Reflections on CERAWeek SnapLNG™ High performance

low-carbon liquefaction

We offer our clients SnapLNG™, an innovative modularized, standardized, and at-scale low-carbon solution that minimizes the total cost of ownership.

• Proprietary productized offering combining a compact modular design with standardized components and technology

• Developed by T.EN using Air Products technology

• Pre-engineered design taking advantage of digitalization

• Referenced and reliable processes and equipment for high efficiency, less OPEX and ultra-low emissions

• Accelerated time to market technipenergies.com

CERAWeek is one of the most preeminent global energy gatherings, and its biggest edition concluded last week in Houston.

With so many of the brightest minds and energy leaders gathered in one place to discuss the future of global energy, the conversations and outcomes are going to be significant. Hence, we decided to share some reflections on several emergent themes heard throughout the course of the conference.

The air at the event was buzzing with high problemsolving energy. That was partly owing to the energy crisis, which finally forced the typically high-level debate on energy transition into something that starts to include an operations discussion and much more pragmatism. People in the rooms were not just talking about the destination for the transition in three decades from now, many were now shifting the focus to how they can get there. Conversations about pledges and high-level roadmaps were being replaced with how to deliver, and that is highly reassuring. It is also becoming clear that energy companies are continually assessing, planning, and starting to implement decarbonisation pathways, and the major international energy companies are dedicating sizable portions of budget to the transition.

When, for the first time in decades, the developed world saw its energy security seriously compromised and entered a severe energy crisis, it was faced with a dose of reality knocking down some existing ideals. The energy crisis is demonstrating how deeply anchored the existing energy systems are in hydrocarbons, and it is challenging old assumptions about what and how quickly can substitute these resources. The supply shortage and price volatility for natural gas, resulted in another year of coal growth, significant industrial demand destruction, and economic downturns. As the crisis continues, the world still urgently needs to act to deliver more supply. At the same time LNG to Europe continues to be largely sourced in the spot-market (about 80%), and despite its experience last year, Europe has not added much in termcontracts to diversify its mix and reduce exposure to spot price volatility.

One of the unifying themes of the week’s high-level discussions was that the energy transition will be decided on the demand side. A short-term focus on discouraging supply of all hydrocarbons, including natural gas, as key decarbonisation action, while forgetting about demand, was a major contributor to the energy crisis we are in. Demand should be brought back into focus because industry’s key function is to respond to demand.

Aside from general conservation and efficiency measures, particularly in the developed world, there also needs to be a serious focus on the defining markets and customer needs for new low-carbon technologies – be it distributed generation, biomethane, hydrogen energy, or carbon capture and utilisation. Clear pricing signals and functioning markets are needed to direct investment in the right areas and for the consumers to signal their preferences. This need for crystallising markets and business cases to propel the transition forward came out clearly from the CERA discussions.

The right policy will also play a critically important role, and that was another major theme. The American Inflation Reduction Act or IRA has been exceptionally well-received by virtually all industry representatives across sectors and geographies, as it is viewed as a clear, comprehensive, and simple-toimplement tool for incentivising action and accelerating technology development at scale. One US Government representative described the current Administration’s approach to the energy transition and the IRA as: “we stopped asking the question, what do we need to shut down and started asking what we need to get built.” The US is also attempting a permitting revolution to make it easier to build energy projects, which was welcomed and talked about throughout the week.

For natural gas, there was significant recognition of its unique place amongst the other fossil fuels. Natural gas is abundantly available in resources, it is much cleaner than coal and oil, allowing to reduce emissions without compromising energy security today, while the decarbonisation technologies are being scaled. It plays a major role as a renewables’ integration resource, providing grid flexibility. It also lends itself as a vehicle for decarbonisation, using renewable natural gas, hydrogen, and carbon capture. Given that natural gas emits 50% less CO2 than coal in power generation, using carbon capture with natural gas is a lot more costattractive for example. Most key energy players already agree that it is an imperative transition fuel, but many stressed that it is also a destination fuel (in a bigger mix). This will be a debate to watch unfold for the coming years.

Finally, the need to refocus on emissions reduction – the main goal of the energy transition and of the Paris

Agreement – was perhaps the most important take-away from several conversations. This principle is particularly important ahead of COP28 in Abu Dhabi, which will feature the first global progress stocktake and will likely demonstrate just how far the reality diverged from the trajectory needed to reach 1.5

It is already known that the world is not on track, as emissions have increased again last year to reach another record, as reported by the IEA this month.

Arguably, this fixation on the inputs and on supply instead of the outcome was a big reason why, but it is not too late to course correct.

A successful energy transition is one that will deliver the amount of energy that the world needs with a low emissions profile, necessary to stay on the 1.5 trajectory. The fuel mix and other economy-wide actions that will get us there should be determined by the market, which can deliver the most efficient combination and meet the needs of customers. If such a market can transparently and succinctly capture the cost of emissions, while smart regulations are also in place to protect the public interest, then a secure and sustainable energy transition can be delivered.

The climate and transition debates are often anchored in the context of the developed world, forgetting that the world is not homogenous. That context is very different in Asia and Africa, where a lot more energy is still needed to continue to develop and to end energy poverty, and where the damage of climate change is already felt. South America has different needs and priorities than North America, and Eastern Europe will be different from West and South Europe still. The world will need a selection of diversified, cleaner, secure, affordable, and accessible energy options to meet the global challenge of secure transition, and the market is usually best to decide which solutions can deliver.

My concluding highlight from the week in Houston is that, when the world is attempting a complex energy transition at multiple levels simultaneously, and doing so at an unprecedented pace, ideological debates about individual fuels will not get it any closer to the goal of reduced emissions. The single focus should be on achieving economy-wide emissions reductions and creating the right conditions to achieve them with affordable clean solutions, which also match the needs of the customers and serve energy users.

Or, in short, keep it simple, focus on emissions.

Official Media Partner

Natural gas can continue to play its significant economic and environmental role in the global energy mix for decades to come, offering clean, secure, and affordable energy for global citizens.The extent to which the industry demonstrates and effectively communicates the key role of gas in a sustainable energy future, against the backdrop of a groundswell of anxiety about climate change, environmental, economic security, and political risks will determine theextent of its continuing success.

Gas Pathways is being developed with a view to becoming the authoritative, credible, and fact-based national and international communications platform amplifying the innovation agenda around gas energy –and gas energy infrastructure; demonstrating that the natural gas sector is focused about making affordable energy available to all, and about maximizing resiliency in energy delivery.