Gas Markets
François-Régis Mouton, Chairman, GasNaturally IFRI
19 May 2015
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