Europe could save €900bn (£762bn) and still hit its 2050 carbon reduction targets if it built fewer wind farms and more gas plants, a coalition of gas producers including Gazprom, Centrica and Qatar Petroleum has told the European commission.
The industry is lobbying against the possibility of the commission setting new renewable energy targets and phasing out the use of gas. Next month, it will publish a draft “road map” energy strategy to 2050.
The Guardian has obtained a copy of an unpublished report by consultancy McKinsey, commissioned by the European Gas Advocacy Forum, which also includes ENI, E.On, GDF Suez, Shell and Statoil. The report, which has been sent to the commission, describes gas as a clean, plentiful and relatively cheap form of energy.
It challenges the idea that renewable forms of energy should be the primary way to cut emissions.
Maria McCaffery, chief executive of trade body RenewableUK, acknowledged that burning gas resulted in fewer carbon emissions than coal or oil, but said: “Gas is no substitute for renewable energy. Never in a million years would we call it green.”
The report estimated the costs of building thousands of wind farms and vast new electricity grids to connect them to meet the EU’s legally binding target of reducing carbon emissions by 80% against 1990 levels by 2050. One authoritative study has estimated that 60% of energy would have to come from renewable sources to hit this ambitious target.
But the McKinsey analysis suggested the same carbon emissions reductions could be achieved with far less renewable generation – significantly less than half the total energy mix. It argued that the emissions reductions could be made by using less coal-fired generation, which is twice as carbon intensive as gas, and three times as much gas generation.
It said this would save €900bn by 2050, although hitting the targets would still need about €350bn more investment than is envisaged on current policies. The plan assumed that from 2030 most gas plants would use carbon capture and storage to reduce emissions, though the technology remains unproven on a large scale.
The outlook for global gas supplies has been transformed recently by new technologies that make it possible to exploit previously untapped deposits, particularly shale gas in the US. In November the International Energy Agency predicted this would lead to a “global gas glut”, bringing cheaper prices for consumers and making renewables and nuclear less competitive.
BG’s chief executive, Frank Chapman, said last week the “conservative” IEA was “on its own”, arguing that growing demand, particularly from Asia, would keep prices high.
National Grid estimates that as supplies from the North Sea run out, the UK will be forced to import 70% of its gas by 2020. McCaffery added that a greater reliance on gas would expose Britain and the rest of Europe to volatile prices. “Relying on imported gas still gives us vulnerability of supply and volatility of prices. Once renewables like wind farms have been built, they have very low costs – only operation and maintenance.”
The McKinsey report also said Europe’s own largely undeveloped shale gas resources could meet the continent’s needs for 30 years based on current demand. But Brook Riley from Friends of the Earth said: “Member states are getting more and more keen on shale gas. The problem is that you can’t go into such a risky energy source like shale gas when you have a proven technology like renewables, and energy efficiency should also be prioritised.”
*About the author: Tim Webb writes for the guardian. co.uk