“A power sector must be developed that is based largely on renewable sources, complemented by the rapid phasing out of coal and decarbonising gas.” – European Commission, December 2019
The European Commission’s recent ‘European Green Deal Communication’ is welcome news and recognition of the growing evidence that an accelerated decarbonisation of the energy system is critical to reach climate objectives. The document sets out increased ambitions for climate policy, targeting at least a 50% reduction of CO2 emissions (relative to 1990) by 2030, whilst at the same time acknowledging carbon leakage – something we believe is a critical step.
The report states that should ‘differences in levels of ambition’ worldwide persist, it will propose a carbon border adjustment mechanism, for selected sectors, to reduce the risk of carbon leakage. This would ensure that the price of imports reflect more accurately their carbon content.
If implemented successfully, this will give low-carbon national resources a competitive edge against their less efficient (more carbon intensive) counterparts, accelerating the energy transition and the race to the bottom (net-zero). This is welcome news for our initiative – Gas2Wire projects are the most effective means of decarbonising natural gas:
- Shared infrastructure costs for power transmission, accelerating the deployment of renewables.
- Combustion and CCS at the point of extraction, eliminating transport emissions and ‘shrinkage’.
The emissions cuts will apply to both the natural gas pre-combustion and CO2 post-combustion, both of which add further gains in energy efficiency. Once CCS technologies mature to a stage where post-combustion methods can capture 100% of emissions, Gas2Wire will be uniquely placed to deliver net-zero power from a fossil fuel.
The question is, whilst a carbon border adjustment mechanism would be welcome and sound in theory, how will each adjustment be determined and applied in practice?
Equally, in light of recent ‘progress’ with the digital services tax levy, how might other countries respond to such increases on their native companies’ exports?