Home' Trinidad and Tobago Guardian : June 11th 2015 Contents BG8 ENERGY
BUSINESS GUARDIAN www.guardian.co.tt JUNE 2015 • WEEK TWO
The bosses of the four biggest pol-
luting companies in history talk-
ing about how they can help solve
global warming may seem like
the height of hypocrisy.
Chevron, Exxon Mobil, BP and Shell are
responsible for more than 10 per cent of all green-
house gases emitted since the industrial revolution,
and yet here they are, talking under the banner:
"Natural gas as a core pillar for a sustainable
future of the planet."
Exxon boss Rex Tillerson manages to use the
word environment 13 times in his opening address.
"(Our industry) can deliver significant environ-
mental benefits", he says, while Shell s Ben Van
Beurden followed with "gas can help in securing
a sustainable energy future."
These comments reflect the key theme at this
year s World Gas Conference in Paris, as energy
bosses look to rebrand their fossil-fuel businesses
as a crucial weapon in the fight against climate
change. (Or rather half their businesses; there
was no mention of the fact they are also major
Delegates were left in no doubt about the key
theme of this year s World Gas Conference.
But this is not as ridiculous as it may seem.
For a start, their argument that natural gas
emits half as much CO2 as coal and should,
therefore, be used to support renewables, is legit-
imate. As is the point that US CO2 emissions
have fallen sharply on the back of shale gas dis-
But more importantly, this attempt to disas-
sociate gas from coal and oil, and present it as
a cleaner fuel source, shows that energy companies
have accepted the fact that reducing CO2 emis-
sions is now firmly established on political and,
increasingly, corporate agendas across the world.
A number of energy companies have signed
up to the World Bank initiative to end routine
gas flaring by 2030; a process of burning off
excess gas at extraction that emits about 300m
tonnes of CO2 every year.
Many, including Total, BP and Shell, have also
made a joint call for an effective carbon price,
which would force big polluters to pay more for
the CO2 they emit. This may seem odd given
these very same companies will be hit, but this
call is clearly out of self interest; the biggest rival
to gas is coal, and coal producers will be hit far
Gas companies are very keen to champion
their environmental credentials
Coal is cheap and abundant, and the only way
gas producers can compete on price is if carbon
is taxed, even if this means the oil side of the
But it s not just about CO2. Many gas executives
are at great pains to highlight the growing problem
of air quality around the world, particularly in
Gas, van Beurden says, emits 90 per cent fewer
air pollutants than coal, a fact that should not
be overlooked in a world where there are seven
million deaths linked to pollution every year,
according to the World Health Organisation.
And just as gas cannot compete with coal on
price, it cannot match the environmental cre-
dentials of renewables. The gas industry has
responded by saying the two complement each
other perfectly. It argues renewables, such as
solar, wind and hydro power, cannot alone meet
the growing demand for energy, which is estimated
to rise by as much as 40 per cent in the next
Just as importantly, executives say, solar and
wind power are variable, so gas is the most envi-
ronmentally-friendly fossil fuel to act as a back
up when renewables cannot satisfy demand. Gas
plants are also relatively flexible and can be turned
on and off more quickly and cheaply than coal
and nuclear plants.
Gas companies went to great lengths to attract
the interest of delegates
And they also point to the potential of gas for
storing energy from renewables. Batteries are
grabbing all the headlines, but gas offers a viable
alternative, particularly for larger-scale storage.
Finally, gas can be used to power vehicles with
much lower emissions than oil-based petrol or
diesel. Argentina, for example, has more than
two million natural gas vehicles, with Brazil not
All of this means that "gas is not part of the
problem, but part of the solution," Dudley says.
This is all well and good, but the simple fact
remains that despite the industry s efforts to con-
vince us otherwise, natural gas remains a fossil
fuel that emits harmful CO2. And lots of it.
So simply switching from coal to gas is not
the answer. In fact, if all the coal power stations
in the world were turned off and replaced with
modern gas-fired plants, total global CO2 emis-
sions would fall by about five billion tonnes a
year to 25 billion tonnes, according to Laszlo Varro
at the International Energy Agency (IEA).
One way to make gas cleaner is carbon capture
and storage (CCS), but the world has been very
slow to develop this technology. There is just one
commercial scale CCS coal plant and no gas
What is clear, however, is that as things stand,
renewables alone cannot satisfy the world s grow-
ing demand for energy. In theory, it would be
possible to power the world solely with solar
panels, but variability remains the major drawback.
And while batteries can be used to store energy
during the day for use at night, they cannot store
energy in the summer to use in winter.
This is why "we are going to continue to need
conventional power generation for a long time,"
says Varro. And as gas is the cleanest fossil fuel,
it is "the best candidate for filling the gap", he
For this reason natural gas use will grow sig-
nificantly in the coming years, potentially to the
point where it overtakes coal and oil as the world s
preferred hydrocarbon. At some point in the next
20-30 years, however, gas use will have to start
falling to avoid dangerous climate change.
This reliance on gas could be reduced signif-
icantly if governments invest in large-scale energy
storage systems and, more importantly, in renew-
able energy that is not variable, such as tidal and
The technologies to wean ourselves off fossil
fuels are available. The problem is, with current
models of financing, developing them at scale
is, for now, proving too expensive.
Concluding its biannual meeting, OPEC decides to
leave oil production targets in place at 30 million barrels
Noting that oil production growth from countries
outside the Organization of the Petroleum Exporting
Countries (OPEC) is expected this year to be one-third
of that experienced in 2014, OPEC is holding firm on
its quota of 30 million barrels per day (MMbpd).
In a statement from Vienna, members attending the
167th OPEC meeting said that with the decision, member
countries confirmed "their commitment to a stable and
balanced oil market, with prices at levels that are suitable
for both producers and consumers."
Analysts at several US firms said the move was expect-
ed, but it still managed to drag US oil prices down. By
mid-morning on Friday, US crude oil futures were down
27 cents from the day before at US$57.73 per barrel.
Analysts at Tudor Pickering Holt & Co in Houston
said in a morning note to investors that recent OPEC
production has routinely exceeded 31 MMbpd with
Saudi Arabia accounting for about 10 MMbpd. Pro-
duction in Iraq and Libya remains volatile, they said,
and the pain of $50 oil has yet to curb Nigerian and
The consistent output above OPEC s ceiling reinforces
the global oversupply situation, analysts at RW Baird
noted in a June 5 report. "We remain cautious on crude
pricing given this persistent oversupply dynamic coupled
with various technical headwinds, resulting in a chal-
lenging backdrop for energy stocks near term,."
OPEC meets next in Vienna on December 4, 2015.
OPEC refuses to cut
Is gas a weapon in the fight
against climate change?
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