METHANE. Andris Piebalgs Interview

Andris Piebalgs is former European Commissioner for Energy (Barroso I) and for Development (Barroso II), currently with the prestigious Florence School of Regulation (European University Institute) in Fiesole, Italy. 

For what we were interested in this dialogue, it was  noteworthy that Piebalgs was the Chair of the International Methane Emissions Observatory (IMEO) Implementation Committee. We talked international politics of methane and the energy facet of the war in Ukraine.

Raul Cazan

Transcript

SPEAKER_01 0:00

EU always are relying on market forces, but not only inside EU, but also outside EU. And what Russia destroyed is definitely the build trust in global energy markets.

SPEAKER_00 0:20

And you're listening to another episode of the Two Celsius Podcast. I am Raul Kazan, and today I talked to the former commissioner for energy in the Barroso Commission, Andris Piebalgs. I had to interview him over the phone because he was cruising in his electric car on the coast of his native Latvia. I wanted him to talk about a paper that he wrote at the European Institute in Florence earlier this year. The name of the study is called Cost-Effective Decarbonization 2022. In short, we ranted against uh methane emissions, but we also talked about how Russia destroyed not only Ukraine, but trust in all them energy markets. You are the former Commissioner for Energy in the Faz Barroso Commission, Commissioner for Development Barroso Second. You are currently working with the prestigious Florence School of Regulation within the European University Institute in Fiesole, in Italy. And it is a true honor to have you with us today. Welcome.

SPEAKER_01 1:42

Yeah, it's my pleasure. So I really enjoy this conversation.

SPEAKER_00 1:47

Uh for what we are interested right now in our dialogue, it is massively noteworthy that you are um the chair of the International Methane Emissions Observatory, the IMEO. You're the in the implementation committee. Still are. Last year you were. I hope you still are.

SPEAKER_01 2:06

No, I am, I am. It is still uh there. So uh IMEO is one of the tools, global tools, uh, to achieve uh substantial greenhouse gas reduction, as methane is 20 times or more than 20 times more potent compared with CO2. And as a result, uh each uh ton of methane avoided is good for climate, but in many cases it makes also economic sense, especially for the gas prices that we have now. So avoidance of methane also provides a commodity to the to the market. Uh inside the energy sector, the emissions, at least inside the EU, are not relatively high. It's roughly 12, yeah, it's less than 10% of all methane emissions, but uh there are massive methane emissions from agriculture and also from the waste sector. And these could be saved uh by different uh feeding patterns uh and at the same time also better using biomethane. So I'm quite happy about the commission's ambition to increase biomethane uh target for 2030 to 35 BCM. It's definitely doable.

SPEAKER_00 3:26

Excellent. But let me get to my actual first question because you are also the advisor to the president of Latvia, your home country. Would you would you have advised uh Mr. Levitz, uh your president, to join the global methane pledge at the COP26 in Glasgow last year?

SPEAKER_01 3:44

Well, Latvia is a very, very conscious country, and so uh it's uh it's uh really is now very actively, at least politically, very much supporting all the climate-related initiatives. So I'm quite happy about my country's political uh political activities. I should not advise uh government to do more in pledges in participation. I think where government definitely should do more in practical implementations. That's where I would say now the focus should be. But what concerns uh global ambitions, Latvia is doing well, and I'm quite uh pleased with uh my country.

SPEAKER_00 4:25

But on the other hand, why are there so many Central and Eastern European states disinterested in signing the methane pledge? Because in in the end it was just a signature dropped on a piece of paper, I agree. But uh, and the EU is actually uh a co-signatory.

SPEAKER_01 4:43

Yeah, I think I think uh it's not necessarily a political stand. I I believe in many cases um uh if EU is joining me pledge, uh countries understand that they are part of it. So it's not not really that they are opposing because they could then oppose on EU level. And then there is something that I noticed uh in discussion with member countries EU, uh methane emissions is not so well understood. It sounds rather trivial one on methane emissions, 20 times more actually than CO2 emissions. But uh it's to get a message across the board that there is a potential, you need time. I I I can't explain it rationally, because for me it sounds like two times two, but it seems that in overall agenda meeting issue still you need to explain to people uh why it is necessary and also what the potential is in these savings, because in in these savings is there is a lot of money as well. So you invest money, but you are also get back some of that money. So, yeah, some educational work still needed uh inside the European Union. And it I would not divide East and West in this regard. I think all EU countries could do by far better on uh dealing with meat and emissions, particularly for from the waste and agricultural sectors.

