Europe poised to rely on natural gas


Natural gas is likely to become the energy source of choice after moves by Germany and some other European nations to turn their backs on nuclear power.

The Swiss cabinet last week recommended decommissioning its five nuclear reactors. In Italy, the Berlusconi government has shelved a plan to relaunch nuclear power, which was banned after a 1987 referendum.

“We need more gas. After Berlin’s decision, gas will be a driver of growth,” Gunther Oettinger, Europe’s energy commissioner, said on Monday, echoing a sentiment increasingly expressed by energy analysts and executives.

Gas is relatively abundant and cleaner than coal – a selling point for a region that has pledged to lead the world in fighting global warming. These considerations have fuelled Brussels’ backing for a sprawling new pipeline, known as Nabucco, that would by 2017 link Austria to oceans of gas in Azerbaijan, reducing the bloc’s dependence on Russia.

A decision on whether to go ahead with the plan is due later this year or next.

Poland and other European states are also pushing to use hydraulic fracturing techniques to access shale gas deposits trapped in rock, despite environmental concerns.

Gas accounts for 23 per cent of European Union power generation, compared with 28 per cent for nuclear and 19 per cent for renewable sources of power, such as wind and solar.

Even before the Fukushima crisis in Japan, and Germany’s subsequent decision to abandon nuclear power, a heated debate raged in Brussels about how that mix should change.

The competing priorities are cost, which is vital for European consumers and industry, and the bloc’s environmental goals, particularly its ambition to reduce carbon emissions by 80-95 per cent by 2050.

The EU has already pledged that some 20 per cent of its total energy needs should come from renewables by 2020.

Andreas Carlgren, Sweden’s environment minister, expressed concern on Monday that in its haste to ban nuclear power Berlin had neglected to identify an environmentally friendly replacement. “The decisive issue for Germany now is that it is highly likely that it will increase imports of nuclear generated electricity from France and that it will risk not being able to ease dependency on fossil fuels – primarily of coal power,” Mr Carlgren told the TT news agency.

Cost is a serious concern. Ronan O’Regan, director of energy and utilities at PwC, the professional services firm, estimated that Germany could expect to spend €3bn ($4.3bn) for every 1,000 megawatts of new offshore wind capacity. An equivalent gas-fired plant would cost about €800m.

“The interesting question is whether renewables can take up the slack.

“I think it’s going to be pretty challenging in the short term,” Mr O’Regan said.

Even if there is a renewables boom, gas is also likely to benefit because of the need for a back-up fuel in the event that the wind is not blowing or the sun is not shining.

“More renewables means more gas volumes too,” Mr Oettinger said.

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