METHANE. Ilaria Conti Interview

Ilaria Conti is Head of Gas at the Florence School of Regulation.

Her main fields of expertise concern EU institutional relations and EU electricity and gas regulation.

She spent about 9 years in Brussels, working for the the Permanent Representation of Italy at the EU, the United Nations and, from 2005 until 2013, for EFET, the “European Federation of Energy Traders” covering various positions within the association. 

Professor Conti joined the Florence School of Regulation (FSR) in 2015 as Energy Policy Deputy and in 2017 she was appointed Head of the new FSR Gas area.

 She is author and co-author of many scientific articles and position papers, actually, until 8 years ago she was the Managing Editor of the publication “Economics of Energy & Environmental Policy” that belongs to the International Association for Energy Economics.

We met in 2022 in qualities of master and disciple (I was the student, obviously) at the European University Institute in Florence – in the beautiful little town of Fiesole up on the hills west of Florence - where you, professor, were part of the teaching staff in a course that dealt with high quality regulation in areas such as climate and energy.

Raul Cazan

Transcript

SPEAKER_00 0:00

Investing more in renewable energies and uh in renewable energy infrastructure is what will probably save Europe from uh dependence on uh on other on importer on imports from other countries. And uh it's definitely something which should not be abandoned.

SPEAKER_02 0:28

My name is Raul Kazan, and you're listening to another episode of a podcast that is two degrees Celsius hotter. Today we are trying to figure out why is gas getting so expensive. And does it have anything to do with green taxonomy? And finally, why on earth are we buying it from the Russians? For this, I invited one of the coolest professors I've ever met. Her name is Ilaria Conti is the head of gas at the Florence School of Regulation. Her main fields of expertise concern EU institutional relations and EU electricity and gas regulation. She spent nine years here in Brussels working for the permanent representation of Italy at the EU, at the United Nations, and between 2005 and 2013 for the European Federation of Energy Traders, covering various positions within the association. Professor Conti joined the Foreign School of Regulation, FSR, in 2015 as energy policy deputy. And in 2017, she was appointed head of the new FSR gas area. She is author and co-author of many scientific articles and particular papers. Actually, until five years ago, she was the managing editor of the publication Economics of Energy and Environmental Policy that belongs to the International Association for Energy Economics. We met in quality of master and disciple. I was a student, obviously, at the European University Institute in Florence, in the beautiful little town of Chiesole, up on the hills of Florence, where you, Professor, were part of the teaching staff in a course that dealt with high quality regulation in areas such as climate and energy. Professor Ilaria Conti, it is an enormous honor to have you here at Two Celsius. Welcome.

SPEAKER_00 2:32

Many thanks, Raul. It's really a pleasure for me to be here, and thanks for this very kind introduction. I feel a little bit ashamed, a little bit shy if you call me professor. I don't, I'm not really sure. I fully deserve that. I do is I do teach here, and it was a pleasure to meet you there also on that occasion. But uh I'm still a humble sort of researcher, and uh uh so I am and uh as you know, uh as you uh correctly said, I've been working for the Foreign School of Regulation where I am indeed surrounded by professors. But uh yes, I'm very happy to have this talk uh with you today.

SPEAKER_02 3:10

Um essentially, we're going to talk about two very important position papers that I read recently and you published uh at uh the Florida School of Regulation also recently. Uh the whole context is um related to the fact that a few months ago, that is in December 2021, you proposed the methane regulation. Uh this led off the hook imports and and uh kind of uh ignored EU climate goals. But today, however, everything is exacerbated by Russia's invasion of Ukraine. So, on top of mitigating climate change, we have the moral imperative right now to win away, in any sense, from an aggressive state that is Putin's Russia. Um, this is uh also changing the energy and security maps that my one of my favorite authors, Daniel Jürgen, is writing about. So um Europe and the European consumer uh are going to suffer a little bit, most probably. However, at this point uh we are interested in what you wrote recently, and that is related to the high gas prices in Europe, which started to grow way before the uh invasion of the Ukraine. So, is that a matter of policy intervention? You're asking yourself in in the policy paper. So uh uh given the fact that uh we already have um an initiative in the European Parliament that is aiming at increasing the gas storage capacity in Europe, uh I want to ask you if gas storages are still able to provide the necessary flexibility and contribute to hedging price spikes in the new context given by the war.

