Illustration: Aïda Amer/Axios

In touting Europe’s just-released economic recovery plan whose core features clean energy, top government officials there are walking a fine line on the role of natural gas.

Why it matters: Europe is at the leading edge of a global debate on the fate of natural gas, the cleanest fossil fuel that nonetheless still emits carbon dioxide, as the world tries to drastically cut carbon and other heat-trapping emissions.

“There is no plan to phase out gas over the next 10 years. For the foreseeable future, gas will remain an important energy source for the European Union.”
— Ditte Juul-Jørgensen, director general for energy of the European Commission, at a (virtual) Atlantic Council event Thursday

The big picture: Natural gas emits half the CO2 when burned compared to coal, but its primary component is methane, which can leak and is a far more potent greenhouse gas than carbon.

  • Environmentalists around the world have increasingly opposed natural gas, even though it demonstrably reduces emissions when displacing coal, because in the long-term it doesn’t reduce emissions to the level scientists say is necessary.

Catch up fast: The European Commission proposed earlier this week an $825 billion package of policies aimed at helping reinvigorate the continent’s economy as it recovers from the pandemic.

One level deeper: Natural gas, which accounts for about a third of the European Union’s energy consumption, is not penalized in the proposal. Oil and gas companies could actually benefit because the plan directs billions of dollars for technologies capturing carbon and producing hydrogen for energy, according to Ronan Palmer, director of clean energy at E3G, a European environmental think tank.

  • That’s because most hydrogen used today comes from natural gas, which emits carbon. The EU’s recovery plan focuses on what’s called “green hydrogen."
  • This kind of hydrogen comes “from water with electrolysis, an energy-intensive but carbon-free process if powered by renewable electricity,” which is prohibitively expensive, per this Reuters article.
  • Any use of green hydrogen will likely need to first use natural gas — and its infrastructure — to make hydrogen, European government officials and other experts say.

The intrigue: The Atlantic Council’s event showcased the wide range of views.

  • Juul-Jørgensen appeared to downplay the European Union’s goal to be carbon neutral by 2050, when “the role of gas will be much smaller than it is today, but that’s 2050. That’s 30 years from now.”
  • As long as companies crack down on methane and emissions from other parts of the process, “we are going to be in a position to compete in the long-run,” said Chris Smith, senior vice president of policy, government and public affairs at Cheniere Energy, America’s biggest exporter of liquefied natural gas — a lot of it to Europe.
  • European Investment Bank economist Eugene Howard reminded everyone tuning in about the bank’s November announcement to stop funding fossil-fuel projects in two years. “When we talk about gas infrastructure, the energy lending policy made it quite clear we are phasing that out,” he said.

What we’re watching: The European Commission is hashing out the taxonomy governing sustainable financing. Debate is underway about to what degree natural gas and other hot-button energy types like nuclear get recognition for reducing emissions.

Go deeper: Natural gas is helping combat climate change--but not enough

Go deeper

Coronavirus pandemic zaps America's natural-gas export boom

Reproduced from EIA with IHS Markit data; Chart: Axios Visuals

After the U.S. exported a record amount of liquefied natural gas in late March, the coronavirus pandemic — paired with warm weather — cut that amount by more than half in June, according to IHS Markit data.

Why it matters: Politically, it's a blow to President Trump’s energy agenda. Economically, it's contributing to job losses and project delays in the oil-and-gas industry, which is now a significant part of the economy.

Big Oil's transatlantic divide on climate change policy

Reproduced from Goldman Sachs Investment Research; Chart: Axios Visuals

Big Oil's transatlantic split on climate change is really on display of late, with a couple of recent reports highlighting the differences.

Driving the news: "Royal Dutch Shell will announce a major restructuring by the end of the year as the energy company prepares to accelerate its shift towards low-carbon, CEO Ben van Beurden told employees," Reuters reports.

Column / Harder Line

Supreme Court unleashing power over pipelines, natural gas

Illustration: Eniola Odetunde/Axios

A decade of battles against pipelines proposed to crisscross the country is arriving at the Supreme Court.

Driving the news: The court ruled last week on the first such high-profile case, and two other actions also on pipelines are pending before the justices in decisions whose impacts could be far-reaching.