Net-Zero Dialogue｜Marco Alverà
Date：2022-01-06
Source: China-Europe-America Wechat Official Account
(Click to Watch Video)
CEO, SNAM, Marco Alverà's Speech
Good morning. I would like to thank the organizers and strategic partners of the China-Europe-America Net-Zero Transition Platform for inviting me to participate in this important event and I extend a special thanks to Mr. David Gosset, a long-time friend of Snam.
The axis of this event connecting Europe, the United States and China is crucial if we are to reach net zero on time and importantly to stay within the 1.5-degree warming target for the planet.
The outcomes of the COP 26 in Glasgow have shown us that we still have a window, that window is closing. We're at the very limit but we can still get there. To do that we need all countries to be on board. Cooperation will be key, especially among these countries that together account for around 50% of global GDP and global CO2 emissions.
There's also a strong potential for collaboration between Europe and China on the energy front, in particular on natural gas. Both Europe and China are buying big volumes of natural gas in the winter when the prices are very high. What we need to do in Europe and in China is to build more storage, so that we can buy the gas in the summer when the prices are lower, and take the gas out of the storage in the winter.
This would lower prices and would create more solidarity and greater security of supply. But the good news is that the storage sites that we can build today for natural gas can be used for hydrogen or for CO2 storage in the future, therefore greatly contributing to the effort to get to net zero. I therefore wish the best of today's important sessions, confident that through dialogue like events that are being advanced today we can really strengthen the paths forward towards a net-zero world.
Before we go further, let me just spend a few words on what Snam is. We are by far the largest European gas infrastructure company. We are also the largest global independent gas storage business with about 3.5% of global market share when it comes to natural gas storage.
We're also a very strong advocate for the energy transition. We are among the first to start blending hydrogen in our existing infrastructure, showing that we can transport up to 100% hydrogen in 99% of our existing infrastructure, and also showing that we can store 100% hydrogen in our existing natural gas storage sites. We've been active both in China and the United States. We've opened our office in China already in 2018 and have maintained a local presence there throughout also these challenging times.
Originally we are from Italy where our founder Enrico Mattei started the company 80 years ago, really to be a pioneer in what was then the gas revolution, and we're trying to revive that spirit and that tradition being equally pioneers in what is an expected hydrogen revolution.
On the race to zero, I believe there are many things that are moving in the right direction and finally I have reasons to be optimistic. After this year, both at the G20 in Rome and then at the COP 26 in Glasgow, we have achieved commitments to get to zero emissions by countries representing 90% of today's global emission. The importance of having the US back in the table cannot be overstated. The difference between having a target and not having one is everything. And only with a net-zero target we can begin to really think about the hard-to-abate sectors.
China, very importantly, also has a target to reach zero and has a target to peak the CO2 emissions before 2030, which is very important. We can only stay below 1.5 degrees if we get enough action done within this decade. The United States and China also pledged between themselves to boost climate cooperation to make all of this happen. So I think net zero is now still on the table, but it will only stay at the table if we can get enough projects built between now and the next COP that will be held in almost a year.
Second point is that we now have the hundred billion of year commitment of contribution from the developed economies to the developing economies, which will help transition in the countries that have less access to capital. And thirdly, on finance there's a big commitment, Mark Carney launched a new initiative called GFANZ that is now worth an incredible 130 trillion dollars of pledges to contribute balance sheets between now and 2050 to meet net-zero goals.
So we have 150 trillion dollars of new infrastructure that has to be built, we have 130 trillion of capital are ready committed or ready to be invested in this. What we're now missing is what's in between, the real new energy projects that will deliver a system which is more resilient, more reliable, much cleaner, and also cheaper than today's sometimes dysfunctional energy systems.
In this context, the role of hydrogen is becoming increasingly important. What has emerged very explicitly in this year's meetings is that now we have a consensus that we will need a lot of hydrogen to get to net zero. Hydrogen will be essential to transport sun and wind over long distances, shorter than those over which we transport natural gas today but still longer than the distances where we transport electrons.
So hydrogen will be that perfect molecule that allows us to move the sun of the desert and bring that sun into a factory, into a ship, into a truck. Hydrogen will also be the ideal solution to take the sun of when it's sunny, either during the day or during the sunny season, and keep that hydrogen underground for use when the sun is not shining or the wind is not blowing. Hydrogen can be used as a straight swap for many fossil fuels in the hard-to-abate sectors: industry heavy, transport, and possibly into winter heating as well.
All this also at the same time becoming cheaper than many of the current fossil fuels already. The costs are falling very fast. They are now expected to reach 25 dollars per MWH by 2030. Just to put that into perspective, we are today paying gas more than 100 dollars per MWH, both in Europe and in China. The cost will continue to fall further.
There's now commitment from the departments of energy from the green hydrogen catapult of which Snam is a founding member together with a Chinese company, Vision, and a Saudi company, Aqua, a Danish company, Orsted, Yara, Iberdrola and other world leaders including Fortescue from Australia. We have committed to making hydrogen already in the next five years as cheap as 50 dollars a kilo.
And we now have Bloomberg saying it will get to almost 15 dollars per MWH by 2050. So we have a trajectory of 50 dollars a MWH before 2026, 25 dollars a MWH before 2030, going all the way down to 15 dollars per MWH by 2050.
These numbers are very important again, today we're paying natural gas 100 dollars per MWH. So all this is to say that hydrogen can run together with biomethane, together with other low-carbon gases, hydrogen can be green, can be blue, if the right CCS is applied. And hydrogen can reach between 15 and 25 percent of a fully decarbonized energy mix, and this is very important, we will need to build the infrastructure for all of this.
That infrastructure will be I say forever infrastructure this will be, infrastructure that will last for many, many centuries to come. Once we connect the sun of a desert or the wind of an ocean to a factory or to a shipping board, that connection is almost a permanent infinite duration connection.
In Snam we are really committed to this, we're working very hard, but I still think that what is missing as I mentioned are all these projects that we need to develop and we need to develop some breakthrough projects already in the next coming months.
So that companies that have the people, the equipment, the project management skills like Snam can really play a big role in this. China is racing fast in this hydrogen revolution. Sinopec is building the largest solar power plant in the world in Xinjiang and another 30 projects are being developed throughout the country and also in Mongolia.
So at Snam, we are fully committed to getting to net zero ourselves by 2040.We're fully committed to helping our country Italy, our region Europe, but also working very closely with China and with the US to really make net zero a real possibility.
In particular in China as I mentioned we have an office, we're in close touch with the local authorities and with big state-owned enterprises as well as entrepreneurial companies to really push forward on this agenda to deliver cheaper, greener, and more sustainable and resilient energy systems in the future.
Thank you.