SPEAKER_00 5:14

Thank you very much for the question. It is a complex question and uh indeed it requires, I think, a couple of uh preambles. Um, as you said, uh European energy policy had uh taken, I think, a very clear direction in the towards walking at a very fast speed towards the uh objectives of the European Green Deal. So in recent times, uh last year, let's say, until the summer, we saw a number of initiatives uh from the European Commission which were really focusing on sustainability, on uh trying to meet the famous climate targets and also the uh renewable consumption targets uh and uh CO2 abatement targets. So um we have seen uh many, I think, valuable initiatives in this direction. Obviously, uh we found ourselves at uh, I would say, an unprecedented unprecedented situation uh after the summer, where we started uh witnessing a huge and uh sudden increase of energy prices in the electricity and gas sectors. And uh, while there were some reasons which could have been uh you know expected, which could have been easy to explain in a way, just by based on uh uh the simple uh demand and supply uh mechanisms, there were other reasons which were less clear. And um, indeed, we see now uh we know we all know unfortunately how the events evolved and uh that uh we had this uh really unfortunate conflict uh between uh Ukraine and Russia following the invasion of Ukraine by Russia. So this unprecedented situation has, as you said, exacerbated um the whole scenario concerning the evolution of uh the energy system in Europe. Uh it has put a lot of constraints that we didn't have before, and therefore the European energy policy had to adapt, had to change, had to even switch a little bit the focus for the immediate term, for the immediate and short term. So, what you say is absolutely correct, Raul, that uh we um I mean the eyes of the Commission slightly turned from sustainability targets to the immediate security of supply targets, and also as to avoid consumers suffering too much, trying to make this um immediate target to reach easier and smoother from the point of view of consumers, so so that it's not too much burdensome to uh uh to cut a long story short, to uh make Europe independent from the gas supply uh coming from Russia. So, this is a completely different target uh compared to last year. We didn't have this target before. Um the European Council in Versailles, just one month ago or so decided to clearly um impose that Europe uh can do without uh the famous 155 BCM of gas coming from uh from Russia, and uh the latest initiatives have uh really moved in this direction. So we have seen the Repower EU, we've seen a recent um publication, uh republication of the European Gas Security of Supply Regulation, which also involves storage. So now I come to storage and to your question in particular. Storage is, of course, one fundamental instrument, it's a critical instrument uh to ensure um security of supply in general, even before the start of the uh uh of the conflict between Russia and Ukraine. But it has now uh gained even more in importance uh in the context of this uh of this recent uh discussion and target that I mentioned. So if we have to do without this 155 BCM of gas coming from Ukraine, of course, we have to also take into account the maximizing use of uh of gas storage in Europe. And not only maximizing, but also perhaps thinking about new ways of dealing, of managing storage. Because at the moment, uh gas storage in Europe is uh is treated in a very different manner depending on the member state we are talking about. There are some member states where gas storage is totally uh a commercial, it's totally um uh part of the of the free market, of the liberalized market, so it's gas like any other type of gas. There are some member states where instead gas storage is regulated, typically uh Italy or France and uh Hungary, etc. So what happens is that the gas storage, which is which as I said is critical. Why? Because if it covers about 100 uh BCM when gas storages are full in Europe, we have approximately 100 BCM of gas. And uh considering that uh the um consumption of gas in Europe is assesses around 400 BCM. So we are we are talking about one-fourth of total gas consumption in Europe. So a very important instrument. Um, we saw that last year, after the summer, when this uh important energy crisis started, a very important, very fundamental data, I think, is that those countries which had uh gas storage regulated were much better off than the others. So it means that the uh gas volumes in store in those countries were higher, were significantly higher than in the other member states where gas was simply um something for the open market. And this tells us that um tells us at least a couple of things. Uh, one, that if you want to ensure security of supply, you can't leave it completely to the market because the market um, with its simple laws of demand and supply, will not deliver security of supply, or at least it won't deliver it where you want it or at the time that you want it. And that's that our our policy briefs are uh precisely describing this, describing uh potential ways of ensuring uh a usage of uh gas storage that it is able to deliver security of supply and uh ideally also serving uh the purpose of uh keeping um keeping energy prices uh as low as possible.

SPEAKER_02 12:15

And also you you proposed here like a common European uh problem solving for the whole Europe, right? So what you're proposing in your policy brief is um uh new sort of gas procurement for the whole uh union. Um basically you you call it centralization of gas procurement. Could you elaborate on this a little bit?

