The elephant, or should that be bear, in the room.

28th Feb 2022

 

Given how quickly things can escalate, I’m not confident that between me writing this and you reading it, things won’t have changed again. But let’s talk about Russia; everyone else is, for good reason. And let’s consider the implications for the energy world of recent events.

Firstly, the glaringly obvious. Market uncertainty surrounding an energy supply puts up prices. If that energy supply can be turned on and off, by an unstable trading partner, then sensible voices argue to look at alternatives. Those who are just anti-gas will jump on the bandwagon and argue to end the use of gas, because of the market volatility. That knee-jerk response, which I suspect will be sympathetically heard by consumers because of the political situation in Ukraine, should trigger UK Government action. But not what the anti-gas lobby want.

The Government should use recent events to fast-track decisions away from reliance on natural gas, and make clear that hydrogen is to be our gas of the future. Doing so now, sends a strong signal to the market about the future. All industry has ever asked for is market certainty.

In response, yes use our North Sea gas reserves as part of our transition to Net Zero and signal their longevity with the production of blue hydrogen. The sooner this starts the better, as Putin has shown us.

In sending that market signal about hydrogen, those countries resource rich in wind and solar will have a firm market to supply to, so they’ll start to generate this Net Zero gas. Those involved in UK power generation will also respond by installing more wind power, knowing that if demand for electricity isn’t there, then hydrogen production utilises the capacity. Gas storage facilities will be encouraged, knowing that as the UK is windy all year, not just in the winter, then seasonal storage is needed, knowing demand is there in the winter for heating.

Responding to the bear in the room will be on policy makers’ minds; let’s hope they see what positive response they can make. Geopolitically, if we help make the natural gas Russia has less valuable on the world stage, then this is the means to control any territorial ambitions that country has.

Best wishes, Mike Foster, CEO

Mike Foster

EUA's Chief Executive

 

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