The EU needs to classify gas as a “transition fuel” to green energy if it wants to cut the use of coal and meet its emissions targets, the chief executive of the Czech energy group EP Infrastructure has said.
The bloc is aiming to reduce its net greenhouse gas emissions to zero by 2050, and the European Commission is due to spell out next month how it will classify natural gas and nuclear energy during the transition to a greener economy.
Gary Mazzotti, chief executive of EP Infrastructure, which transports Russian gas to several European markets and is controlled by Czech billionaire Daniel Kretinsky’s EPH, said that for central Europe the only realistic way to move away from its historic reliance on coal was via gas.
“The longer you put off giving gas that transition [status], the longer you prolong the use of coal,” he said in an interview with the Financial Times.
The commission’s classification system will need to win the approval of a majority of EU states and the European parliament. Countries such as Poland have been pushing for gas to be recognised as a transitional fuel while the likes of France have demanded nuclear technology be assigned this label. A group of 150 NGOs have urged the commission not to award gas such a label.
However, Mazzotti said that for central Europe, there was no alternative to treating gas as a transitional fuel. “Ultimately, the French need nuclear to be classified as sustainable, and this part of the region needs gas to be sustainable if you want to achieve carbon neutrality,” he said, adding that the bloc also needed to ensure that adequate gas storage facilities and long-term contracts were in place.
Europe’s gas market has been in the spotlight in recent months as prices, which slumped last year as the pandemic hit, have spiralled, forcing some energy suppliers out of the market, and prompting concerns about supplies this winter.
Mazzotti said the surge in prices had been driven by a range of factors, ranging from a rebound in European demand as the pandemic eases, to a drop in European production and lower deliveries of LNG from the US.
Some market participants also believe that Russia has contributed to the surge in prices by limiting top-up sales to customers, in an effort to pressure EU regulators into approving its newly completed Nordstream 2 pipeline — which was fiercely opposed by the US and several countries in central Europe.
Mazzotti said this could be a factor, but that in the medium to long term, high gas prices did not help either consumers or suppliers, and could also slow down the green transition.
“Low [gas] prices encourage too much transition [away from coal] too quickly. And the high prices that we have right now encourage no transition and actually promote the extension of the life of coal,” he said.
“So there is a . . . balance which I would expect to come back into the market, some time after the first quarter of next year.”