Gas Networks Ireland Speech to the Joint Oireachtas Committee on Transport and Communications

Transcription

1 Gas Networks Ireland Speech to the Joint Oireachtas Committee on Transport and Communications 1. Mr Chairman, Committee Members, thank you for inviting us here today to talk to you about Gas Networks Ireland s plan to maximise the utilisation of the gas network and in particular to outline to you the very real benefits to Ireland of developing natural gas in the transport sector. My name is Liam O Sullivan, I m the Managing Director of Gas Networks Ireland and I am joined by my colleagues Mr. Padraic O Connell, Head of Regulation and Corporate Services, Mr. Denis O Sullivan, Head of Commercial, and Ms Edwina Nyhan, Head of Finance. 2. Before I outline our plans in more detail let me first give you some brief background information about natural gas in Ireland. Natural gas is available in over 160 population centres in 19 counties throughout the country. Approximately 650,000 Irish homes and 23,000 multinational and Irish businesses depend on natural gas for their energy needs. Natural gas is an ideal partner for renewable energy providing the flexibility and effective backup needed to compensate for the intermittence of wind or solar power generation. Natural gas burns more cleanly than other hydrocarbons, producing up to 30% less carbon dioxide than oil and about 45% less than coal, making natural gas the ideal choice to help Ireland transition to a low carbon future. 3. Gas Networks Ireland, cognisant of the environmental challenges associated with global warming and the imminent publication of the Government s White Paper, has devised a strategy to help Ireland achieve its objectives in this regard. Core to this plan are three main elements: i. The development of a market for natural gas as a transport fuel; ii. Switching existing oil users near the gas network to natural gas; and iii. The introduction of renewable gas into the network. These activities combined will bring a series of benefits to Ireland as a country including lower emissions, improved security of supply and lower energy costs for Irish consumers. 4. While there are a number of topics we could discuss here today, we believe the focus of this meeting should be on Compressed Natural Gas (CNG) as a transport fuel. CNG is a cleaner, cheaper alternative than oil and is already a proven technology. CNG represents a great opportunity for Ireland and for fleet operators in the transport sector. It is of note that Ireland is already behind the curve in utilisation of CNG as a transport fuel. There is strong growth in CNG across Europe with over 1.8m CNG vehicles in the EU and about 18 million worldwide. 5. In a nutshell, what do we want to do? We want to develop a fuelling infrastructure to support the development of a viable CNG market in the transport sector consisting of about 70 filling stations around the country. Why do we want to do this? Currently commercial vehicles using diesel account for 3% (or about 80,000) of the vehicles on Irish roads but 20% of total energy used and 30% of total transport emissions. If these vehicles were converted to CNG the benefits would include cheaper fuel for fleet operators, lower air pollution, and reduced noise pollution. Lower transportation costs could translate into lower public transport fares for the Irish public. In addition, the higher utilisation of the gas network would also ultimately benefit all gas users through lower tariffs and end user prices. How do we plan to do this? We are here today to outline our plans but it is important to stress at the 1