SPEAKER_00 12:43

Absolutely, yes. So um in our first policy brief uh in uh in December, um we of course we were working under you know in a different in different circumstances. So we were considering that um the idea of having uh joint procurement uh would be uh something to be avoided. Quite frankly, um in a in a normal situation where you have um uh where you have where you don't have a war, when you don't have such a big uh let's say problem to be addressed, uh gas markets have proved to be to be working quite well. So um we would not see uh back then the uh necessity of uh having a joint platform for the common purchase of gas in general, not only storage, but even uh pipeline gas or any other type of gas, LNG. We wouldn't see it as a as a necessity because, as I said, in normal conditions, in normal market conditions, uh it is difficult to think that uh having a process whereby member states gather and negotiate uh the purchase of a certain amount of gas for a certain uh period of time uh would give any benefit compared to the alternative of having an open market where uh gas companies negotiate independently the best price uh for themselves and for their customers. Uh, we wouldn't see any, let's say, uh additional benefit in having a joint procurement. Why? Because Mark in uh in because the gas price is volatile and therefore deciding to close an agreement now at a certain price for 10-15 years uh could even uh prove counterproductive. And I'm talking, I'm taking now the perspective of the final consumers, of course, uh, because uh this the same gas price could even decrease in the next few years, and therefore the consumers would then pay the differential uh between the say the spot price and uh the price which was negotiated by this long-term contract. So for us, it wasn't really a winning solution. Of course, now we are talking about a completely different situation where diplomacy plays a role, where uh uh uh Europe has the need to uh secure supplies, which is not something, which was something that we would take for granted just uh half a year ago. But now uh we really uh we really need to make sure that we will have enough gas uh in store for the next uh for the next uh winter, which actually seems to be the most difficult or the biggest obstacle uh in a in a medium perspective, making sure that there is enough uh energy for uh our citizens in Europe uh in the in the upcoming winter. Um and therefore uh the idea of uh purchasing gas to be put in storage is uh is probably the easiest of the possible measures that Europe could uh discuss and implement. How would that work? We are now working at uh at a new policy brief, so I can already uh reveal uh something, it which I hope it will be published uh this week or next week. So, uh compared to the previous uh publication, we made a few steps forward and thought, okay, let's try to imagine how this mechanism could work if uh joint procurement of gas storage would go ahead as an idea, which seems to be the case, at least in the latest discussions. Um, how could that work? Because the challenge here is also um trying to um set up something which doesn't completely uh um turns upside down the current functioning of the gas market, uh and also doesn't create, as I said, any precedent which would then turn counterproductive in the medium term. We don't know what's going to happen, we don't know if the war is going to finish uh soon. We all hope so, of course. Uh but uh we have to think also about uh what's happening next. So, how would the market uh work when the situation uh goes back to normal? And um so for this reason, we thought that uh at the basis of this new system based on joint procurement of gas uh in storage, uh we could think of a market-based mechanism, which is auctions. So um the this amount of uh gas to be put in stock could be uh previously set and then uh put out on auctions. Um, auctions are an effective way of uh uh allocating gas capacity. They were introduced already with the third energy package. So we have a network code, the capacity allocation um mechanisms, network code, which uh really revolves around the introduction of uh storages for uh for gas capacity, uh, sorry, of auctions for uh for gas capacity, and it proved to work extremely well because it is a market-based mechanism. So companies are reactive to that. Um, what's the big obstacle at the moment? That uh it's not convenient for companies to uh participate, wouldn't be convenient for companies to participate in these auctions because the gas price is currently and also in the forecast, too high to be put in storage. That's the real problem we are seeing right now. That normally uh companies to be incentivized um to uh store their gas would would need to see a significantly lower price than the price we are we are seeing today. So uh these mechanisms need to be changed artificially, and um that's exactly what the mechanism we are proposing, uh mechanism based on storage instead of sorry, based on auctions, instead of uh incentives to be given like lump sums or or et cetera, uh, so that companies are then uh somehow obliged to commit and to make sure that the gas they store and for which they are, of course, compensated uh partly, uh, are um are then committed to um to deliver this gas so that we are sure that they don't, you know, companies do not run away, they have the they are rightly incentivized, uh, which is the final target, the most important target we have, to make sure that uh gas storages are refilled at the end of the that at the end of the summer we start the the cold season with um gas storages almost full. The target for this year set by the European Commission is 80 percent. Uh and this was a target which was uh just established in the uh amended regulation on security of supply and the gas regulation. This was published uh really one month ago. So if that's the target, uh the mandatory fill-in target of up to nine to eighty percent, uh we have to find a way to make sure that uh that this gas is indeed uh put into the storages.

