U.K. Overlooking Gas in Drive to Reduce Emissions, Report Says

The U.K. is ignoring natural gas as it strives to meet future energy needs and reduce carbon-dioxide emissions, a lobby group said in a report published today.

“Firms are not being encouraged to think about investing in gas-fired power generation in the long-term, which is exactly what is required to fill the emerging electricity gap,” David Odling, energy policy manager at Oil & Gas U.K., said in London at a presentation of the study by Poeyry Energy Consulting.

The U.K. needs to replace as much as 30 percent of its aging power-station capacity over the next decade and plans to install as many as 8,000 offshore wind turbines as it strives to generate 15 percent of its energy from renewable sources by 2020. The government’s current renewable-energy plans may cost more than if gas were relied on to a greater extent, according to the report commissioned by Oil & Gas U.K.

“Pushing too hard, too quickly increases the risk to consumers of high prices and reduced security of supply,” said Gareth Davies, one of the report’s authors.

With Britain focused on short-term renewables targets, it risks losing sight of the longer-term aim to produce less carbon dioxide in the energy sector, Davies said. Carbon dioxide and other greenhouse gases are blamed for global warming.

About 80 percent of U.K. homes are heated with gas and the fuel is used to generate almost 50 percent of the country’s electricity. The country’s North Sea production is in decline and Britain is becoming increasingly reliant on fuel imports. The government predicts the U.K. gas market will be entirely dependent on imports by 2030.

Capture Emissions

Continued use of gas, the cleanest-burning fossil fuel, would give time for new technologies and supply chains to establish themselves, according to the report. Emissions from gas-fired power stations can be captured and pumped underground in future, it said.

“Our view is that a deliberate policy to reduce gas’s share of the energy mix represents a flawed pathway for society to progress toward decarbonization,” according to the report. “Gas hardly features in policy makers’ outlook.”

The 2020 renewables target should be revised and a more realistic timescale set, Davies said. The goal is likely to be missed and is a distraction from the aim of an 80 percent emissions cut by 2050 from 1990 levels, he said.

Odling said industry leaders should be more vocal in making the case for gas worldwide as well as in Britain. BP Plc Chief Executive Officer Tony Hayward called the production of gas from shale formations in the U.S. a “quiet revolution” in a speech in October last year.

A dispute between Russia and Ukraine over gas prices that resulted in reduced supplies to Europe last year still clouds politicians’ energy strategies, Odling said.

“The message simply hasn’t got through,” Odling said. The fear that oil and gas are to be found “in countries where there are potential difficulties” has “got into the body politic.”

To contact the reporters on this story: Ben Farey in London at bfarey@bloomberg.net

To contact the editor responsible for this story: Stephen Voss on sev@bloomberg.net

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