THE CARBON WAR

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The Winning of The Carbon War
dioxide. Studies show that gas needs fugitive emissions of less than 3% if it
is to provide a climate benefit over a typical coal plant. There is currently no
consensus on levels of fugitive methane emission across the industry, which
vary by project and geography. The Carbon Tracker gas report assumes a level
of 1.4% leakage of methane for both conventional and unconventional gas.
This may well be conservative. Some studies suggest that unconventional gas
has higher levels of leakage, but the data are insufficient to enable a firm conclusion
to be reached. Either way, efforts by industry to minimise leakage and
make processes as efficient as possible will be important in determining gas’s
contribution to the energy transition.
With this significant caveat about the uncertainties around leakage, the
presentations end and panel discussions begin. I look across the Thames at
the City of London and wish more of its financial legions could hear what
I suspect is coming.
The first panel is asked to reflect on the conclusions of the Carbon Tracker
gas report. Gerard Moutet, Vice President for climate and energy at Total, has
the floor. Clearly not all the oil and gas reserves will be burned, he says. It is
vital that the Paris agreement refers to a price of carbon, and this must favour
gas over coal. Total sees a 2% per annum growth in gas consumption, much
bigger than the 1.4% Carbon Tracker uses. In Total’s scenario, LNG will grow
at 4% per year. Of course not all LNG projects will be built, but we need much
more than in Carbon Tracker’s scenario, he says. Solar will grow and Total is
big in solar. But it will take time. So we need gas.
Gerard has given a perfect summary of the gulf that still exists between
the relatively progressive oil and gas companies, and advocates of ensuring a
two degree future at all costs.
Paul Spedding, former Oil and Gas Financial Analyst at HSBC, now Senior
Advisor to Carbon Tracker, is also on the panel. History teaches us that even
small drops in demand for oil result in big drops in oil price, he says. The same
is true for gas. I don’t like LNG, he says. LNG projects are the gas industry’s
equivalent of the oil sands. They don’t give shareholders a good rate of return.
In the back row, I smile, or probably more exactly smirk. Paul has a quietly
spoken manner, but rarely minces words. His comment about LNG being akin
to tar sands leaps onto my computer screen as participants tweet it.
Others agree with him. We do not see significant increase in global
demand for gas, says Richard Chatterton, European Gas and Carbon Markets
Analyst at Bloomberg New Energy Finance. it will become increasingly uncompetitive.
The potential for renewables to take market share from gas is material,