SPEAKER_02 20:31

Would you tell me those incentives? What kind of incentives are they? I mean, there would be something like tax cuts or something similar.

SPEAKER_00 20:39

For this, uh, we in our model, in our suggestion, our proposal, we uh there are different ways how this could work, depending on how the uh depending on the design for these uh auctions. So what is certain is that the proposal is to have auctions. Uh the target is sure. We this we have to uh incentivize companies to fill the storages because we have a mandatory filling target. How do we do that? There are different ways. So we have different we propose different options. We can uh we think that um uh the this uh this compensation can happen, for example, ex post. So uh because it's difficult to predict what the the price of gas will be in six months, uh we can propose to companies that they bid at a certain price, but then eventually the compensation for the the gas they will actually that will actually be put in storage will be compensated afterwards based on a market price which will be uh um defined ex post. This is, for example, an idea. Otherwise, it's possible also to think of incentives um uh ex ante. So the companies that are uh able to participate in this. auction do receive a compensation uh which is which is anyway linked to the to the bid price so so that you know um uh as the the gas price is evolving uh we are sure that the compensation is aligned is fair so that we don't do not set a too high compensation and then maybe the gas price falls or declines too quickly and uh so this would be you know an unfair uh way of uh of um making sure that gas storages are are filled yeah yeah so we are really it can also be a source of speculation couldn't it to open the way for the company's greed that they're pretty famous for sure in normal conditions I would say yes but at the moment actually it's very for companies there's no doubt that it it it would not be convenient at all to participate in this uh in these auctions um they would rather uh avoid that and they would rather um you know uh use the gas or store the gas for for future usage um because again as I said the levels of uh gas prices are really um extraordinarily high now for uh particularly for the period that we are uh that we are in so april may usually the the gas price starts declining and uh but this is not the case of course because of the of the conflict in uh in Ukraine um you in the very beginning of uh of it you you mentioning the uh uh liquefied gas um so lng uh in the context of the EU uh gas wholesale market and um would be leaning towards LNG a smart non-green solution at least to compensate the ban on Russian hydrocarbons so could a very sensitive uh uh German government adapt to to this just like the Baltic states did with the clypeda terminal for example the simple answer is yes LNG just like uh uh storage is uh I think a fundament and will be a fundamental uh instrument um as a reminder we are really trying to uh make sure to to use any potential uh measure any potential instrument to contrast this unprecedented situation so obviously what wouldn't appear ideal just one year ago uh is now becoming a something you know to at least reflect on because as I said the most urgent issue right now for the winter ahead is ensuring that we do not run the risks of blackout of shortages uh because uh the your the the gas supply coming from uh from russia was indeed uh until recently a very important uh part of the European energy mix so we have to compensate for that and LNG is an obvious um an obvious first uh instrument to look at so uh LNG is a particular market it's a global market and uh the prices of uh LNG the the LNG price is uh interlinked now between international markets something which doesn't appear doesn't happen for example for pipeline gas pipeline gas in europe is indexed to European gas hubs and it can be very different from uh from uh other markets of course from the US or from China etc that's why there are indeed different hubs LNG is becoming a global market because uh LNG ships can travel and do travel around the world and there are some agreements in place which facilitate the uh redirection of LNG cargoes uh towards those markets where simply gas markets uh gas gas prices are higher so typically an LNG cargo uh leaving from the US and directed to Europe may decide to turn and uh continue to China if the gas price there is higher so we have again to contrast this to avoid this to happen and Europe is trying has been trying to secure uh enough LNG uh coming to Europe and stopping in Europe and being the and delivering gas in Europe for uh then in the next months and this LNG is uh typically coming from uh the US but also from other countries here in the Mediterranean and we we we have for example Spain which is uh probably the biggest country in Europe in terms of uh uh LNG terminals and uh and terminals reception capacity reception so what we are seeing is uh LNG will help is is meant to help even more because uh even in the uh uh in the recent repower EU uh publication uh LNG does play an important role where we've seen uh we read this every day in the news that uh uh Europe is trying to secure um uh deals with other countries uh trying to diversify uh the origin of the uh of of the gas that we we purchase for europe um and LNG is important because it gives enough of flexibility so we are not you the gas delivered doesn't have to run through a pipeline that's the biggest uh the biggest advantage of LNG cargoes can be uh delivered at any terminal in Europe and we have quite a quite a few terminals in Europe uh of course the situation has dramatically changed before the war before the energy crisis these terminals were basically underutilized um whereas now we are considering uh you know after some calculations of uh the uh increase of LNG coming to Europe uh in the next months