Long live gas

Long live gas

Simona Manna
Blue gold will play a major role in supplying the world's energy for at least the next 40 years. What about climate change? If the U.S. really were to exit the Paris Agreement, the consequences would be serious. Interview with Ambassador Richard Morningstar, Director of the Atlantic Council Global Energy Center

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Gas is "cleaner than many traditional fuels and will be a reserve for new renewables-based systems." Richard Morningstar, Director of the Global Energy Center at the Atlantic Council and former Ambassador of the United States for the Republic of Azerbaijan and, previously, at the European Union, has no doubts about the role of blue gold in the future of energy. In this wide-ranging interview with Oil, Morningstar analyzes the key issues related to gas, including infrastructure, U.S.-Europe relations, pipelines, American shale, climate change, and potential new directions under U.S. President Donald Trump’s incoming administration.

Does natural gas offer the best transition to a renewables-based energy system?

I believe that natural gas is an important energy source for transitioning towards a low-carbon emissions future. Gas is cleaner than other forms of energy and will constitute a reserve for new renewables-based systems. It will take time before the energy sector and energy production are entirely based on clean energy sources. In the meantime, we have to rely heavily on gas, while continuing to work on other resources that enable us to reduce carbon emissions and have a clean energy industry, in addition to a clean economy as a whole.

Richard L. Morningstar

Richard L. Morningstar

Global Energy Center

He is the founding Director and Chairman of the Global Energy Center at the Atlantic Council. He served as the U.S. Ambassador to the Republic of Azerbaijan from July 2012 to August 2014. Prior to his appointment, since April 2009, he was the Secretary of State's special envoy for Eurasian energy. From June 1999 to September 2001, he served as United States Ambassador to the European Union. Prior to this, Morningstar served as special adviser to the President and Secretary of State for Caspian Basin energy diplomacy.

Some experts, however, are concerned that the creation of infrastructure for transporting gas could mean gas will not be a transition source but rather become an entrenched, long-term source. Is this a reasonable worry?

I understand the reasons why there is concern that new gas infrastructure could remain in place even after gas is no longer needed. However, I do not agree. Gas will be needed for a long time, certainly for the next 30 or 40 years, and I believe that some new infrastructure could make a real difference. We are not dealing with a zero-sum game. Gas must continue to play a significant role alongside other resources such as solar and wind power that are available only on an intermittent basis. We must also remember that in Europe, there is a lot of infrastructure for importing gas, but better interconnections are necessary to transport gas from one place to another within Europe. And Europe must make sure it has the infrastructure to be resilient.  For these reasons, Europe must continue to develop its gas sector.

How are current relations between the European Union and the United States? And what does the future portend for the production and transport of gas following the election of Donald Trump?

I believe that President-Elect Trump has made it clear that he wishes to support the export of natural gas from the United States, and I think this is positive. Therefore, cooperation between the U.S. and E.U. will be lasting. We must also admit that the simple fact of having natural gas available from the United States will force other competing countries, such as Russia, to maintain a low-pricing structure for energy.

The US promises to become one of the main LNG exporters. Will this in any way change relations with the European Union and Russia? Do you think that the US will one day replace Russia as Europe's gas supplier?

I do not believe that the United States will ever fully replace Russia, which will continue to be a major gas supplier for Europe. However, as I said, the availability of gas from the United States will help to ensure the presence of liquidity on the market, to maintain an energy structure with favorable prices and to ensure adequate competition in the industry.

What do you think about the project involving the doubling of Nord Stream? What are the prospects for the Southern Corridor?

Nord Stream 2 is a rather complicated issue. There are commercial, legal and political implications, and I believe that these are very important. I also think that building a new gas pipeline is not a good signal after what has happened in the Crimea and Eastern Ukraine. The issue is dividing Europe and will increase dependence on Russian gas. I do not believe Nord Stream 2 is necessary. However, I need to clarify that even if Nord Stream 2 is constructed, the current European policy, which provides for the integration of the gas market, the creation of other potential sources of gas and the guarantee of competition from the United States and other countries could mitigate the problems resulting from Nord Stream 2. Again, it is essential to have a network of interconnections within Europe. Regarding the Southern Corridor, I believe it will be constructed, given that the project has now reached an advanced stage. I do not believe that the Turkish Stream gas pipeline will interfere with the Southern Corridor. Given relations between Turkey and Azerbaijan, I believe that Turkey will ensure that it will take place. I am optimistic about the prospects that Caspian gas will come to both Turkey and Europe.

Shale gas: is it still revolutionary? US producers seem to have overcome the price crisis and production has increased this year, yet the sector is still said to be facing difficult times.

There is no question that the development of shale gas in the United States has been a revolution. At the same time, however, we must recognize that there are ups and downs in the marketplace. The technology in the United States has improved dramatically. The situation in the gas market is still delicate, but I think that the United States will continue to be a major gas producer over the coming years.

What will the implication be of the entry into force of the Paris Agreement? Do you think these processes towards a low-carbon future, especially following Trump's selection, will act more as an accelerator or rather as a break?

You have raised a very important question. What will the effects be of Trump’s election? Before the elections, I would have said that the Paris Agreement definitely would be an accelerator; many countries have made commitments - which will be monitored - and they will work together to meet them. Now, I am concerned that if Trump’s administration withdraws the United States from the Agreement, this would have very serious effects. The United States is a major emitter of carbon. It has played a key role in the Paris negotiations and needs to continue to be one of the key players as the Agreement is implemented, from the standpoint of ensuring that countries meet their commitments and in helping lesser developed countries meet their commitments as well. If the United States leaves the Agreement, this will make it all the more difficult, but hopefully would not lead to defections from other countries. I also think that if the United States were to leave the Agreement, it would have a very negative effect on our overall conduct of foreign policy and that it will have repercussions on other areas. It will, therefore, be difficult for us to reach agreements on other issues with many of our partners and allies. I think there would be a real danger of the United States becoming isolated from a foreign policy standpoint. Hopefully, this won’t happen. I also think that companies need to encourage the new administration to stay with the Paris Agreement. The development of the green economy could provide a lot of jobs. If the United States withdraws from the Agreement, companies could have problems in dealing with other countries. I hope that the new administration will take a real hard, pragmatic look and stay with the Agreement.

See the OMC 2015 Special