Baku, Azerbaijan, Oct.9
By Leman Zeynalova – Trend:
The role of policy in supporting natural gas as a key fuel in the transition to low carbon economies remains unclear in key consumer markets, the Gas Exporting Countries Forum (GECF) said in its report.
“For example, it is estimated that only 20 countries among 169 have cited natural gas in their Intended Nationally Determined Contributions (INDCs). Policymakers in many countries do not explicitly recognize the potential of natural gas in reducing carbon intensity over the long-term. Their attention is focused on other decarbonization options, which may be more expensive and not without challenges, such as safety in the case of nuclear and reliability in the case of renewables,” said the report.
GECF analysts particularly note that in Europe, significant policy constraints exist for natural gas.
These include: i) constant changes to gas market rules and design, ii) the dominance of national policies and priorities over regional EU policy, which blur the visibility on the role gas should be given in different countries. European gas market liberalization policies still raise concerns for gas suppliers, mainly those related to the efficiency of market mechanisms, such as transport capacity allocation, new gas pipelines treatment, and insufficient harmonization of market rules between countries. Furthermore, the liberalization policy of energy markets as a whole is sometimes blurred by intervention, particularly in the form of subsidies that support other energy sources (e.g. subsidies to renewables or to coal in countries like Germany), according to the report.
Another domain that reflects the policy challenge for natural gas is related to the future role of nuclear energy, according to GECF.
“With the exception of Germany, European determination to decommission old nuclear fleets is waning and hesitations about closure can be observed in Switzerland, Spain and France. For the latter, the 2014 parliamentary decision to reduce the share of nuclear power from 76 percent in 2014 to 50 percent in 2025 has been postponed, increasing uncertainty around the future role of nuclear in the country,” said the report.
Regarding the concerns of gas security of supply, it is more a perception than a reality, according to GECF.
The report says that in actuality, security of supply increased significantly over the last decade with several discoveries and with increased diversification of gas resources, particularly with the development of LNG.
“Natural gas become a very reliable source and can be supplied at affordable prices. Moreover, technology progress observed in different parts of the gas supply chain (especially in the upstream and liquefaction technologies) allows to improve the performance in delivering natural gas to different markets and to unlock large gas potential at competitive costs.”
---
Follow the author on Twitter:@Lyaman_Zeyn