Paris — Shell CEO Ben van Beurden is set to warn a major conference Tuesday that the energy industry must guard against the development of a coal/renewables-based energy mix at the expense of natural gas.
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Speaking at the opening day of the World Gas Conference in Paris, van Beurden is expected to say that a failure to properly price carbon dioxide emissions is allowing coal to maintain or grow its share in the energy mix alongside renewables, at the expense of cleaner-burning gas.
A coal/renewables mix can already be seen in European countries such as Germany and could spread to Japan, he argues, according to a section of the speech released earlier Tuesday.
"Key gas and LNG markets have ... failed to create carbon pricing systems that lead to a switch from coal to gas in power generation," the prepared speech says.
"In Europe, gas-fired power-plants have been mothballed or decommissioned over the last few years ... from a short-term financial perspective, coal-fired power has been cheaper than gas."
But, "the emergence of a coal-plus-renewables energy system could see emissions in countries like Germany either reducing too slowly or even go up."
Van Beurden warns that such systems could develop in Asia too.
In Japan, he says, "we also see generous subsidies for renewables, the removal of regulatory obstacles to coal-fired plants, and uncertainty about the future of nuclear power after Fukushima. This, and the lack of a carbon pricing mechanism, sets the stage for a coal-plus-renewables future."
Coal produces around twice the emissions of carbon dioxide per unit of electricity generated compared to natural gas.
But if the carbon price is low, generators may not have an incentive to switch from coal to gas when gas prices are higher.
"These developments in two major gas and LNG markets -- Europe and northeast Asia -- again show us that we cannot take it for granted that gas will play an important role in tomorrow's world," van Beurden said in the prepared remarks.
On Monday, six oil and gas majors made a joint call for world leaders to introduce effective carbon pricing systems.
Shell, BG Group, BP, Eni, Statoil and Total made the call ahead of the COP21 Climate Change talks in Paris at the end of this year.
The World Gas Conference is a major industry event that takes place every three years, attracting industry leaders and government figures, as well as thousands of delegates.
It was last held in Kuala Lumpur, Malaysia, in 2012.