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Fuel switch underrated
By Catrinus J. Jepma
Could natural gas be the transition fuel that will guide the world to a stage where carbon-intensive fossil fuels will no longer dominate primary energy supply? Some claim that it could, for which they have a number of strong arguments. To start with, there will simply be more natural gas available than its main ‘competitor’ oil: a review by IPCC shows that although identified reserves of coal and gas are about the same, it is expected that conventional gas resources remaining to be discovered are about four times as large as for oil. This would suggest that the market share of gas will gradually increase at the expense of oil, and indeed projections by the World Energy Council* seem to confirm that view: the share of gas in primary energy is scheduled to increase from 21% now to 22-32% in 2040. In a similar vein, IEA* projects a 2030 natural gas market share of about 25% (av. growth 2.3%).
Second, both in terms of GHG emissions and local environmental pollution, gas is cleaner than oil and coal. Switching from coal and oil to natural gas thus generates a huge, long-term environmental benefit. Although it is difficult to precisely calculate what the mitigation impact of an instant switch from coal/oil to gas would be (this depends on the efficiency rates of the plants, use of co-generation, etc.), still some indications can be given. For instance, the carbon content of natural gas is only 60 percent of that of coal (per unit of primary energy content) and with state-of-the-art natural gas turbines only 30% (see University of Illinois, 2002*).
It is no surprise that a number of JI/CDM projects intend to switch from coal/oil to natural gas and receive GHG emission reduction credits in return. The use of natural gas in (public) transport also becomes increasingly popular because of its contribution to a cleaner local environment. Should you wish to compare the use of both fuels yourself, just go to Buenos Aires or Delhi and you will smell the difference that compressed natural gas (CNG) car engines make. Although on a worldwide scale there are only about 3 m cars with CNG-fuelled engines (about 0.5% of all cars worldwide), this number will most likely increase once governments provide clarity about their fiscal long-term position (in terms of incentives for a fuel switch in transport).
Third, natural gas does not seem to have such clear disadvantages (perceived or real) as all other energy sources have: coal is too polluting, nuclear energy too risky, and renewables too expensive. Natural gas, instead, is not very polluting, not risky, and not expensive. Therefore, natural gas may well be the winning fuel for the next decade and increase its present market share in primary energy use of 21% to levels in the order of magnitude of 22-32% by 2040 (see above).
Is there a chance that this development may not take place? Yes, there is. Firstly, the gas market becomes increasingly international, simply because for most regions import dependence is projected to increase. The rapidly increasing volumes of internationally traded gas need to be transported and, irrespective of whether transport takes place via LNG tankers or the grid, this requires a massive investment effort, either in new pipelines, or in LNG liquefraction, tanker and terminal equipment. Secondly, the decision making process related to such investments – we are talking millions – is not easy, because interference by regulators tend to making investments sometimes considerably less attractive. Thirdly, the market liberalisation process makes it increasingly difficult to get a firm long-term perspective on transport needs. Finally, international grid connections usually involve various countries with usually not well-coordinated, let alone integrated, energy policy regimes.
On top of that, according to IEA, 55% of proven gas reserves is located in just three countries, Russia, Qatar and Iran, which are not exactly the most stable regions in the world. Moreover, such a concentration of reserves gives you the flavor of a potential cartel, which is also not conducive to investment (note, however, that there are rumours that a very substantial gasfield which has recently been discovered east of India, may change this picture).
Nevertheless, the role of gas is going to be crucial for a post-Kyoto regime. Just to illustrate with help of ballparc figures: given the emission values for gas, oil, and coal of, respectively, 0.64, 0.84 and 1.08 tC/toe, and given their shares in primary energy (in toe) of about 20%, 35% and 25%, respectively, theoretically a complete fossil fuel switch towards natural gas in industrialised countries reduces Annex I emissions by about 18%, more than three times the -5.2% Kyoto target! Even a 10% switch towards gas would therefore already have a massive abatement impact.
This is why it seems to make sense for the global climate policy community to carefully observe how the role of natural gas will develop. It is especially interesting to see how the International Gas Union IGU (www.igu.org) - little known outside the gas industry but potentially one of the most powerful players in the energy world – is preparing itself for the future role of gas in the world.
Catrinus J. Jepma
Chief editor
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