'The Key word is decarbonisation'

James Watson has been Secretary General of Eurogas for more than a year already. His appointment surprised many in the “Brussels Bubble”. Prior to this he was head of SolarPower Europe, an association which promotes the interests of companies, institutions and organisations specialising in all forms of solar energy, in other words: renewable energy. Eurogas represents the European gas industry, which still derives most of its income from natural gas. Reactions were predictable, therefore; here was someone choosing to move from the future back to the past, from the clean energy value chain to a fossil fuel club, literally and figuratively.

As always, the reality is less clear cut. For those who knew James a little better, the move was understandable. Even during the time he was at the helm of SolarPower Europe, he made it very clear that an energy future without gas was unimaginable. During meetings and in public appearances he emphasised that all forms of renewable energy need a reliable, constant source of energy to ensure that the energy supply is sufficient at times when the sun or wind fail to deliver. Gas, at present mainly natural gas, is eminently suitable for this. Power stations are not dependent on the weather and if they run on natural gas they are also using the non-renewable fuel  that has the least impact on the climate.

James Watson: “I think that many people do not look at the energy system holistically. Solar energy is a fantastic technology and research shows that its share in the energy mix will grow rapidly. But what we need to realise is that solar energy alone is not a solution. We’re not going to meet climate targets merely by using a greater number of irregular energy sources. The key word is ‘decarbonise’; all sources must ultimately be 100 percent sustainable. Gas has the potential. Renewable and decarbonised gas can, alongside all those other sustainable sources, be part of the future. It is a process. It is part of the solution. Even when I was working at SolarPower Europe, I found natural gas to be an effective means of balancing an energy system with a growing share of intermittent sources. But that’s not enough; natural gas itself must also be decarbonised until it is completely CO₂-neutral.”

But here too, in Brussels, gas is still out of favour.  Most advocates of rapid decarbonisation consider the ‘all-electric’ route to be the best way to meet climate targets.

“So I don’t believe that. We also have to look at the costs. Large-scale electrification is essentially unaffordable. We have a vast gas infrastructure in Europe and we must continue to use it. From the point of view of cost-effectiveness, that seems to me to be far better than laying tens of thousands of kilometres of high-voltage cable and building one offshore wind farm after another.”

Do your former colleagues also understand that?

“Yes, most of them. They saw it as a good opportunity to continue working on a fully sustainable and affordable energy supply. But some of them (he laughs) compared me to Judas.

Or Faust, who sells his soul to the devil.

“Yes, that too. But if you think like that, you don’t understand what’s at stake. Putting all our eggs in one basket is not an option. Molecules will be just as essential in 2050 as they are now.”

The use of natural gas remains controversial, even for those who accept it.

“That's right. We agree about the endgame but not always on the stages along the way. We will still need natural gas for a while, but we must, where possible, gradually replace it with renewable and decarbonised gases. It’s not going fast enough for many of those championing the use of green hydrogen. For example, they don’t agree with Eurogas’s view that, for steel production, we must first switch from coal to natural gas and then to hydrogen. They see that interim step as delaying matters unnecessarily. I’m afraid they are wrong.”

I often notice that Eurogas is not trusted on this point. It would only want to preserve the existing profitable business, which is still mainly based on the production, distribution and marketing of natural gas.

 “I understand that, on one hand. Eurogas represents a group of companies and associations that are active in the whole gas value chain, with significant financial interests. But the criticism is not justified. Whoever, like us, supports specific goals for phasing in renewable gas, calls at the same time for natural gas to be phased out. After all, a climate-neutral energy supply will have no place for fossil fuels, unless the emissions are prevented by the capture and storage of CO₂.

 “We have to stay realistic though and must continue to talk about natural gas. That part of the story is not finished; we still need it while we are decarbonising our energy supply. We are still using coal and oil extensively, energy carriers that should be gradually replaced by gas; by natural gas first of all.

“Some people want us to feel guilty about using natural gas. I strongly disagree because it will certainly continue to be an indispensable energy source for the next ten, twenty years – both for security of supply and for attaining CO₂ reduction targets.

