Portrait

The challenge – secure, sustainable and affordable energy

Maintaining a steady supply of affordable energy in years to come is one of the biggest challenges facing Europe. Energy is indispensable for economic growth and prosperity.

Oil and gas are an integral part of our everyday lives, and that is not about to change. The major technological breakthroughs of the 19th and 20th centuries, the emergence of the automotive and aviation industries, and the innovations in the chemical industry drove the rapid expansion in demand for fossil fuels and petrochemicals. The birth of the “petroleum age” in turn prompted technological advances, and made hydrocarbons the foundation of economic growth and prosperity. Coal dominated the European energy market up the middle of the 20th century, but was overtaken by oil in the 1960s and accounted for almost half of global energy consumption by the time of the second oil price shock in 1979. Today, oil and natural gas make up around 55 percent of world energy demand and meet more than 60 percent of Austria’s energy needs.

Surging energy demand

Global energy demand has more than doubled since 1970 due to rapid population growth and the industrialisation of the emerging market countries. Today Austria, too, uses much more energy than it did 40 years ago. Oil’s share of the energy mix in Austria has fallen from around 50 percent in 1970 to 38 percent today, while natural gas has made major inroads over the same period – it now accounts for 23 percent of total energy consumption compared with only 10 percent in 1970. Global gas demand is set to rise sharply in the next few decades, with non-OECD countries responsible for 80 percent of the increase. One-third is likely to be attributable to China alone. Russia, United States, China, Qatar and Australia the are expected to remain the world’s leading gas producers.

Natural gas - the energy source of the future

Expert opinion is unanimous that the search for new energy reserves will spread to all corners of the globe. Natural gas – by far the most environmentally friendly fossil fuel – is gaining in importance thanks to its suitability for a wide range of household, commercial and industrial uses, as well as its role in electricity generation. It is also extremely energy efficient and can be transported subsurface along existing pipeline networks. Most important of all, gas stands out for its storability. Gas is a key factor in security of supply, which is particularly vital to large industrial companies, and small and medium-sized businesses. Small wonder, then, that the International Energy Agency (IEA) speaks of a “golden age of gas”. Gas is also an ideal and essential back-up for renewables due to its ability to compensate for swings in electricity supply and demand. Revolutionary “power to gas” technology holds the key to affordable solar and wind energy transportation and storage, and thus to the constant availability of these energy sources. But power generation is only half of the story. It will soon be impossible to imagine heating without combined heat and power (CHP) plants, or personal transport without natural gas vehicles. With a range of applications that now rivals oil, natural gas fully deserves its reputation as the energy source of the future.a

Oil - the indispensable feedstock

While natural gas is set to inherit the mantle of oil as the main global energy source, there is no substitute for oil in large parts of industry. It will continue to be needed both as a fuel source and as a base material for the chemical industry. It is a valuable and indispensable ingredient in over 90 percent of all chemical products, including plastics, detergents, cosmetics and fertilisers. Since there is no “post-petroleum” age on the horizon, more efficient use of this precious resource is a must. The long-term upward trend in oil prices and increasingly heavy taxation will leave little alternative to improved oil use.

A bright future

Oil and gas will remain the dominant energy sources for a long time to come. They still form the backbone of energy supply around the world. There is still plenty of oil and gas in the ground, and indeed global reserves have never been higher. Modern technology and an improved understanding of reservoir characteristics mean that it is now possible to tap reserves that were previously considered commercially unrecoverable. In 1960 it was assumed that global oil reserves amounted to 30 billion tonnes and would run out in 38 years, but today the planet’s 234 billion tonnes of proven reserves are expected to last for 54 years, despite the steep rise in consumption that has taken place in the meantime.

Valuable energy on our doorstep

Austria’s oil and gas reserves play an important part in security of supply. Some seven percent of the oil and 17 percent of the gas required by Austria is produced domestically – a major gain for the national economy. Large investments in oil and gas exploration, production and storage also have a major economic impact. In the past few years RAG has pumped more than EUR 1 billion into the Austrian economy by building production systems and storage facilities. The latter are RAG’s response to one of the biggest challenges facing the energy sector: storability. Austria’s geology means it is predestined for a role as one of Europe’s energy storage leader. Relative to consumption, the country already has the largest gas storage capacity in Europe – and the figure will grow still further in the next few years.

EU energy strategy - the 20-20-20 targets

The European Union sees energy as one of the biggest challenges facing the continent. The EU’s climate and energy package, with its 20-20-20 targets, is aimed at putting Europe on a new, more sustainable and secure path. The prime objectives of these policies are reducing greenhouse gas emissions, improving energy efficiency and raising the share of renewables in the energy mix. Climate-friendly natural gas has a pivotal role to play in meeting these objectives.

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