St Petersburg International Gas Forum – New Challenges and SolutionsPublished on October 7, 2021
Good afternoon to everyone.
All distinguished speakers and especially Mr. Alexey Miller, Chairman of the GAZPROM. I am honoured to be with you all once again – in one of the most important energy cities in the world.
Natural gas has never been as important to global society.
Gas has massive advantages that include: heat ntensity, air pollution, GHG emissions, scalability.
Gas has a growing importance: energy access, socio economic development, sustainability and the environment
Natural gas is a major solution to major global societal challenges. Until there is a new energy technological revolution, then our core message must be “gas works”.
If the world is concerned about pollution, we must demonstrate that natural gas is part of the solution
Natural gas today and a portfolio of decarbonised gasses, including hydrogen, tomorrow will be the catalyst for and foundation of a more sustainable energy future.
Natural gas can be a major positive catalyst for a cleaner environment through fuel switching from dirtier fuels. Fuel switching to natural gas alone can deliver a reduction of 5.5Gt (13%+) in energy sector CO2 emissions, and drive air pollution down globally. This is proven technology that is available today.
We should therefore not see climate purely as a challenge but as an opportunity – if dirtier fuels become politically or socially too expensive, then gas is primed to become the beneficiary. The climate debate should be seen as a positive driver for natural gas demand.
There is the uniquely harmonious relationship between natural gas and renewables. I do not believe that natural gas should view itself in competition with renewable energy.
Europe’s decarbonization focus is clear to us all. It would however be impossible on both a financial investment basis, and engineering basis without secure supplies of natural gas that keep Europe energized and warm. Secure and reliable supplies of natural gas are a core foundation of European decarbonization.
Natural gas is the ideal partner for renewable energy, which should also be seen as a driver for natural gas demand.
Gas as a driver of socio economic and industrial value in the developing world
Much of the developing world suffers from a significant energy poverty crisis. The IEA suggests that 1.6 billion people in developing Asia have no access to clean cooking facilities. That is roughly 20% of the world’s population. Nearly 10% of population in Central & Southern Asia lack reliable electricity access. This creates a brake on regional socio-economic development.
There will be more than 2 billion additional people living on the planet by 2050, which much of that growth coming from the so-called developing world.
Natural gas is a vital driver of socio-economic development across the developing world – just as it has been in the developed world. Much of Europe, North America and Asia have benefitted from gas’ unique properties. Gas is and will remain the foundation of the developed world’s energy system.
Why should the developed world benefit from industrialisation and deny the benefit to the rest of the world?
Natural gas enables quick, clean and affordable expansion of energy access. New gas infrastructure and increased natural gas usage can propel economies across the region, reducing monetary and energy poverty.
Natural gas also creates socio-economic value through its inherent public health advantage. Enhanced use of gas today in industrial and domestic environments could drastically cut air pollution and thereby reduce 7 million deaths pollution caused every year. It would immediately improve quality of life and public health by cleaning up the air and environment.
Emerging gas technologies will continue these trends and create long term demand for natural gas
The IGU advocates for energy innovation and clean technology that involves the efficient and sustainable use of all gaseous molecules.
A major emerging demand generator for natural gas could be hydrogen. Hydrogen should not be seen as a competitor. The infrastructure and financial challenges are profound. For instance, Japan would have to more than double the current renewable power generation capacity just for its steel industry’s needs.
Blue or turquoise hydrogen – produced from decarbonized natural gas – is a necessary component and one that is much more ready for being scaled. We should therefore look to the potential of multicoloured hydrogen as major demand generators for natural gas.
Long term investment is vital to energy security
I have one final point to make. I wish to congratulate Gazprom on the construction of North Stream 2. The commitment of billions of $ of investment capital and thousands of hours of human capacity are both vital if the gas value chain is to continue its role as the foundation of and catalyst for a more sustainable energy system.
The current pricing environment is derived from strong and constant demand across the globe, based on a combination of post COVID recovery in the developed world, and the ongoing needs of industrializing and developing economies. Put simply, the world needs more gas to meet the needs of growing population that wants the highest possible standard of living.
However, due to the emphasis on environmental policy and the energy transition, significant pressure has been put on the supply side of the energy dynamic, whilst no constraints have been placed on demand. This has created a tight global market.
To this situation, one must add in the inherent intermittent nature of renewable energy and a year of some of the lowest wind yields in history. Natural gas prices have therefore seen a recent “perfect storm”.
This is why I congratulate organisations such as Gazprom that have shown a commitment to securely supplying the world with natural gas. We request policy makers around the world recognise the unique role of natural gas for keeping societies energized and warm, both in developed and developing markets.
If this happens, additional multi $ bn investments can be made that will both guarantee global energy security, and help loosen the global gas market – thereby pleasing everyone – apart from the odd short term equity investor.
As you can see, there are many reasons to be positive about natural gas demand and how we can promote the unique attractive characteristics of the blue fuel, both today and far into the future.
I believe that for multiple generations, as long as human society needs energy, it will need natural gas.
I look forward to seeing you all in person at WGC2022 in Korea, where we can once again come together to defend, promote and celebrate the role of gas and the value it creates for global society.