The Golden Age of Natural Gas - IEA Report
As supply and demandfactors increasingly point to a future in which natural gas plays a
greater role in the global energy mix, the International Energy
Agency (IEA) on Monday released a special report exploring the
potential for a “golden age” of gas.
The new report, part of the World Energy Outlook (WEO) 2011
series, examines the key factors that could result in a more
prominent role for natural gas in the global energy mix, and the
implications for other fuels, energy security and climate
change.
The report, titled, “Are We Entering a Golden Age of
Gas?” presents a scenario in which global use of gas rises by
more than 50% from 2010 levels and accounts for more than a quarter
of global energy demand by 2035.
However, the report also strikes a cautious note on the climate
benefits of such an expansion, noting that an increased share of
gas in the global energy mix is far from enough on its own to put
the world on a carbon emissions path consistent with a global
temperature rise of no more than 2 degrees Celsius.
Speaking at the launch of the report in London, IEA Executive
Director Nobuo Tanaka said, “We have seen remarkable developments
in natural gas markets in recent months. There is a strong
potential for gas to take on a larger role, but also for the global
gas market to become more diversified and therefore improve energy
security.”
Mr. Tanaka added that “while natural gas is the ‘cleanest’
fossil fuel, it is still a fossil fuel. Its increased use could
muscle out low-carbon fuels, such as renewables and nuclear -
particularly in the wake of the incident at Fukushima and the
likelihood of a reduced role for nuclear in some countries. An
expansion of gas use alone is no panacea for climate change,” he
said.
‘Golden Age of Gas’ Scenario
Recent developments have created considerable opportunities for
greater future use of natural gas globally, depending on the
interaction between economic and environmental factors and policy
interventions in the market. This report presents an illustrative
“high gas scenario” - the Golden Age of Gas Scenario - which
incorporates a combination of new factors that could support a more
positive future outlook for gas.
These include ample availability of gas (much of it
unconventional), which lowers average gas prices, implementation by
China of an ambitious policy for gas use, lower growth of nuclear
power and more use of natural gas in road-transport.
In the scenario, China’s natural gas demand alone rises from
about the level of Germany in 2010 to match that of the entire EU
in 2035. To meet the growth in demand, by 2035 annual gas
production must increase by 1.8 tcm, about three times the current
production of Russia.
Conventional natural gas will continue
to make up the greater part of global production, but
unconventional gas becomes increasingly important, meeting more
than 40% of the increase in demand.
Global natural gas resources are vast, widely dispersed
geographically and can help improve energy security. All major
geographical regions have recoverable natural gas resources equal
to at least 75 years of current consumption. However, timely and
successful development of these resources depends on a complex set
of factors, including government policy choices, technological
capability and market conditions.
Supply, Demand and Climate Impact
Unconventional gas resources are now estimated to be as large as
conventional resources, but their production outlook is uncertain
as the use of hydraulic fracturing to produce unconventional gas
has raised environmental concerns and tested existing regulatory
regimes.
Adhering to best practices in production can mitigate potential
environmental risks, such as excessive water use, contamination and
disposal. Based on available data, the report estimates that shale
gas, produced to proper standards of environmental responsibility,
has 3.5% higher “well-to-burner” emissions than conventional
gas.
Natural gas is a particularly attractive fuel for countries and
regions that are urbanising and seeking to satisfy rapid growth in
energy demand, such as China, India and the Middle East.
These countries and regions will largely determine the extent to
which natural gas use expands over the next 25 years. When
replacing other fossil fuels, natural gas can lead to lower
emissions of greenhouse gases and local pollutants. However, the
high gas scenario shows carbon emissions consistent with a
long-term temperature rise of over 3.5°C.
A path towards 2°C would still require a greater shift to
low-carbon energy sources, increased energy efficiency and
deployment of new technologies including carbon capture and storage
(CCS), which could reduce emissions from gas-fired plants.
Mr. Tanaka noted that the report indicates that the future of
natural gas seems bright. “If the policy and market drivers of the
GAS Scenario develop as projected, then gas would grow to more than
a quarter of global energy demand by 2035,” he said. “Surely that
would qualify as a golden age.”
The special report “Are We Entering a Golden Age of Gas?” can be
downloaded free of charge on the World Energy Outlook website:
target=”_blank”>http://www.worldenergyoutlook.org
. The World Energy Outlook is the IEA’s flagship
publication.
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