Enhanced role of natural and renewable gas could speed delivery of EU’s climate goals

22 March 2018

GasNaturally notes with interest the European Commission’s Action Plan on Sustainable Finance, released on March 8, but argues that to deliver the fullest benefits, the contribution gas can make to social and environmental sustainability targets must also be recognised. 

“Natural gas is a cost-effective, near-term solution to reducing CO2 emissions and air pollution which will enhance the EU’s ability to deliver its climate and energy policy goals,” said Marco Alverà, President of GasNaturally.

The gas industry points out that natural gas and liquefied natural gas could contribute to rapid decarbonisation of the transportation sector, especially heavy-duty vehicles and maritime vessels, significantly improving air quality.

Gas has a role in sustainable development

GasNaturally is aligned with High-Level Expert Group on Sustainable Finance’s view that “sustainability means making economic prosperity long-lasting, more socially inclusive” and would like to see specific recognition that gas will play a key role in building a sustainable and circular economy, which balances environmental, economic and social considerations.

European energy policies, in which gas plays a key role, are already based upon sustainability, security of supply, and industrial competitiveness. Gas in all its forms - natural gas, biomethane, hydrogen, renewable gas from power-to-gas process - relies on infrastructure that already exists, is already amortized, is practically invisible and is proven safe and reliable. Natural gas can contribute to improving efficiency and, with relatively small investments, continue to provide supply security and resiliency. 

This is why we are wary of some elements accompanying the Action Plan that show a narrow focus on particular technologies and solutions. For example the climate mitigation criteria for investment in distribution and transmission systems in the draft Sustainability taxonomy are based on primary screening metrics that give clear privilege to the integration of renewables without taking into account the costs and the resilience of the whole energy system.

Prescriptive approaches should be avoided

GasNaturally supports a broad approach to sustainability aligned with the EU’s goals that is applicable to all types of assets and capital allocation.  A prescriptive approach could deprive the European energy system of the benefits offered by the existing gas network and close the door to innovative sources of renewable energy such as power-to-gas, waste-to-hydrogen, and gas-to-hydrogen, which rely on the gas network.

The integration of variable renewables comes with technical and financial implications for the grid. Natural gas and its infrastructure are already in place and can store, carry and dispatch large amounts of energy at any time, and at a fraction of the cost of a system which relies on electricity transmission and storage only.

In the upcoming work on the new classification of sustainable assets, the following elements need to be considered:


·       Deployment of renewable electricity production will be limited without sufficient energy storage. Stable energy supply should be valued by investors since any disruption in the energy system could lead to substantial economic damage. The gas network can provide that storage affordably, therefore lifting some of this risk and eventually lowering end-use costs. 

·       Gas grids are able to carry increasing volumes of renewable gases - biogas, biomethane and hydrogen - used in key sectors of the economy: heating, transport, and power generation. This potential needs to be reflected in any classification of infrastructure assets.

·       Transparency about the costs and benefits of different pathways of energy transition is required to provide accurate information to consumers on the cost implications of various energy sources and energy infrastructure upgrades.

Sustainable Development Goals should underpin all new initiatives and policies driving private and public investment

Long-term planning should be the priority when mobilising private and public capital. Energy infrastructure development is typically linked to long-term investment. The right financing framework would help investors support gas infrastructure projects with a long-term perspective, while taking full account of the EU energy and climate targets. It is therefore a question of matching projects and investors interested in long-term stability and sustainability.  Introduction of a “green” category of assets, even if only through a voluntary label at first, will not help in building a holistic and knowledge-based approach to sustainable energy systems of the future. Classification of gas technologies outside of the “green” investments would effectively preclude a much needed boost from private investors to very promising technologies such as:

  • High-efficiency CCGTs
  • Biogas and biomethane
  • Carbon Capture and Storage//Carbon Capture and Utilisation
  • Large-scale production of hydrogen
  • Renewable Power-to-gas

The International Energy Agency foresees a role for all of these technologies in its most ambitious, Sustainable Development Scenario in which climate, air quality and access to energy are addressed.