Why do we actually need a separate target for renewable gases? In the past, Eurogas said that one main target was enough, i.e. CO₂ reduction? How we accomplish that goal is secondary. As long as those emissions are sufficiently reduced.

“We’ve realised that, in addition to the CO₂ reduction target, a separate target for renewable gases is also required. The reason is simple: companies do not, how shall I put it, necessarily look far into the future, unless they are legally obliged to do so. Just look at the EU’s 20% renewable energy target for 2020, something we are going to achieve, more or less. As a result, there has been substantial investment in sustainable energy sources and costs have fallen significantly. I don’t believe that we would have come this far based on a CO₂ target alone. The same applies to decarbonised gas.  Everyone knows which direction has been chosen. The message is that it is better to invest now and be rewarded later. And early investors will benefit the most. You can see that now with sun and wind – whoever was there first has been reaping the benefits of this for the longest time.

“For an association like Eurogas it’s also quite revolutionary to be advocating such a sustainability objective. This comes from below, not from above. It’s the companies in the industry that are taking the initiative in this respect.

That seems illogical. Surely companies are striving to be profitable first and foremost? From an economic point of view, investing in green gas is unwise at the moment. Natural gas still delivers much more.

“That’s true, but climate change is basically not an economic but a political issue. NGOs have been particularly successful in raising public awareness for this.  Politicians react to this and their reasoning is simple: we have a crisis, so; we must do something. This involves sacrificing rational economic considerations. So the European Commission proposes a fund of 100 billion euros of public money to support countries during the transition towards a climate-neutral energy supply. Ten years ago that would have been unimaginable, even in your wildest dreams.

“We’re also noticing companies being increasingly pressurised in other ways to change their strategy. Energy company investors want them to put less money in fossil fuels and more in sustainable solutions. At first this related only to ideological groups but now it’s becoming common for the traditional funds to make similar demands.

But ultimately you can’t ignore the economic reality. There’s no such thing as a free lunch. Everything has to be paid for.

“Yes, indeed. But I won’t go so far as to believe that an economic recession would put an end to all green stuff.  Maybe that was still the case ten years ago, but not any longer. The sense of urgency is too great for that. We’ve come too far already; we’ve crossed the Rubicon. It’s no longer business as usual. We have to innovate, to be pioneers. We need to get to grips with what is no less than an existential threat.

Let me come back to the role of the incumbents. Eurogas, which represents these interests, likes to present itself as part of the solution, not the problem. Is it capable of reinventing itself?

“It will have to be otherwise we won’t make it. You can see that it’s already happening. Shell supports the goal of climate neutrality by 2050 and has purchased, among other things, French wind energy company Eolfi. Engie has acquired Solar Direct. Total has its own solar division. Others will certainly follow. Longstanding, wealthy companies need to cooperate with small, innovative and dynamic newcomers, not work against each other.

Finally the Green Deal of the new commission. The EU likes to see itself as a major player on the world stage, but with regard to CO₂ emissions it is only a minor one: not even 10 percent and it’s falling too. Aren’t we punching above our weight here?

“No, I don’t think so. It’s true that our CO₂ emissions are comparatively low, but we are the most prosperous region in the world. That creates opportunities and obligations. We can decarbonise our economy better than anyone, that’s also the beauty of the Green Deal. The ambition is: wealth retention, lower emissions and reduced dependency on fossil energy sources. A good example of this is to curb methane emissions. As we know, methane is a much more potent greenhouse gas than CO₂. Worldwide, natural gas is responsible for only three percent of emissions. So people ask me: James, why would you worry about that, it’s peanuts. But I think that we as a sector should also tackle that problem. Others can benefit from that. If we invest in sustainable solutions here, they will become cheaper. If we innovate in new technology, the innovations will come onto the global market. We must not link Europe’s potential to our own emissions but to all the opportunities.

Author: Anton Buijs (Chief Communications Officer at GasTerra)