SPEAKER_00 6:16

Okay, I agree. But Professor, I have to tell you something. Um, recently we we carried out a project with the clean air, clean um clean air uh task force, the CATF, and uh we carried out thermographic photography and filming only in Romania in our case. It's useless to say that uh over 90 percent of the sites covered were like a spaghetti strainer. Basically, there were numerous leaks of methane and probably other volatile organic compounds, and therefore the conclusion for us was pretty clear the methane fugitive emissions are a problem that essentially lies with the businesses. But let me tell you something positive about uh about this, and it came as a surprise. The companies did not try to hide these issues nor to prevent uh our thermophotography uh operators from carrying out their jobs. So, consequently, uh, you think the solution would be for companies to join the oil and gas methane partnership, the OGMP 2.0, wouldn't it?

SPEAKER_01 7:22

Yeah, I think it is definitely a huge step because uh when companies start properly measuring and accounting for uh methane emissions, it's immediately a huge improvement because the moment you understand that you are emitting, uh you are starting also to deal with this, with mitigation and uh programs of uh leak detection and repair, uh so-called LDAR program, is is is a key really to avoiding methane emissions. And I assume that uh until now a lot of companies said, well, we are dealing with methane emissions uh because of safety reasons, and it's that's true, but uh they never thought that leaks or minor leaks could be also happening through venting, or as you mentioned, also fugitive emissions, and the technology developed so strongly that it's rather easy to measure. So you can get uh can get a good understanding, but this will be promoted only if you have an incentive, or you are part of GMP that definitely is trying to reach a higher standard, or EU regulation will force you to do it. And EU regulation is coming, so uh Commissioner already made a proposal. Uh so there will be still some discussion uh with the member countries and also with the European Parliament. But in overall, uh we have now uh uh I would say I already said we have now, we will have a very robust uh uh framework for dealing with methane. Uh still there is a caveat, it's only energy sector. So it is uh uh oil, gas, and coal, and a lot of uh emissions also globally now happen from bioenergy sector as well. So war is a lot of agriculture and waste sectors. So so I would expect, and there have been also recent studies saying that nearly half of agriculture emissions could be avoided. It is there's there is new technologies that could be applied in agriculture, but also changing the people's habit. And now with also high uh energy prices, one message that everybody should pass through, and government should pass through, that first of all, try not to waste neither energy, neither any food, because if you do it, you actually do immense damage for the environment. Not just the products that you have well put in the garbage can and that's later land sometimes in landfill, but already by the energy and raw materials used to produce this product. So there is an enormous sense of education and behavior change. And is and because of high prices, we don't have too much time. So government should start each day really promoting resource and energy efficiency uh by fiscal incentives, but also by reminding people. Uh, people wear masks uh during the pandemics uh because government encouraged it. So not everybody liked it, but that happened. So the same is also for energy savings. And we started our conversation that I was locked in traffic jams. So uh high oil price and spirit price uh and uh petrol price has not changed the habits, as I see in my country. So we really need to do some binding measures as well, really to look that there is less cars, less consumption, cleaner environment, but at the end of the day, also better living condition for everybody. And that I think people need to really understand. And to understand this, government should promote this measure, this this message, because only in this way we can change society. We have achieved the point where consumer behavior decides a lot. If consumer behavior does not change, then uh supply will be there, and pollution also will be there uh one way or another. So we really need to have very conscious citizens and understanding what is what the stakes, what are the stakes of the whole thing.

SPEAKER_00 11:58

Right. Uh can I ask you what kind of a car you're driving right now?