we noticed that there might even be uh the need for uh to to build um more infrastructure as to um make sure that uh uh LNG can actually uh be taken uh by European member states and delivered so again Raul this is not something which was foreseen so we all know that uh Europe had made some important steps um towards avoiding uh the um uh that uh gas infrastructure or even new gas infrastructure uh to be built in europe um but uh as i said the this the situation has uh completely changed so these issues are back to the to the discussion table again uh making sure we have enough gas for the winter ahead and even if uh we have enough of deliveries how do we uh how do we take them via the terminals and how do we make sure that they are then transported to the consumption destinations these are the the the main um uh mainly debated topics at the moment so as you can see uh quite a step forward from uh the um the topics we were discussing only one year ago right right uh it wasn't foreseen in smart policy briefs like yours but uh from uh from a geopolitical or geostrategical uh point of view they were uh foreseen by the baltic states and that was the utter reason that for which uh lithuania built the the clypeda terminal for lng you know and it was uh thus so easy for them to to wean away from russian gas as they did uh very very recently like a couple of weeks ago so absolutely lng terminals are uh proved important for those countries which had uh uh a higher degree of dependence from russian gas that's uh that's for sure and anyway the direction the long-term direction for europe would was anyway that of uh the of making uh europe making sure that europe becomes more resilient more independent in energy terms from imply from supply uh from gas in general because uh it's not it was not uh targeted as a specific uh objective to to make sure that europe is independent from russia now it is uh but also in general um europe had already clearly decided to increase uh the the regeneration of energy from uh renewable sources and honestly despite the current situation despite the big crisis that we are we are living in despite the uh now objective need to secure also uh energy from from gas and from fossil fuels for the short period um the sustainability objectives are still very clear in the mind of the of the European Commission it's not that uh Europe has abandoned sustainability targets uh because it is now distracted by other issues um i i think this is an important point to make um even in these traumatic times uh several commissioners Timmermans Kadri Simpson have repeated that we shouldn't be distracted and even Ursula von der Leyen uh we have uh repeated that uh it's that uh the path that Europe has taken towards sustainability and towards uh climate neutrality is still uh very much marked uh and uh um that accelerating the generation of uh clean of clean energy um generation uh is uh is something still important still a primary target so eventually actually um um investing more in uh renewable energies and uh in energy renewable energy infrastructure is what will probably save europe from uh dependence on uh on other on importer on on imports from other countries and uh it it's definitely something which should not be abandoned and we have a clear uh sign of this uh commitment or recommitment if you want in the recent repower EU strategy where um where europe insists on the idea of having a uh a hydrogen accelerator so um electricity um clean electricity generation is incentivized in itself and also with the final purpose to um uh maximize uh the production of of hydrogen there are now much more ambitious targets for clean hydrogen compared to the uh to the recent strategy even compared to the uh hydrogen package which was published only in December um and also other forms of uh cleaner uh molecules like biogas there is there are now um the the the targets for uh the generation of uh biogas and biomethane for example has doubled uh in the in the strategy of the commission so um we see that alongside with uh the need to find to to to repair to the current situation in any manner um there is still a string a strong focus and attention to uh clean clean um forms of energy generation so um um instead of um of uh fooling around with um uh with ideas like um bridged sources of energy such as methane is considered uh acceleration of alternative energy alternative energy uptake uh as part of weaning off uh not merely russian gas but natural gas altogether uh is essential in this fight uh again say energy fight against russia and against climate change isn't it okay absolutely uh as i said uh in the re power you we have uh important targets that are going still in the in the direction of sustainability just to mention um the european commission uh foresees the to boost biomethane production from the target which was in the fifth of 455 package which was 17 bcm uh till 35 bcm by 2030 and also uh regarding electrification um there is of course there are important targets concerning energy efficiency first of all so a big uh chunk let's say of the energy uh that we need should be uh first of all saved with energy efficiency measures um but even uh the um the product the the installation of wind and solar power plants is uh is maximized um and as i said uh about um uh there is a there is a target of producing uh 5.6 megatons of uh of green hydrogen which is again which means again um really in increasing the targets which were originally foreseen uh even in the hydrogen strategy so yes the the the the simple answer to your question is yes we shouldn't uh lose track in the in the path towards decarbonization we should still uh keep it in mind as a main target that uh it's only by investing more and more in uh uh in clean energies that we will make sure that uh security of supply and uh eventually in the long term um uh lower prices uh for effort for citizens will