Natural gas could play an important role as a “bridging fuel” to a low-carbon global economy. Substituting coal for gas as a feedstock for power plants will cut greenhouse gas emissions by half. Gas is also touted as an ideal backup for intermittent renewable energy supply, at least in areas with established infrastructure.
World Energy Congress, Istanbul, Turkey, 11 October 2016: The world must wean itself off coal to generate electricity according to industry and government leaders at the World Energy Congress in Istanbul.
The resource is also growing in popularity as a vehicle fuel, particularly in North America, because of its large volumes of unconventional reserves.
The role of gas in the energy mix greatly varies across the world, based on a slew of factors including availability, infrastructure and demand. The future maintenance and refinancing of existing infrastructure or even build up is facing substantial uncertainties.
Maros Sefcovic, Vice President in Charge of Energy Union, European Commission said: "Gas is a very important transitional fuel."
The EU wants to keep gas consumption steady through 2030 and phase out coal. The EU's 6.8% drop in carbon emissions between 1990 and 1994 was partly due to a switch from coal to gas. Today, coal accounts for around 25% of electricity production in the bloc.
Sefcovic added: "The political frame for the future energy policy was decided in Paris. It was ratified by China, India and the EU, making clear that the global community will work for a low carbon transition." He referred to the EU aims to reduce greenhouse gas emissions by 40% and increase energy efficiency by 30% by 2030.
He outlined the EU's plans to form an interconnected liquid gas market in Europe with the expectation that global capacity in LNG will increase by 20% by 2020, saying: "We will also concentrate on the security of supply. All Europeans should pay a fair price for gas. Some European countries currently pay two or three times the price of major partners and/or competitors. We would like to have transparent relations with Russia as our most important supplier. We demand a transparent, competitive market, high-quality services and fair prices."
Sefcovic also addressed the issue of carbon taxes: "We don't have the unanimity to introduce it in Europe at the moment. The best we can do is to form an emission trade system and a carbon market."
Chandima Weerakkody, Sri Lanka's Minister of Petroleum Resources Development said: "The commitment to natural gas is there but conversion is a big challenge. Conversion to coal was in question a few years ago but the government decided to stay away from it as a policy."
He noted that the country gets 40% of its energy needs from biomass but had discovered gas in 2011 and was working to attract investors: "Our Govt wants to see LNG in energy diversity. The targets emphasised in Paris can be achieved universally if we stand together. We are working to have our own gas policy. We have discovered gas and now we are working to get the investors into the country. We need to convince countries and then invest in infrastructure and exploration. That's how the target can be achieved."
Claudia Cronenbold, Chair of the Bolivia Member Committee at the World Energy Council and President of the Bolivian Chamber of Hydrocarbons and Energy, said: "Gas will play an important role in the future, but the question is how big it will be. If we expect gas to replace oil, the infrastructure and pricing in the gas market is a big challenge. Latin America currently pays more for gas than Europe. Different local market prices affect competitiveness of the industry. For gas to play a big role, markets must become very flexible."
Rene Bautz, CEO of Gaznat, and Chairman at the Global Gas Centre, said: "Gas is the number one selection for ensuring a secure energy future. We should work to secure affordable energy, increase the share of renewables to increase in energy mix and also build gas-fired power plants that will help reduce carbon emissions.
Bautz also stated that use of gas as a transport fuel should be encouraged: "There is a lot of room for natural gas vehicles. The current market share of such vehicles in Europe is about 1%. In Italy, though, there are 1 million natural gas vehicles. We are also working on providing tax reduction for vehicles using natural gas in Switzerland to encourage use of gas in transport."
Bob Dastmalchi, Business Development Director at Chevron, said: "Global energy systems are too large to be reshaped by a single source of energy. A mix of energy will meet future demand and gas is one of them because it is affordable, reliable, clean and abundant. There are 14 trillion barrels of conventional and unconventional oil and gas resources left in the world. Some of this is not recoverable but it is still abundant. The demand and the resources are there."
Dastmalchi added that natural gas makes up 21% of the global energy mix: "There is a lot of room to shift from heavy carbon to low carbon. In the energy mix, transition to other alternatives can be achieved by meeting the standards set in Paris. The golden age of gas is ahead of us."
Bjorn Hamso, Senior Manager of the Global Gas Flaring Reduction Partnership at the World Bank, said that 1.1 billion people have no access to commercial and clean fuel and that: "We have to reach them." He added that 20% of World Bank loans have a positive climate impact.
The bank has earmarked US $29 billion for climate change projects and has pledged to limit the funding of coal-fired power projects: "In many countries, natural gas will start playing a much more important role. We will support the replacement of coal. In urban areas, we think natural gas is good for air pollution." He noted that by 2040, the market share of fossil fuels in the energy mix will still be 50% under the best scenario.
Hamso said: "There are many shortcomings in energy market around the world. There is a lack of payment discipline and lack of pricing signals. However, we are making progress on these fronts. We should try to make the oil and gas industry clean. This has to do with energy efficiency. The massive subsidies for oil and gas around the world should also be phased out."
An IMF study from 2015 estimated that fossil fuel subsidies totalled US $5.3 trillion that year, representing 6.5% of global GDP.
Marc Benayoun, CEO of Edison, said: "Gas has not delivered up to expectation. The benefits are there but we need to push demand forward. Still, the market is much more liquid today. Competition between different gas sources is to the benefit of the consumer. Gas is now less indexed on oil and more indexed on hub prices."
Benayoun added that gas demand had fallen 15% in Europe in the eight years since the financial crisis: "A lot of value has been destroyed. To fix that we should make a stronger business case for gas in power generation. Small-scale LNG is interesting but not yet material."