Not exactly a winner but still a champion

24-11-2014

Do you remember Eric Flaim and Roberto Sighel? They were the World Allround Skating Champions in 1988 and 1992. We haven’t really heard their names much since the late 1980s. Names such as Johann Olav Koss, Rintje Ritsma and, of course, Sven Kramer tend to come to mind more readily. Flaim and Sighel won the Allround Championship without winning an individual distance race. That appeals less to our imagination. How can we compare this to gas?

In the world of energy, gas is the ‘Allround Fuel Champion’ but does not feature as the winner in any of the current main themes. Allround skating competitions feature four distance races; if energy were subject to a similar ‘allround’ competition, it would have to compete over three areas: environment, price and security of supply.

First, environment. Gas is by far the cleanest fossil fuel producing CO2 emissions that are more than 50% lower than those produced by coal per kWh. However, the winner of this ‘race’ is of course renewable energy (especially wind and sun).

Robert van Rede

Then price. It is quite obvious that, at the moment, coal prices are considerably lower than gas prices and also the marginal costs of renewables are particularly low in comparison to those of gas. We can explain in great detail that coal prices are too low due to a CO2 trading system (ETS) that is not working properly and that renewables are paid for predominantly by subsidies which are pushing gas out of the energy mix. But that will not alter the facts.

Finally, security of supply. In skating terms, we feel that the situation in the Ukraine has practically led to us being ‘lapped’ here. Very unfortunate, given the transport network’s great reliability and the gas sector’s solid performance over the last few decades.

Trying to show that we are perhaps not ‘number one’ in any individual area but that we are the best overall does not seem to have been a winning strategy recently. Yet in Europe we are facing a situation where there is an increasing mix of renewables combined with coal. So we are paying for the renewables with the savings we are making by using coal.

With the approach of the new European CO2 objectives and the climate summit in Paris next year, it is crucially important for us to reflect, with the other energy suppliers (coal and renewables) and policymakers, on how we can achieve these objectives together without placing too much of a burden on Europe’s economy.

This makes little sense if the aim is to have less CO2 emissions.

Based on IEA predictions, it is clear that we all have a part to play in meeting energy requirements at European level and on a global scale. There are still many (major) technical challenges to overcome to be able to significantly increase the proportion of renewables in the energy mix. Economic mechanisms also hamper us in achieving a balanced route on the way towards a fully sustainable world.

There is therefore more than enough work to be done. Working together is the key and not making this into a competition like the World Allround Championships. With that in mind, it is good to know that Johann Olav Koss and Rintje Ritsma also became allround world champions without winning individual distance races.

 

Robert van Rede, CCO GasTerra