Sun, 28 Nov 2021

MOSCOW, Russia: With surging natural gas prices leading again to the greater use of coal, TotalEnergies CEO Patrick Pouyanne highlighted the need to achieve stable prices, as lower gas prices will reduce reliance on higher-polluting coal.

In an interview with CNBC during a Russia Energy Week panel in Moscow, Pouyanne said the transition to cleaner energy has also created an imbalance in the market, stressing, "High pricing is not good news. Of course, immediately for my company results are better, but for customers, it is not."

"Replacing coal with gas is good for climate change, but to do that, we need to have a lower price. Coal today is king and is cheaper than all the other sources of energy," he added.

In Europe, the use of coal-produced electricity has increased, as European coal futures have more than doubled since the start of the year, while gas prices nearly quadrupled during the same period.

Pouyanne noted this is not merely a European gas crisis but is also a global one, caused by a "huge hike in demand for gas from China and Asia."

During the CNBC panel, BP CEO Bernard Looney stated, "I think that this crisis in Europe has reminded us that energy is part of the lifeblood of society and that energy use is only going in one direction, and that is upwards."

"At the end of the day, if supply goes away and demand does not change, that only has one consequence, and that is an escalation in price rises. Just simply correcting a supply-side issue without affecting demand will not result in a more stable system, it will result in a more volatile system," he added, in reference to the efforts of governments to reduce fossil fuel production and use.

Additionally, Looney said power shortages are also impacting households and businesses around Asia, forcing many factories to shut down and causing supply shortages.

Panelists noted that a transition to cleaner energy has created higher demand for gas, which is considered a cleaner fuel. Demand is further rebounding from the COVID-19 pandemic, as economies reopen and international travel resumes.

Energy price rises have also caused supply chain disruptions and a shipping container shortage, which both contributed to rapid inflation, said Pouyanne.

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