SPEAKER_01 12:02

I have an electric car, so this I don't know, yeah. Yeah, so but uh well, I I also do not have very clean conscience because I I feed it from the grid, and uh in Latvia grid is only half a uh renewal, so that means yeah, now it's not not completely. I have not solar panels at the house, so I can't claim that I am really driving renewable electricity. Uh, half, yes, so this is good, but not another half isn't. So I don't qualify for for the standards that is being uh asked for renewable fuels at least 70 percent savings. So in my case, I would say it's less than 50 percent saving.

SPEAKER_00 12:51

Uh okay, but getting back to IMEO for uh for a little second, uh, we had a meeting with Dr. Ronald Coopers from UNEP and from IMEO, obviously, and he said something um um well very bluntly but also very amusingly. He says that uh what IMEO does or OGMP altogether isn't a corporate of a government activity altogether, it's about engineers basically fixing something. So he says that they're very focused on getting the to the people who need to get the tools and the motivation in their hands to do the actual fixing. And the great thing about engineers is that they like to fix things, so if you can motivate them, that's actually quite doable even on the short term.

SPEAKER_01 13:41

Well, engineers are always motivated, but I would say uh the society driving and EU discovered it is uh is finance and profit. And and as you know, this uh EU taxonomy on sustainable investments. I think that's where actually the biggest influence lies. Because each project needs money. So whatever operation you do and whatever engineer can do needs financial investment or remuneration or incentive. And that could be done definitely for bigger companies if the company's leadership and shareholders put sufficient attention to renewability or cleanness of the processes, and the banks that loan the money for running the business also take care of it. So I believe that engineering is important, no question about it, but it's not uh the decisive link. The decisive link is really corporate behavior and lending policies. That's really decides the success or failure.

SPEAKER_00 14:50

Uh, I want to get to your uh study that uh the cost-effective decarbonization study that was uh carried out earlier this year.

SPEAKER_01 14:59

Yeah, it was uh actually last year, and since then, so many things have changed. But uh yeah, please go ahead.

SPEAKER_00 15:07

Well, it it actually checks out because this is what a valuable study is. You see that even despite the fact that things are changing in terms of even geopolitics, everything there is pretty much valid. And you're saying that keeping energy affordable, secure, and competitive while aggressively pursuing decarbonization will be a very challenging thing. But um only yesterday I met with a political scientist, and he told me that uh all our policies should be more likely to be focused on informing the European taxpayers that um energy will be a very expensive service, as simple as that. And all fiscal and financial fixings that we try, many uh member states are trying to do right now are just ridiculous. So there is no silver bullet, no short-termism in this matter.

SPEAKER_01 16:00

Well, I would say uh I think that we will be challenging, no question. And when we wrote it, we thought the challenge would be not too difficult to master if you have the right approach to it. But now with uh with uh Russian aggression in Ukraine and Russian behavior and Russia destroying actually uh the global energy markets, the challenge grew higher as and related, especially for the part of the population that are not rich, that actually can't cover fully the energy bills. And in this respect, there is now more, I would say, more challenge to addressing two issues that we expected: extremely high and volatile bills. That I think is one challenge. And another thing that uh was seen as important but not so urgent is uh energy security, supply security, because EU energy supply in big part has been uh depending on Russia's uh suppor of supplies of hydrocarbons. And that's definitely completely destroyed, and we should understand that there will be no next Russia. And if I see the impact of energy efficiency policies that we have had since my time in office and renewable energy uh policy in place, then we saw that actually it helped us to avoid 10% more dependency. So, and a lot of member countries, because of renewables and because of energy efficiency policies, decrease their dependencies. But it was not to the scale that it was needed. And now what we need really to build is uh independent energy system, plus also try to make bills payable uh for the part of the most vulnerable population. And additionally, what we also have as a challenge is the prices, energy prices for industries, for their competitiveness. And they are, I think, are not easy to fix. We need really to look uh on many issues, but in fundamentally, we know that the tools that we have are rather limited. Energy efficiency definitely is the first tool in energy savings, and second tool is renewable energy. Uh and uh to help all this is definitely well-connected European energy grid, because that I think is uh is a precondition that we don't build extremely expensive uh systems. So that would lead me to the thing that it's not wrong that governments respond to price hikes. It's they do it in a rather chaotic way, I agree, but it's not wrong in itself. I think where we nearly need to work very closely together, it is rebuilding systems that is renewable, sustainable, plus it's also corresponds to energy independence requirements. So it is it is high order that we need to address. And uh we also know from the time of our study that to speak about blue hydrogen at this stage is more theoretical issue. It's not, it's really not uh not uh not really an issue at this stage because the prices are so high that separating carbon and storing it is definitely by far less efficient than just build a renewable energy power platform and feed uh to produce green hydrogen, it's by far by half far simpler option. So it is it's clearly that they have been substantial change uh uh with the current situation, and we should understand that it will not pass in a couple of months' time. The experts are well at least united for one and a half year, but uh most of them would also say that well, 2024 is still under under uh risk. Uh so so that's clear that we should address issues related to price spikes. But it's also very clear that it has nothing to do with energy transition. Actually, energy transition helped us uh both with affordability and with security.

