6th IEA-IEF-OPEC Symposium on Gas and Coal Market Outlooks

Background

Despite current gas and coal prices being well below 2022 peaks, today the world continues to be in its first truly global energy crisis which is already significantly affecting energy flows and prices and is set to have profound and long-lasting impacts on trade patterns. In many countries, governments have stepped in to shield consumers from high prices, especially households but also industries and businesses. Despite these measures, record-high energy prices have contributed to rising inflation with implications for economic growth and household wealth. The consequences have been most pronounced in the price-sensitive emerging and developing economies, slowing, or even reversing progress in increasing energy access and development in some of the poorest countries. Despite this global crisis, governments and companies around the world keep pushing ahead on a clean and sustainable energy transition to net zero carbon emissions, aligned with the objectives of the Paris Agreement to keep the global temperature increase well below 2°C, with efforts to pursue 1.5°C. Achieving this transition to net zero requires fast innovation and technology deployment, supported by policy frameworks and investment.

The role of coal and gas in different sectors and regions must be integrated into a long-term strategy rather than decided under the pressure of a short-term crisis. Despite the temporary increase of coal burning in Europe, coal consumption in most of the developed economies will decline, particularly in power generation, with hard-to-abate sectors, such as cement or steel, next to be targeted. Whereas energy efficiency and deployment of renewables is a prerequisite for rapid decarbonization, it is insufficient. Carbon capture and utilization technologies is one of the critical solutions needed to decarbonize energy systems but is lagging behind other low-carbon energy technologies. The development of low-emission fuels, such as ammonia or hydrogen, is key to providing flexibility to the system while optimizing system development as they can be used in conventional infrastructure after some retrofits. Indeed, the value of low-emission gases, including biogas or biomethane, goes well beyond the electricity sector. However, in order to unlock the potential of low-emission gases, there is need for a regulatory framework, and investment in technology and infrastructure.

The International Energy Agency (IEA), the International Energy Forum (IEF) and the Organisation of the Petroleum Exporting Countries (OPEC) have a long history of collaboration in joint events and more generally, exchange of views, in order to contribute to look for solutions in the global energy and climate debate.

The Symposium on Gas and Coal Market Outlooks, hosted by the IEA, was jointly organized by the IEA, the IEF and the OPEC in response to a call from the G20 leaders’ Summit (Cannes, 2011) for continued dialogue between producers and consumers on short-, medium- and long-term outlooks and forecasts for oil, gas and coal. It also built on related work undertaken by the IEF since the 12th IEF International Energy Forum Ministerial (Cancun, 2010).

The Sixth Symposium, held under Chatham House Rule, was structured to encourage participation of all attendees after each set of presentations. As shown in the agenda, it was organized in three sessions, covering short-term developments in gas and coal markets, medium- and long-term developments in gas and coal markets and the role of technology and infrastructure in scaling up low-emission gases. Presentations were short in order to allow time for discussion and participation from the audience. Along with the agenda, we offered a series of questions, which assisted all participants in framing the discussion.

Discussion Questions

Session 1: Short-Term Developments in Gas and Coal Markets

Managing the Energy Crisis to Ensure Access and Affordability

After reaching high levels in October 2021, natural gas and coal prices reached historical prices in 2022. While the crisis has accelerated the need to enhance energy efficiency, increase renewable capacity, diversify energy sources, and fast-track hydrogen solutions, governments are also protecting consumers from rising energy prices that are having an impact on everyday life. Although indirectly affected by the crisis, some non-OECD countries are also experiencing energy shortages due to redirected natural gas flows to Europe with their governments facing greater hurdles to shield consumers from price spikes. Meanwhile, soaring wholesale gas prices are encouraging more utilities to switch to carbon-heavy coal to generate electricity in the short term, putting real energy transitions at risk.

• How can government policies help households, simultaneously raise revenue, diversify supply and reduce demand in the short term? What is the right balance?
• What type of regional and international collaboration is possible to manage the crisis, in both OECD and non-OECD countries?
• How can governments maintain the momentum for energy transitions in the short term?

Session 2: Medium- and Long-Term Developments in Gas and Coal Markets

Rethinking Transitions to Achieve Climate and Sustainable Development Goals

The worst energy crisis since WWII highlights energy security as a global priority and market stability as a desired outcome with lessons for the future. In the long term, market stability will depend on how governments and policymakers approach the energy transition to avoid future supply and price shocks. How to get a secure energy transition and universal energy access and what role gas and coal can play in the different time frames are challenges with many aspects to be considered. Unexpected geopolitical developments can then further exacerbate the situation. A holistic transitional framework that prioritizes energy security with a central role for clean technologies such as CCUS will help ensure adequate energy supply, protect consumers during crises and keep climate goals within reach.

• Will the role of natural gas and coal change as part of a new approach towards such a transition? What are the lessons learned from the energy crisis? What does a revised framework look like?
• How will a transition “rethink” impact investment in coal and natural gas infrastructure and storage?
• What kind of reforms to the regulatory and permitting landscape are needed as more LNG is required to fulfil the needs of both OECD and non-OECD countries?

Session 3: Thematic Session

The Role of Policy Regulation, Technology and Infrastructure Solutions in Scaling-up Low-Emission Gases

Low-carbon gases are today at the intersection of energy supply security and decarbonization efforts. Besides contributing to lower-emission pathways, domestically produced low-carbon gases enhance market resilience and can alleviate energy market volatility by providing additional sources of energy in a tight energy market. The scale-up of low-emission gases such as hydrogen, biogas and biomethane will require innovative technologies such as such as CCUS, BECCS and a scaling-up of electrolyzers and the development of international trade between resource-rich suppliers and emerging import markets. The EU targets a supply of 20 million tons of green hydrogen by 2030 with 10 million tons produced in the EU – agreed within a binding commitment – and a further 10 million tons imported. Globally, an estimated 12 million tons of low-emission hydrogen per year could be exported by 2030 based on project announcements. However, more than 80 percent of this volume still has no off taker defined, potentially hindering final investment decisions. Firming up demand for hydrogen and other zero carbon gases and producer-consumer dialogue and collaboration on least cost technology pathways and infrastructure requirements along value chains will be critical to meeting energy security and decarbonization goals.

• What is the medium-term supply and demand outlook for low-emission gases such as hydrogen, biogas and biomethane and how can technology expedite the process?
• How can producers and consumers enable international trade and investment in low-emission gases?
• What policy and regulatory measures, business models and infrastructure solutions will enable global energy stakeholders to scale trade and investment in low-emission gases such as hydrogen?

Key Documents

• Agenda