October

Natural Gas as the Fuel of Choice From the EuropeanGas Forum PerspectiveContinued from page 19balanced European energy mix, alongsideother energy sources, and to highlight theissues of cost and moral hazard in ongoingdebates.As industrialized economies, we alsoneeded to position gas more effectively asan intrinsic part of a longerterm alternative.As a first step, EGaF fielded a study titled“Making the Green Journey Work” thatcovers all sectors of the European economy.The main focus is on power generatorsbut other sectors are also included, albeitcovered in less detail. The study providesa technical analysis of the contributionthat natural gas can make to meeting CO 2emission reductions as targeted by the EU. Itbuilds on scenarios outlined in the EuropeanClimate Foundation (ECF) Roadmap2050 and describes three potential waysto achieve the 80% emissions abatementtargets by 2050.The first conclusion of the study was thatEurope should refrain from mandatingspecific technologies as part of settingCO 2emission targets for the period until2050. The benefits of this strategy wereoutlined to lead to significant cost savings,maintaining European competitiveness,and hence put no restraint on economicgrowth. Two reasons fermented theaforementioned conclusion. First, there isconsiderable predictive uncertainty whichnew technologies will be readily available30-40 years from now, and at what cost.Second, flexibility is needed to deliver alow carbon energy mix which will be costefficient during the period in question.The other conclusion of the study wasthat Europe should rely on existing maturetechnologies at first and gradually move intonew technologies (such as carbon capture& storage and others) at a later stage, oncethe feasibility and their performances werebetter established. This would allow newtechnologies to come to maturity and havea lower impact on costs.Compared to the reference scenario (i.e.,60% RES scenario of the ECF Roadmap2050), the alternatives proposed by EGaFachieve significant cost savings to meetCO 2reduction targets, by using naturalgas in a more balanced energy mix, thatrelies less on coal and less on higher costrenewable technologies. For the period2010-2030, total costs savings in the powersector could be in the vicinity of €250-500 bn. This is about half the investmentneeded in this sector by 2030. Additionalsavings of a similar magnitude are alsopossible for the period between 2030and 2050, although costs are much moreuncertain given the uncertainties in terms ofinvestment costs in that time frame.Natural gas enjoys the lowest cost ofcapital compared to other power generationschemes that are capable of meetingemissions goals. Combined-cycle gas plantsemit half as much CO 2per kilowatt-hour asmodern supercritical coal plants and theyare two-to-three times less capital intensive.While operating costs are low, renewablescan be very expensive both in start-upcapital costs and transmission grid impactcosts. Nevertheless, we do see a significantrole for lower cost renewables as part of acost-efficient future energy generation mix.The study demonstrates that EU emissiongoals could be met by utilizing slightly less ofthe more expensive renewables, comparedto the higher renewable utilization scenario,particularly with respect to the next 20 years.If adopted natural gas-fired generationwill normally be the lowest cost source ofback-up thermal generation required tocomplement intermittent renewables (suchas wind power) and help maintain energysupply security.Hence, adopting alternatives as outlinedby the study between 2010-2030 would20