SPEAKER_00 20:46

But uh in your research, you're saying that switching from natural gas to hydrogen uh could be expected to be uh uncompetitive until after 2030, even even with uh high carbon prices.

SPEAKER_01 21:02

Yeah, that's uh that's correct, but um, today uh the prices are uh natural gas prices are high. Uh so we took at that stage of the natural gas because there are two components actually that decide this competitiveness. One factor is very much related with carbon price, so carbon price definitely helps renewable hydrogen to be competitive, but also natural gas price, and we could never imagine at that time that natural price to go to the levels that we they are now. And that immediately makes a completely different situation with uh renewable hydrogen. But in my opinion, uh we should not wait until the price goes down for uh natural gas. We should start really to invest in renewable hydrogen because renewable hydrogen is basically the answer that we have, and the only answer that we have for decarbonized. Aviation or decarbonizing industry. So we have no other option. So that means that support should go really in this direction more fast than we expected, because we expected rather well gradual growth of renewable hydrogen as the prices of carbon will grow higher. Now things completely have changed. And I think what else have changed, and this is something that still needs to be discussed, uh, EU always are relying on market forces. But market forces means that you rely on market forces not only inside the EU, but also outside the EU. And what Russia destroyed is definitely the trust in global energy markets, because they started to manipulate the commodity that has been believed generally respond to the market rules. And what they are doing now, for example, also cutting 40% supply to Germany via Nord Stream 2 or half of supply only to uh to the uh supply to Italy. They claim that it's technical reasons, and German governments that usually are quite tolerant to Gaspond statements, this time clearly said no, it is politically motivated. And I fully agree there is nothing to relate to the technical problems that they have in the pipeline. Nothing uh justifies what it is, it's just political will to put uh your partner, former partner, or former former commodity buyer just on your his knees to to just to profit politically, uh, and that's that's the whole reason. And the I think this we need to take into account that the trust in global markets does will not recover. Um, yeah, if ever, I would say. I I I don't expect fast recovery, but I believe I think uh it will never recover as it used to be.

SPEAKER_00 24:08

My home country, Romania, uh, aims right now at what he what politicians call energy independence. Probably this is a sovereignist version of uh energy security. And uh they they call for investments in deepening gas exploitation and building more gas infrastructure, even though they call it hydrogen ready. Uh, does this make sense from a cost-effectiveness perspective? Why would a member state claim energy independence in Europe?

