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Gas as an Effective Tool for Achieving the Environmental Targets of the Global Economy

24 May 2018
Газ как эффективный инструмент достижения экологических целей глобальной экономики

Key conclusions

The role of natural gas in the global energy mix is growing as it remains the most environmentally friendly and affordable fuel

«Over the last 20 years, global use of primary energy resources went up almost 1.5 times, including the increment of electric energy by almost 80%. The share of natural gas in the global energy mix is about 22%, right behind oil and gas. Our goal for 2035 is to be on par with oil, and it’s absolutely realistic,» Alexei Miller, Chairman of the Management Committee and Deputy Chairman of the Board of Directors, Gazprom.

«When we say that natural gas in absolute volume will get a higher share in the global energy mix <...> we mean that this increment will be mostly driven by electric energy and transport. If we look at the electric energy generation, it’s a cleaner and safer electric energy sector attractive for investment. The average internal rate of return for a gas-steam cycle project is about 14–15%. In transport, natural gas is behind hydrocarbons, so it’s 20–30% lower than traditional fuels,» Alexei Miller.

«Politicians realized that if they really want to improve their environmental situation, they should bet on gas, because it is there, it is available, and they can utilize ready to use technologies to solve all issues and problems,» Mario Mehren, Chief Executive Officer, Wintershall Holding GmbH.

Russian gas supply has a great potential for international markets

«Gas will be a strategic development resource for the Russian Federation in the next decade. Proximity of the two major and most dynamic markets, the European and the Chinese ones will affect our gas industry. The European market shows a 5% increase in demand. Europe demonstrates another significant trend, which rationalizes growing demand for Russian gas: decline of its own gas production volumes. This means that a niche opens up for new import of Russian gas supplies to the European market,» Alexei Miller.

«By 2035 European production will fall two-fold, thus gas export demand will amount to about 200 billion cubic meters, a significant share of which will account for Russian gas,» Alexei Miller.

«China’s 2020 goals are absolutely realistic: 360 billion cubic meters of gas and expansion of its share in Chinese energy balance from 7% to 10%. We estimate that 80–110 billion cubic meters will account for the Russian pipeline gas,» Alexei Miller.

«Russia has enough gas to supply it to Europe and export it to many other countries. India, perhaps, could become one of them,» Hemant Kanoria, Chairman, Managing Director, Srei Infrastructure Finance Limited.


Geopolitical restrictions on gas supplies

«It would be reasonable to stop campaigning against or for certain sources of gas. Gas is neither good nor bad. Today in Europe there is an impression that Russian gas is bad, and the US liquefied gas is good. This is kind of an odd discussion,» Mario Mehren.

«The market gets to decide which gas will be used in Europe. The latter should get ready for the diversification and let Russian gas supplies in,» Rainer Seele, Chairman of the Executive Board, Chief Executive Officer, OMV AG; President, Russian-German Chamber of Foreign Trade.


Bet on gas as an environmentally friendly fuel

«The Paris Agreement stipulates for more gas, not less, because only with more gas we can realistically cut emissions,» Mario Mehren.

«It would be difficult to overestimate the fact that gas is an effective tool for solving environmental issues,» Hemant Kanoria.

«Natural gas is the best energy source in the future. Wise European politicians are already preparing to transit away from coal. It has huge potential for energy industry <...> Thus we can reduce energy industry’s carbon dioxide emissions by 40%,» Rainer Seele.

«Machines operating on CNG [compressed natural gas] are much more efficient than gasoline ones. And the exhaust is very clean. Yes, there is carbon dioxide, but without particles. Absolutely clean exhausts, and in fact it is much cheaper,» Marco Alvera, Chief Executive Officer, Snam SPA.

Do not overestimate the significance of renewable energy sources for the global energy balance and the environment

«Hard bet on renewable energy sources is faulty. And total decarbonisation of the world economy is plain-old utopia. We must admit that fossils will keep their sizeable share for the next 20 years,» Alexei Miller.

«Huge amounts of money are invested in solar and wind energy, but we also note that this new venue brings up new security issues. In particular, the point at hand is that solar and wind energy requires almost a hundred per cent reserve capacity for traditional fuels. These are completely new challenges of power industry security. These models are not very cost-effective, and maybe even quite ineffective,» Alexei Miller.

«You do not improve the environment when you focus on renewable energy sources alone. You must get rid of the coal, and only then you will succeed,» Mario Mehren.

For more details go to the Roscongress Foundation Information and Analytical System’s website.