ENERGY Magazine recently interviewed International Gas Union President Joe Kang on the challenges and opportunities facing the global gas industry.
This has been a challenging year. What impacts will the pandemic have on long-term demand for natural gas?
Well, firstly we have to acknowledge the human impacts of the pandemic. Right around the world our communities have suffered, and the restrictions that have been in place have impacted the daily lives and well-being of all of us.
The economic impacts of COVID have clearly seen a decline in energy demand the world over, including for gas. The uncertainty this has created has also seen investment delays. It will take a while for these factors to play out but all credible analysis sees a near-term recovery in gas demand and significant long-term growth – particularly in key markets.
The fall in global gas prices, as well as clean air and climate policies, will promote further switching to gas from other more polluting energy sources, such as oil and coal. This year’s Global Gas Report published by the IGU, research company BloombergNEF and Italian-based gas infrastructure company Snam, found gas demand could rebound to previous levels as soon as 2021, depending on the persistence and longevity of the pandemic. And in key markets such as China and India, gas demand is expected to double by 2040.
How do you see the uses of natural gas changing over time?
The drive for cleaner energy, reduced carbon emissions, energy security and economic growth will all push gas demand higher. We have already seen unprecedented coal-to-gas switching in Europe, and clean air policies in major growth markets such as India and China will drive more gas adoption in the next few years.
The use of natural gas is changing, but industry and the power sector are together expected to account for 61 per cent of the incremental gas consumption by 2040. There are, of course, varying views on how the use of gas will evolve, but industry is still as a big driver. BloombergNEF forecasts the share of gas in industrial energy use will increase from 22 per cent in 2018 to 28 per cent by 2040.
All analysis shows a continued significant use of gas in power generation, but different growth trajectories are forecast. This divergence in outlooks highlights both the risks and the opportunities for the global gas sector in the energy transition – and the importance of actions taken by both industry and government to capture the new opportunities.
There is some debate on the role of natural gas as a transition fuel. What is your view?
Natural gas is essential for the success of the ongoing energy transition, as it can effectively meet growing energy demand, while lowering greenhouse gas emissions and improving air quality.
Natural gas is also a vital building block for an economically and environmentally sustainable future.
Renewables and gas are the two fastest growing energy sources, and this trend has to continue, in order to meet the growing global demand and stay on track for Paris commitments and UN Sustainable Development Goals.
Natural gas is a building block needed for sustainable, reliable, and affordable energy systems.
And importantly, we have to reduce the carbon intensity of gas through better measurement, detection and reduction of methane, introducing green gases and ultimately hydrogen and carbon capture and storage.
What trends are you seeing for carbon capture and storage technology around the world?
Low- and zero-carbon gas technologies – including renewable gas, hydrogen, and carbon capture and storage (CCS) provide an efficient and cost-effective pathway to dramatically reduce greenhouse gas emissions.
While CCS capacity has been slow to develop in the past, new enabling policies are set to support near-term growth, particularly in North America, Europe, and China. Technology innovation combined with deployment at scale shows significant potential to reduce costs of carbon capture by 50 per cent or more.
Prior to the COVID-19 crisis, CCUS was gaining new momentum. In 2019, five new CCS-equipped power plants were announced, spurred primarily by new investment incentives in the United States, bringing the total to 14 power plants in development globally.
Many countries are increasing their support for CCUS development and deployment, including Canada, China, Japan, the Netherlands, Norway, Saudi Arabia, the United Kingdom and the United States.
CCS is an important opportunity for the global gas industry, and a number of our member organisations are leading the way.
What can we do as an industry to build greater social acceptance and support for the role of natural gas, especially our role in the transition to lower emissions?
When working to develop resources around the world, it is critical that the industry continues to focus on safety, environmental safeguards, and engagement with communities to address concerns and help develop local economies.
As an industry we have to recognise that many in the community have genuine questions and concerns about how our future energy needs will be met – and we have to participate in that discussion.
Does the industry need to do more to promote the benefits of gas?
We do, and we will. At the IGU, we believe there are five key messages that need to be better understood:
Natural Gas is a key resource for addressing the global energy trilemma. It is a clean, affordable, versatile, and abundant fuel that will play a prominent role in the future of sustainable energy and economic development.
Natural gas offers the fastest and most economical path to reduced carbon and air pollutant emissions; helping to meet increasing energy demand, while improving the environment and air quality.
“As an industry we have to recognise that many in the community have genuine questions and concerns about how our future energy needs will be met – and we have to participate in that discussion.”
Natural gas is a building block for sustainable, reliable, and affordable energy systems.
Natural gas can provide access to clean modern energy and clean cooking to those in need.
Innovation across a wide spectrum of energy technologies, including the natural gas value chain, will be critical for the world to attain the urgent sustainability and climate targets.
Finally, as we pursue recovery from COVID-19, the world is looking for the most effective ways to drive a rapid recovery that spurs economic growth while maintaining our environmental performance. That means ensuring our existing infrastructure and expertise is used to maximum effect to fuel recovery. The gas industry understands this challenge, and will be a big part of the recovery process.