UK Gas Policy – Fuelling or Failing the Future?
A day ahead of the publication of the UK Government’s Energy Bill and just a week before its equally eagerly-anticipated Gas Strategy was to be unveiled, FTI Consulting hosted a breakfast briefing to assess the health of the UK gas industry and analyse the likely implications of these policies. Would they fuel or fail the future?
Tom Bergin, a former oil broker turned author and energy industry and corporate strategy reporter for Reuters, chaired a panel of industry and policy experts.
Audience guests included representatives from organisations including Ofgem, Oil & Gas UK Centrica, British Gas, EDF Energy, BG Group, Clifford Chance and Lloyds.
Soap Opera Sexy
In setting the scene, Tom Bergin noted that Seventies TV favourite Dallas was the very embodiment of the oil industry. Gas, also a crucial energy source at the time, “just wasn’t sexy”. Fast forward some thirty five years and the Ewings are back on our screens but this time their economic fortunes rest upon the exploitation of gas reserves. Gas has become headline news worldwide. And the UK, noted Tim Yeo MP, Chairman of the House of Commons Energy & Climate Change Select Committee, continues to enjoy a better position than many in Europe thanks to its proximity and good relations with Norway, a reliable and friendly supplier. But with energy policy striving to tackle the issues of security of supply, climate change and affordability, he welcomed new sources and a changing role for UK gas. The possibility of significant shale reserves and the expediency of investment in new gas-fired electricity generation represent good news for the UK.
Short-Term Certainty, Long-Term Uncertainty
Yeo explained that continued and vigorous debate over the UK’s commitment to carbon reduction targets post-2020 will prove fundamental, while uncertainty over the viability of carbon capture and storage technology raises big questions as to how long-lived unabated gas-fired power stations can be.
Nevertheless, gas has a crucial role to play in filling the UK’s generation capacity gap and minimising the competitive disadvantage of higher energy prices in a way that measures to increase competition in the wholesale and retail markets perhaps cannot.