2 outset that we need the necessary regulatory, policy and funding support to ensure this happens. 6. Ireland s transport sector faces a series of challenges including emission reduction, security of supply and cost competitiveness. We believe introducing CNG into the transport sector here is a key step in addressing these challenges. CNG is ideal for community fleets such as buses, local authority vehicles, and delivery trucks as well as Heavy Goods Vehicles (HGV) fleets. CNG vehicles emit 22% less CO2 than similar vehicles running on diesel and CNG also delivers fuel cost savings of up to 35% for fleet operators. For example converting 50% of the national fleet of buses and 50% of the national fleet of HGV trucks (about 5,000 buses and 10,000 trucks) to CNG will result in the fuel cost savings for the Irish economy of 524m per annum over diesel and emission savings of 165,000t CO2 per annum or 2,000,000t CO2 per annum if renewable gas were used. 7. On a practical level how does CNG work? CNG vehicles can be purchased from many leading vehicle manufacturers and cost approximately 10% more than a conventional diesel truck. A CNG vehicle can be refuelled in five minutes at a service station similar to a diesel vehicle. Importantly we see CNG working in partnership with Electric Vehicles and not competing with them. Electric vehicles make sense for the private/family car market while CNG is the ideal, indeed only viable alternative for fleet operators (for trucks and buses) a perfect synergy. 8. What have we done to date? Gas Networks Ireland has been working on the development of CNG in Ireland over the past number of years. Ireland s first fast-fill CNG station was completed at our office in Cork last year and we introduced five CNG Volkswagen Caddys to the company s fleet. Using our own CNG Caddy, a round trip Cork/Dublin costs 35, whereas the same trip costs 50 (depending on efficiency) for a comparable 2 litre diesel van. This is as a result of an approximate natural gas price of 0.79c per litre equivalent compared to diesel at 1.19 per litre. The range of the Caddy using CNG is 650 kms per fill so there is no need to refuel for a Cork/Dublin round trip. The 2014 budget applied a welcome favourable excise treatment for CNG, with the application of the minimum level of excise duty on natural gas as a transport fuel, as well as a commitment that this will remain in place for eight years. We have carried out a number of very successful trials to date with Bus Éireann and some major fleet operators. We are also working with a number of businesses to convert their fleets to CNG. 9. What do we need to do next? The EU requires Ireland to develop a national policy framework to deploy a CNG refuelling infrastructure by Gas Networks Ireland is ideally placed to develop this refuelling network and to ensure Ireland complies with the EU Directive. We want to roll-out a national network of Fast Fill Stations - 27 stations initially, building up to 70 stations over time across the country. Gas Networks Ireland has targeted 3 station openings in Government funding and cross-departmental support is critical to the success of the roll-out of this infrastructure. Similar to EVs we need to incentivise fleet operators to convert from diesel vehicles to CNG for all major fleets of HGV trucks and public transport buses as CNG vehicles typically cost 10% more than an equivalent diesel vehicle. A VRT and motor tax treatment should also be implemented to recognise low emission vehicles (similar to EVs). 2

3 10. In addition to developing CNG, Ireland needs to develop a renewable gas infrastructure that will facilitate the development of an indigenous energy source as part of its overall energy mix well into the future. Renewable gas can be readily harvested from food waste and agricultural residue. This gas can then be injected into the gas network or it can be used independently as a fuel for heating, transport or power generation. If this renewable gas were directed to transport through CNG, we would also benefit from the 20% lower carbon dioxide emissions versus diesel. Renewable gas is a key resource for the future, it is already a proven technology and many other countries in Europe are pursuing the same long-term strategy. 11. I hope the foregoing has provided some useful information to the Committee. I would like to thank the Chairman and the Committee again for giving us the opportunity to explain Gas Networks Ireland s plans and the huge benefits we see in developing natural gas for the transport sector. With the right policy and investment supports these natural gas initiatives combined offer fantastic potential benefits for Ireland. In summary, we see the benefits as a significant reduction in CO2 emissions, energy savings for connected households and businesses, increased utilisation of the network thereby reducing tariffs for all gas customers, meeting the requirements of multinational and indigenous companies for renewable energy and provision of a cost competitive advantage in commercial transport. 12. We are happy to take questions from Committee Members. 3