SPEAKER_01 24:40

Well, uh I I think that yeah, we you it would be better to look on the whole EU. But politically, I think uh I I could buy that each country says it because until now, what means uh energy independence, they mean that they will address more to the to the details, the energy supplies, um developments in the energy market. So I I would say this in itself is not worrying consequence. I think worrying consequence is that instead of rebuilding renewables, countries to put too much attention towards gas. I agree that there is some links that need to be in place because of solidarity arrangements, because of risks that some countries have. But uh generally calling more for natural gas investments is counterproductive because, first of all, they have been abandoned not because they have been resources, cheap resources, but because they have been very expensive resources. Second, climate policy definitely calls for investments in uh in uh in renewables. And anyhow, if you produce natural gas, it's still global commodities. You still could sell somewhere else. So it does not necessarily guarantee energy independence. Energy independence guarantee, first of all, investments in renewables, second is uh is uh interconnection with EU other countries. So if there is a free energy flow from the places where power price is uh uh lower to the places where it's higher, it will function. And in somewhere I could see your point that is it is really destroying the whole EU's approach on it. And I would say no. Uh, it's more rhetoric than actual movement away from EU market. And no, I think not in action, not in action, but at some stage all talks could be dangerous, and then then definitely we get a situation where uh EU citizens will be served with extremely expensive energy supply. So so that's that's for sure. Uh what I believe nowadays we should really try to use all the renewable resources we have. We should well interconnect uh these places where we can produce uh um cheaply renewable energy, and I assume Romania is quite good for PVs uh to other parts of the world, uh of the European Union. That's what is a key. So and I think investments in areas that are uh I would say onshore is is definitely very, very profitable at this stage because uh uh that is a huge asset because some countries have uh um not so many resources, I would mean, uh, from the point of view of land that could be used to install renewables installations, and also some parts are uh having less actually uh sun or less wind. So that I believe is crucial now to use this moment for for renewables and energy system move very fast towards electrification where it can. Because electrification is not obsession by somebody, but it has two very important features that give this advantage. One, when you produce electricity and use, you are extremely efficient because uh with petrol, we we use only roughly 30% of energy content there. So with electricity, we use all the hundred. So that I think is the first advantage. But the second advantage of the electricity is that um uh that you could uh produce it from wind and solar that today are the cheapest sources of electricity. So you you make like a double gain. One, you are extremely efficient, and second, you produce electricity from the cheapest sources of energy. There is a caveat. Definitely, she says the system is more challenging to uh to manage because you need to have uh intermittency, you need to keep the reserves, you need really to be smart in the whole system. But why we should be afraid of our intellectual capabilities to master the system? So I would say that for me is quite obvious that electrification and renewable electricity should be now advanced very, very strongly because we have uh unprecedented challenges now and in front of us.

SPEAKER_00 29:48

Right. Um fantastic. Uh, just a last question. Uh, could you tell me shortly, are we going to have significant amounts of gas in our European energy mix in 2050?

SPEAKER_01 30:03

No, no. Uh well, we could have some gas, we would need some gas. So it depends on the level of electrification. So by by in principle, we will have roughly 40% should be clean molecules or even more. And this will be synthetic fuels based from the renewable hydrogen or biomethane. There will be also some applications that we would need uh gas to produce ammonia for agriculture and also for uh maritime. Uh, there will be some industrial applications of gas, but the question is not about uh how to say gas in as a form of uh of uh energy source. Gas will be coming from electricity or from our circularity, I mean using uh uh waste, using also in some cases more naturally producing biomass for biofuels and for biogas. So we will have gas, but it will be different type of gas. It will not be any more fossil gas. Uh so I don't see uh by current events of fossil gas uh around too much uh uh with oil, it could be slightly different, but then we would need really to find a way how to decarbonize or uh or compensate for CO2 that uh will be emitted in some sectors, but it will be renewable gases that will be used in 2050, not fossil gas.

SPEAKER_00 31:56

Uh Commissioner Pierbergs, it's been a pleasure. Please um please excuse me for pulling you over. Uh I guess uh No, no, it's uh no problem.

SPEAKER_01 32:06

No, no. I think we try to find the most workable solution for for today. So no no worries. Thanks uh uh for having me and pleasure talking to you.

SPEAKER_00 32:17

Okay, you can pursue your road towards the beautiful Latvian city of Jurma.

SPEAKER_01 32:22

Yeah, I will. I will through traffic jams. I hope I will manage.

SPEAKER_00 32:26

Thank you again. Goodbye.

SPEAKER_01 32:28

Thank you, bye.