Our project for the future
Long-term vision: "Enagás 2040"
Meeting the Paris Agreement targets for climate change limitation is a great challenge for the energy sector. As the producer of two-thirds of total greenhouse gas (GHG) emissions, the sector has to shift towards a more sustainable model of production, transformation and consumption. This move towards a low-emissions economy will affect all energy sectors (transport, industry, residential/commercial and electricity generation). Gas plays or may play a relevant part in all these sectors.
The European Union is at the forefront of international efforts to combat climate change. Consequently, the 2030 climate and energy framework adopted by the Council of the European Union in 2014 set a binding 2030 target for GHG emissions of at least 40% of 1990 levels, and set additional targets for 2030 in order to achieve at least 27% of energy from renewable sources in the final energy consumption and at least a 27% improvement in energy efficiency.
Additionally, the company has spent the last year working on the "Enagás 204" project with the aim of defining a long-term strategy that guarantees the future growth of Enagás in the context of energy transition, positioning us with a model of long-term sustainable growth, based on value creation for the company as a whole and for our shareholders.
For this purpose analysis of different energy scenarios was conducted not with the aim of predicting the future, but in order to anticipate possible technological and legal changes that may affect our business.
Enagás has spent the last year working on the "Enagás 2040" project with the aim of guaranteeing the future growth of the company in the context of energy transition
The modelling exercise allowed an estimation of the optimum energy mix to be estimated for each scenario, from the standpoint of its long-term technical and economic efficiency, while assessing its impact on the needs to develop gas infrastructures and the sensitivity of earnings to the main conditioning factors. The project saw participation both from experts in key Enagás divisions and external consultants.
The main conclusion drawn from this analysis was that in any plausible scenario, the natural gas chain will have an important contribution to make to energy consumption by the different sectors.
- Gas is and will continue to be the most competitive and clean source of energy to satisfy heating requirements and to guarantee the economic feasibility of local industry.
- Taking full advantage of the investments already made in stable and mature markets provides the necessary support and flexibility to ensure secure electricity supply, at the lowest cost, with a high penetration of renewables.
- In dynamic markets with great potential for growth in energy demand, gas is able to cover the growing need for modern energy services and the commitments to reduce emissions and for air quality while permitting the integration of renewable energies. For this to happen, these markets will require significant investments in gas infrastructure.
- Natural gas offers great potential for growth in the transport sector, mainly that of transporting goods by road and sea, by displacing polluting fuels that generate large amounts of SOx, NOx and particles.
The analysis of the different energy scenarios has led to the conclusion that the natural gas chain will have an important contribution to make to energy consumption by the different sectors
Nevertheless, the realisation of these positive perspectives for the gas infrastructure business will depend on a favourable economic and regulatory environment. We will need to be vigilant in the coming years and adapt to expected changes:
- Energy transition is a process in which different countries will progress in the decarbonation of their economies at different speeds, but one which will in any case require significant investments in energy infrastructures.
- The centre of gravity for gas infrastructures investment is shifting from Enagás’ traditional markets to new emerging markets.
- Regulations regarding air quality and local pollution may prove to be an important driver for energy transition while providing a clear opportunity for gas as it displaces more polluting fuels from the energy matrix.
The conclusions of the Enagás 2040 projects have led the company to adopt a series of actions in key areas in order to face the challenges posed by energy transition:
- Ongoing monitoring of the main early warning indicators identified to anticipate changes that may influence our core business.
- Demonstrating the environmental credentials of gas as a sustainable energy source and its advantages compared to other alternative fossil fuels.
- In stable or already served markets, which do not require significant expansion in supply capacity, promoting the use of existing gas infrastructure as a flexible safety net that is necessary for a gradually decarbonated supply, and the creation of a catalogue of innovative logistic services.
- Taking full advantage of the growth opportunities of our international subsidiaries in dynamic gas markets that require strong investments to cover their growing energy demands, or to adapt their flows in accordance with new upstream developments.
- Promoting innovation and corporate entrepreneurship in new growth areas within gas markets, and contemplating diversification of sources of growth in the longer term.