be accomplished this is something i'm absolutely sure uh and and actually it's a pretty common shared thoughts in europe uh i think what the uh different positions uh are about is how to get there in the in the transition in the short and medium term considering these um uh compelling um objectives that uh have emerged meanwhile and uh for sure priority will be given to ensuring security of supply in the at least for the next couple of years that's my that's my perception um so we might lose a little bit of momentum in investments in renewables uh because uh we have to um to ensure that uh that um that uh more immediate forms of uh of energy unfortunately less clean are available to make sure we do not run into big disruptions for uh for the next few months then after that and hopefully with the solving of the of the conflict um we can uh resume at uh a very high pace uh the good i think the very good um uh objectives and the very good uh targets that uh we had uh uh we had started achieving in recent uh months it's really refreshing to hear that uh but uh sticking to this uh momentum that we postponed a little bit i it's just a mere curiosity of mine um what about the gas producing countries within europe like the netherlands and romania uh are they gonna uh uh i don't know uh have like a uh uh accelerated production of uh natural gas they're gonna feel better on this sort of uh um on this sort of market on on uh within a new uh regulation regarding procurement in europe so um okay well it depends what we are talking about we are talking about storage um there are some countries in europe which do not have storage actually um uh the the the current uh gas storage sites are uh concentrated for about 73 percent in only five member states so there is if we we are talking about joint procurement of gas storage as you can imagine uh there might be a quite fair question um uh uh how could the countries where there is no gas storage be interested in sharing the burden and the costs of such a mechanism of such a system um the simple answer is they wouldn't be interested unless of course uh there is an efficient system which ensures and reassures them that they will benefit from this system so typically in the case of a of a shortage um the the gas which is jointly procured would efficiently be delivered to them at a fair price so the idea of building a new um joint procurement system for gas storage has to start from here to make sure that the countries involved uh equally all the countries involved equally benefit from this uh from this mechanism or if whether this is not possible they uh contribute in a in a in a smaller portion of course to the um to this uh system this is i think it's just um simple you know uh common uh common understanding because um as i said that some there are there is such a big difference in the way energy um resources are allocated in the member states as you said the netherlands are typically a gas country and now they had they had recently decided to phase out of can of gas that they they they decided to close the Gröningen uh field um with a clear direction taken um of phasing out gas and uh turning more and more towards hydrogen for example now this is um is going to continue I think um but on the other hand uh geologically speaking uh the Netherlands are certainly uh in a better position than for example Romania which doesn't have um many alternatives at the moment um so if we are talking about a joint procurement system we have to make sure that the Netherlands as well as Romania as well as Spain France Italy and all the other countries have the possibility to join and are fairly compensated for this uh for for participating and making sure that solidarity really happens and it happens at uh we suggest predetermined conditions that it's the it's too risky to think that the market will deliver uh security of supply and even solidarity uh in case of of disruption um solidarity is a principle which has been introduced in European regulation we know that there was the in the in 2017 with the latest review of the uh uh security of supply regulation this important concept was introduced that solidarity comes at a price and this price is uh predetermined in agreements between member states so in case of disruption these agreements must be implemented and uh that's exactly the type of uh uh research and uh that that we are uh that we are doing how this uh system of joint procurement and uh potentially uh pre-agreements between member states uh could could be established it's not an easy task as you can understand but on the other hand the the historical moment is probably uh one of the most convincing uh for europe and for european member states to try to put aside you know um uh the the national interest towards uh a common good so uh I believe that something will be achieved in this direction at European level that it will be the right moment to uh really uh make a step forward in uh the implementation of uh solidarity when it comes to energy resources in Europe well in the end as a conclusion we see that uh acceleration of uh the uptake of green energy is pretty much the answer on the medium and long term all over the place in Europe yes it is um it is and it shouldn't be forgotten even in these difficult very hard times uh we shouldn't uh uh turn our heads uh from the the good uh results we have achieved in uh making uh our european energy system more and more uh green and more and more sustainable so this Something to be always uh kept in mind. Um, also, I don't think that there is uh a clear contradiction with the measures that are currently being discussed because if on one side we have to ensure security of supply, we are also um aware that uh real uh independence from energy independence for for Europe can be achieved in the long term only via uh internal generation and therefore a generation of uh clean energy.