4 Further Information about Gas Networks Ireland: 1. Gas Networks Ireland is the business division of Ervia that owns, builds and maintains the natural gas network in Ireland and connects all customers to the network. Ervia is the commercial semi-state multi-utility with responsibility for the delivery of gas and water infrastructure and services in Ireland. Gas Networks Ireland is a progressive, trusted and responsible gas infrastructure company with a strong customer focus and commercial ethos that contributes to Ireland s social and economic progress. Gas Networks Ireland ensures the safe and reliable delivery of natural gas to our customers and we continually advance the utilisation of the gas network for the benefit of Ireland. Gas Networks Ireland is a regulated network utility, regulated under licence by the Commission for Energy Regulation (CER). Our gas network is one of the most modern in Europe with over 13,000 kilometres of steel and polyethylene pipeline. 2. Gas Networks Ireland has an excellent record in delivering critical infrastructure projects for Ireland as the gas network owner and operator, with network construction, maintenance and operation experience in the Irish, Northern Irish and UK markets. We have a proven track record of delivering major sub-sea interconnector, transmission and distribution projects. The transmission system is linked to the UK and European gas markets through two Interconnector pipelines with Scotland. There are a number of energy companies competing in the Irish gas market and Gas Networks Ireland provides non-discriminatory access to the gas network to all of these companies who in turn use the network to supply gas to consumers. 3. Safety is a core value for the company and is central to all of Gas Networks Ireland activities. We are continuously improving our safety systems and approach. We run several annual public safety awareness campaigns to promote gas safety issues to the public including our 24-Hour Gas Emergency Service, Dial-Before-You-Dig and Carbon Monoxide awareness. Gas safety is regulated by the CER which has established a natural gas safety regulatory framework and Gas Networks Ireland is subject to ongoing audit and inspection by the CER under this framework. We report quarterly to the CER on a comprehensive range of safety performance indicators to verify that all operations are in compliance with the safety framework. 4. For decades natural gas has played a vital role in Ireland s energy mix and in Ireland s social and economic progress, currently accounting for 29% of Ireland s Total Primary Energy Requirements (TPER). Natural gas is also a critical component for Ireland s electricity generation, with 44% of the country s annual electricity produced from natural gas. Gas Networks Ireland believes that the benefits that natural gas can deliver for Ireland, in terms of emission reduction, increasing competitiveness and sustaining security of supply, have not been fully realised. With modest investment in a number of key areas, natural gas can play an even more significant role in Ireland s energy and environmental policies and in the country s economic development. Natural gas represents 15% of Ireland s Final Energy Consumption, which is a measure of the energy delivered to energy consumers in the economy. This is well below the European average of 24%. Ireland is probably over-reliant on oil at 57% of our Final Energy Consumption compared to 39% in Europe. Switching from oil to gas will not only reduce Ireland s oil dependency but will also decrease CO2 emissions since gas produces roughly one third fewer carbon emissions than oil. 4

5 5. Switching households that are already close to the gas network, from oil to natural gas would result in saving of 200m/a on imported energy costs and a reduction of 200,000t/a in CO2 emissions. 700,000 households in Ireland burn oil for heating. 300,000 of these households are in urban areas with a gas network, with 195,000 only 15 meters from the network. The cost saving to individual households of converting from oil to gas is in the order of 30% and energy efficiency increased by 10%. 6. Natural gas is a trusted, proven fuel source with an existing reliable infrastructure that has been heavily invested in by the state over the years. Gas can play a key role in helping the government achieve its energy targets now and in supporting its decarbonised future energy plans. In addition natural gas can continue to play a key role in the economic development of the country. Many key industries depend on natural gas and gas availability is a key criteria for FDI companies when they are deciding where to invest. 7. Gas Networks Ireland believes that it is important to invest in renewable gas technologies to ensure sustainable supplies of renewable gas for the future. Renewable gas is key for the future of the gas network as the country transitions to a low carbon economy and we are committed to the commencement and growth of renewable gas injection on our grid. We are actively engaging with the CER, the Irish Bioenergy industry and relevant Government Departments to develop the appropriate mechanisms/framework to harvest this opportunity. The current industry plan is to develop a number of demonstrator sites over the coming months. With the right investment renewable gas has the potential to satisfy over 30% of Ireland s gas demand by 2030, reducing the country s reliance on imported fuels, providing Ireland with a renewable indigenous fuel source and providing a solution for Ireland s waste management problem. Renewable gas is proven and is significantly advanced and available in comparable countries such as UK, France, Sweden and Finland. 8. Replacing 20% of Ireland s natural gas demand with renewable gas would reduce emissions by 2,160,000tCO2/a, meet the demands from industry for a renewable alternative and generate up to 5,000 sustainable local jobs. Ireland has adequate resources to convert 50% of its natural gas demand to renewable gas. 5