There’s been a notable development in the energy world over the last few months.The umbrella term ‘fossil fuels’ is breaking apart, with a growing number of groups seeking to talk about them as distinct energy sources – oil, gas, and coal – which should be treated differently.
The headlines have come from the divestment movement, which has notched up a string of successes in calling for fossil fuel divestment. In the last couple of weeks a couple of high profile cases have announced they are divesting from coal specifically. The biggest is Norway’s sovereign wealth fund, and in Britain especially, it was great to see the Church of England make a divestment announcement. Abandoning coal represents a balanced divestment strategy, as HSBC has been recommending. They will drop the most damaging of the fossil fuels while still enjoying the dividends from some of the world’s most profitable corporations.
The extractive industry itself is beginning to resent the umbrella term of ‘fossil fuels’ too. Perhaps noting the bad press around coal, and worried about the potential of stranded assets, they are seeking to distance it from the others. In particular, they are keen to draw a distinction between coal as a dirty fuel, and gas as a clean one. Last week an alliance of six big companies wrote to the UN and to the Financial Times, requesting talks about setting up carbon pricing calling for a switch from coal to gas. Shell’s CEO summed up the mood by singing the praises of gas as “a low-carbon, clean-burning ally to renewables such as solar and wind.”
Politicians have been making this point too, mainly in the US, where the boom in shale gas has lowered prices and pushed out coal. President Obama has gas at the heart of his climate strategy. David Cameron’s Conservatives also see gas a clean form of energy, and are pushing hard for a shale industry in the UK.
What are we to make of this singling out of coal? On the whole, it’s positive. Gas power stations have half the emissions of coal, so it’s a big improvement. Cheap gas has already had an impact in the UK in the past, and in the US more recently – Bloomberg New Energy Finance predict a major drop in US emissions for 2015 as coal power stations are retired. If the industry is running with a switch away from coal, that will have an impact. It’s still self serving – the oil and gas majors are targeting the coal companies’ share of energy generation – but it’s certainly a step forward from the talk of ‘clean coal’ that dominated discussions until pretty recently.
However, it is important that gas is viewed as a bridge fuel, and not the final destination for sustainable energy. Obama seems to have this right, and deliberately refers to shale gas as a bridge fuel. That seems to be missing from Britain’s strategy, where fracking has been promoted at the same time as government support for renewable energy investment has stalled or been dismissed as ‘green tape’.
Gas used to phase out coal, and as a temporary solution while renewable energy expands, is positive for the climate. But gas is not compatible with a safe climate in the long term, and over-investment in gas could lock us into high carbon infrastructure. Cheap gas doesn’t just displace coal. It also changes the economics of nuclear power and renewables. Without support for clean and sustainable energy, it could eventually push emissions up rather than down. Renewable energy will eventually be cheaper than all of the fossil fuels, but anything that delays that moment makes climate targets harder to reach.
In short, the turn away from coal is something to celebrate, but it must be a turn towards renewable energy, with gas as an intermediate solution.