SPEAKER_02 44:35

Great. Um we should uh because the time is pressing now, we should refer as well uh to another policy brief that you co-signed, and that's related to taxonomy. And it's basically taxonomy and natural gas. It's called a fact-based approach to drive sustainable solutions. Uh the issues that I proposed to you to discuss was the first one that uh bothered quite a lot the uh the civil society in Europe. It's the issue related to the uh delegated act from uh January 2022 this year. And the big problem was the lack of public consultation. And even in the course that we had with you, we basically talked about this thing uh obsessively, especially from my part. Uh, did you did you find that that delegated act suffered of uh lack of consultation? So it didn't have the democratic twist that was needed.

SPEAKER_00 45:44

I'm not in the position to uh reply to this question, as I haven't really followed the the whole um process, the whole regulatory process. Usually um it's I mean it really depends. There are uh different processes in European legislation, some do involve extensive consultations, others do not. And when uh consultations, extensive consultation is not uh envisaged is usually for reasons of um um necessity, of uh lack of time. Uh of course, uh I understand uh your point that uh it would be of course much better to make sure that there is uh an extensive uh consultative process, particularly on topics that are of maximum interest and have the maximum impact on uh particularly on citizens. In the course, we we talked, if I remember correctly, about the approval of network codes, and there we did have an extensive consultation. Oh, yes, yes, yes, we did. We we just talked and discussed, uh, I think very actively about how it could be improved, and of course, there's always a space for improvement. Um, in this specific situation of the delegated acts of the uh sustainable taxonomy, I know that in some cases uh consultation, public consultation is not foreseen. I know in this case, for example, there was uh an expert uh um a group of experts uh which provided recommendations and they and they were uh published for a certain period of time, and therefore they were uh potentially um open to consultation. But I'm not sure to what extent the this consultation and these initiatives were were formalized. Um, regardless of this and um concentrating on our policy brief, um, I think what we wanted to uh say with that policy brief is that uh in some cases, um uh while looking at uh clean forms of uh of energy and in the final attempt to of course making the energy mix more sustainable for some countries, uh gas is of course is a better option than uh, for example, coal. So we know that gas is uh already a better uh better um source of uh of energy in terms of uh uh CO2 emissions than, for example, coal, which is still largely utilized in some parts of Europe. So with the taxonomy, we just wanted to make sure that this option is not completely excluded because in some cases it could uh facilitate, accelerate uh the transition of that particular country or market uh towards uh towards decarbonization. I know it sounds paradoxical, but it is it is the case on in in some specific uh countries. Uh obviously, this doesn't mean that uh gas is uh one of the cleanest options. We do have much cleaner options than gas, but we have to make sure that there is uh an assessment of the market conditions. Uh, so that you know we we make sure that we achieve uh the right targets, decarbonizing, uh reducing CO2 emissions in a in a shorter uh time frame than it would take to the same market to go through uh to make a too big jump towards, I don't know, um wind or uh or uh or solar. Uh and and with and with smaller results. So that's the thing. The the policy brief uh really insisted on uh the fact that uh even gas, which seems to be um a non-a non-clean option, sometimes could be considered in some specific cases as a cleaner option uh if the target is to accelerate the transition. So that's that's the uh that's the point. Uh but I did uh perhaps you um referred also to another policy brief of mine on taxonomy, which was uh uh perhaps more theoretical, but where I tried to make a classification um of uh uh clean uh gases. And as you might uh have noticed, uh I insisted on uh um on an important point, which is um in order to consider uh certain gas clean, uh it's not only important to consider the CO2 uh emissions abatement, but also the other greenhouse gases uh abatement uh and also such as methane, just to name one, and uh also uh the uh how I mean the feedstock that is used to produce this gas. So uh by um combining these parameters, you really have a complete idea of what uh of how clean a certain gas is. There are some gases that appear to be clean, particularly in the name, but they are it they they are not eventually. So um nothing against them, but I think it's important when you want to inform efficiently and correctly those who will utilize this uh these gases or those who want to invest in these types of gases, uh, that you make sure they understand how sustainable um they really are. And uh we have seen, on the other hand, the commission has taken a uh a very um convinced, I think, path towards um classifying gases based on CO2 emissions. That's what we have seen in the CO2 emissions abatement. So, this is what we have seen in the uh latest uh hydrogen and the carbonized gas markets package uh published in December. But the definition of low carbon gas and renewable gas is still not complete. So we are all waiting now for this uh famous delegated act, uh, which should be published by 2024, where the commission plans to uh clarify better what um what uh what we mean by life cycle assessment, so where the assessment of uh CO2 abatement starts and uh and ends, um, and also what um how this uh famous threshold uh to uh to to be used, uh threshold of uh minus 70 percent uh reduction of uh greenhouse gases emissions, how this is actually calculated and how it should be measured.

