In light of the United Nations’ sixth IPCC climate assessment, drastic and immediate changes must be made to limit the release of greenhouse gases and maintain average global temperatures to within 2°C of pre-industrialized levels.
Samik Mukherjee explains that the global natural gas market has grown substantially in recent years, positioning itself as a viable transitionary fuel source with much lower carbon emissions compared to oil and coal. Natural gas is a reliable, high energy intensity fuel, affordable to transport globally in large volumes as LNG (1 to 600 reduction in volume makes for efficient storage) and drives sustainable energy mix for the future replacing high emissions fuels like coal & oil.
As Europe, Japan, China, South Korea, and the United States continue to work toward zero net emissions by 2050, liquid natural gas could play a vital role in helping to transition away from high emission emitting fuels. Below, the risks and benefits of natural gas, why and how demand has grown, and examination of how it could act as a step toward zero net emissions is discussed.
A Cost-to-Benefit Analysis of Using Liquid Natural Gas
The primary benefit of natural gas is that it is a much cleaner burning fuel source than oil and coal, emitting up to 60 percent less carbon dioxide (CO2) when combusted. This is especially beneficial for countries that heavily rely on fossil fuels for electricity, heating, and transportation, such as those in the developing world with substantial industrial energy requirements.
Natural gas is also more efficient than coal, requiring less fuel to produce the same amount of energy. This helps to further reduce carbon emissions and offset the cost of producing energy on a wider scale. Finally, natural gas is a more versatile fuel source and can be used to power a wide variety of industrial and residential applications. The capital cost of a gas turbine power station represents a significant capital cost reduction when compared to coal, oil or nuclear of a similar output of power. Installation time from design to operation is around half the time of any alternative options
Although natural gas is a cleaner burning fuel source than oil and coal, it is not without its hazards. Natural gas extraction is energy and water intensive and can lead to environmental contamination if not properly managed. The natural gas production, transportation, liquefaction (LNG) and shipping industry is highly regulated to ensure highest standards of HSE (health, safety and environment) are implemented in the design and in the operation phase.
Understanding the Rise in Demand for Natural Gas
2020 marked a watershed moment for the natural gas industry as global infrastructure grew to meet rising demand. Both Russia and Qatar have invested heavily in natural gas extraction, creating a surplus of natural gas fuel to power Europe and Asia. Specifically Europe got heavily dependent of Russian gas through pipeline. However, in light of the 2022 Russian invasion of Ukraine, Europe has had to source its fuel from elsewhere for example importing more from other natural gas producers to meet the demand for residential, commercial and industrial users.
This shift has encouraged other players to stake their claim in the European market—namely Norway, USA, and Qatar. With new suppliers taking on a greater role in the global fuel trade, the overall size of the LNG market will grow to even greater heights. This will further cement LNG’s place in the industrial landscape and push out older, high emission emitting forms of fuel such like coal and oil from power generation and heating/cooling applications.
However, ongoing sanctions against Russia have driven up fuel prices, making it a more expensive and, therefore, less favorable fuel source. Developing economies may be priced out of using LNG and, instead, return to burning carbon-rich coal. It is important to look at the overall energy mix in a holistic manner. The world population is growing, and the majority of the growth is coming from developing economies where people have strong aspiration to improve the quality of their lives following the footsteps of developed western economies. So, the energy consumption per person is expected to grow significantly in developing economies. Focusing only on renewable energy sources is not a pragmatic view and can lead to highly volatile situations as the events of 2022 taught us. Therefore, in my opinion the world needs a balanced view of all available energies as part of the mix, looking at all three factors – Security/Reliability, Affordability and Sustainability.
Natural Gas’s Role in Restricting Climate Change
The IPCC emphasizes that drastic and immediate changes must be made to reduce global carbon emissions to within 2°C of pre-industrialized levels. Natural gas is a viable transitionary fuel source that can help reduce emissions while the world transitions to renewable energy sources such as wind and solar.
Not only can natural gas be used in the short term to reduce emissions, but it can also be used to offset the cost of transitioning to renewables. For instance, natural gas can be used to power industrial processes while the infrastructure necessary for renewable energy sources is built.
Additionally, natural gas can be used to store energy from renewable sources. When the sun is not shining or the wind is not blowing, natural gas can be used to maintain a steady supply of electricity.
Finally, natural gas can replace the most carbon-intensive sources of electricity, such as coal. This will further reduce global carbon emissions, helping to keep global temperatures within the 2°C threshold outlined by the IPCC.
The global natural gas market has experienced substantial growth in recent years, and this trend is likely to continue as countries work to reduce their carbon emissions. If used correctly, natural gas could become an effective tool in meeting growing energy demand, reducing carbon emissions and helping in keeping global temperatures within the 2°C threshold outlined by the IPCC.