Editorial: Gas Transitions
In Gas Transitions, we will closely track how climate concerns are likely to affect the future of natural gas. For the natural gas industry at this moment there seems little to worry about. In the IEA’s 2019 World Energy Outlook’s “Stated Policies” scenario, which takes into account all existing and planned climate policies, global demand for natural gas will grow from 3,952bn m3 in 2018 to 5,404bn m3 in 2040. Even in the WEO’s “Sustainable Development” scenario, which is aligned with the Paris Agreement, gas demand will grow until 2030 and then gradually fall back to current levels by 2040.
These projections are quite reassuring. In fact, as the WEO makes clear, natural gas can even benefit from climate concerns. Coal/oil-to-gas-switching is described by the IEA as “one of a portfolio of options to reduce emissions across a broad range of sectors”.
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Nevertheless, beneath this rather rosy picture lurk complexities and threats. For one thing, 2040 is not so far away. After 2040, the case for natural gas looks decidedly less bright. The IEA warns that “coal-to-gas” switching is “not the long-term answer to climate change”.
Indeed, under the Sustainable Development Scenario a decline in gas demand will set in well before 2040 in some regions of the world, notably the United States and Europe: in Europe by 40%, in the US by 25%.
These are big declines in these mature gas regions and they are coming soon – if the world gets to grips with “Paris”. That’s a big “if”, but, if anything, the pressure for ambitious climate policies seems to be growing. Despite the Trump effect, and whatever one may think about the scientific debate around the role of CO2 and other greenhouse gases, there is no denying that the world has been getting hotter and that most people have become far more alarmed about climate change than they were, say, a decade ago.
The global financial sector in particular seems more and more determined to put its money where its mouth is. That won’t necessarily be in the natural gas sector. What is more, as gas gains relative to oil and coal, it will also increasingly come to be seen in the public perception as the number one climate threat.
How could all this impact the gas industry? There are a number of “green” alternatives for natural gas that markets will likely turn to, mainly “green” hydrogen (based on renewable power), “green” gases (biogas, biomethane), geothermal energy and electrification (based on renewables or nuclear power). Some of these alternatives, such as hydrogen and biogas, are still gases (molecules) and will present new opportunities for gas infrastructure companies, if not for natural gas producers. Electrification, on the other hand, directly substitutes for gas.
Yet that is not the whole decarbonisation story. There are other pathways to a low-carbon world which do allow natural gas to remain in the mix. The most important one is carbon capture and storage (CCS). Both gas-fired power generation and the production of hydrogen through steam methane reforming can be combined with the capture and storage of CO2.
A bit further afield, there are also what are called negative emission technologies, such as direct air capture, which, if they are successful, have the potential to ensure that natural gas can continue to be used despite the greenhouse gas emissions it causes.
In Gas Transitions we will be reporting on all major economic, technological and political developments that may affect the role of natural gas in a low-carbon energy world. We will interview main players, look at concrete projects, report on key research papers and identify threats and opportunities. If you want to be kept informed of what is going on in the energy transition that is directly relevant for the gas industry, Gas Transitions is the place to turn to.
We will do all this with an open mind and a pragmatic attitude. We are open to all views as long as they are reasonable and based on facts. Because that too is one of the main goals of this publication: to become a global forum where the “gas transition” is discussed. So if you want to contribute, don’t hesitate to get in touch.
Karel Beckman, karel.beckman@naturalgasworld.com, editor-in-chief