SPEAKER_02 52:42

I I hope we're gonna have a consultation period longer than a week to that delegated act.

SPEAKER_00 52:48

Um I don't know. There is time until 2024 uh to publish this delegated act. Uh, I what I hope instead is that uh it will come sooner than 2024 because uh it is very important. These definitions have been lacking for a few years now, and it's not really now time to take a decision in order to give certainty to uh investors but to anyone working in this sector to understand what we can really call uh renewable gas, what we cannot call renewable gas, and what we can consider as a sufficiently low carbon gas to foster the um uh decarbonization of the energy system.

SPEAKER_02 53:36

What but my only critique to this was like um it was really the fact that um the European acts, so the whole normative framework wasn't unitary in this sense. That uh on one hand we have uh the methane plage at the UN, in which the EU is part of, and then we have the uh methane regulation that comes up with uh well, as weak as it is, but it tries to take seriously into consideration fugitive emissions of methane, and then uh we have the taxonomy which leads us to something schizophrenic in the sense that uh uh these requirements is are not really fact-based in the sense that we just do not know. I mean, we simply do not know the reduction of greenhouse gases that is being provided by this. So uh as an environmentalist, I would say just go straight to alternative sources of energy and that's it.

SPEAKER_00 54:40

But uh for methane regulation, you're right. It's a different uh um, it's a separate uh ether, let's say. So, and also we have to take into account that uh the attention uh to methane emissions is much more recent than the attention to uh CO2 emissions abatement and to um and also there are some uh huge differences in uh um in the way uh CO2 is emitted and managed. We have the ETS, the emissions trading scheme, for example, which has been addressing this for for many years now. Uh whereas methane is still well, it's something which uh caught the attention, the global attention, I would say, only a few years ago, and still there are huge problems concerning uh detection and measurement. Uh, it's very difficult to uh uh understand where there are, for example, leakages of methane in the across the gas, uh the gas uh value and delivery chain. Um, so that would be the first uh issue to be addressed, something we do not have in CO2, for example, in CO2 emissions. Um so uh it's it's a slightly different uh scope. And uh um yes, I would say it is a subject which at the moment is treated uh separately for at least a number of good reasons. Of course, we are talking about two uh faces of the same coin, and we can't address one without thinking about the other. So eventually we will need to uh address them simultaneously and to integrate more and more the uh the debate on these topics um because we are still talking about polluting uh the environment and uh um and greenhouse gases emissions in general. So this is one thing. Uh regarding the schizophrenia in uh the taxonomy, I partly agree. It has it that's how it looks, uh, I would say from from outside, particularly. Um well, taxonomy is uh is a debate which started in the uh regulatory forum in Madrid already um four years ago. Um, so that's why I say it's now probably time to come up with uh an agreed, um finally agreed uh taxonomy for the classification of gases. Uh at the same time, while uh these discussions were taking place at regulatory and policy level, um, there were some steps uh being made in the uh taxonomy for sustainable finance, uh, which again has a different flavor. Here we are talking about uh suggestions for clean investments. That's what the sustainable finance taxonomy is about, making sure that investments can take place in uh the right, let's say, form of uh uh of energy. So, of course, one should inspire the other. At the same time, I agree with you. At some point, we should come to an agreed, possibly one-only taxonomy, which tells us exactly uh which gases are clean, which are less clean, which are not clean, and how uh and which ones are um considered uh for investments in sustainable finance and which are not. That's that will be the final target. Hopefully, we will get there soon.

SPEAKER_02 58:17

And it's also the final conclusion of our dialogue today. Um, I have to thank you so much for your for your presence here, and I'm sure we're gonna hear each other in the near future. Thanks again, and goodbye.

SPEAKER_00 58:39

Thank you, thank you very much.