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Item 4: Role of gas in attaining Sustainable Development Goals
Dmitry SokolovHead of Energy Economics and Forecasting Department
Gas Exporting Countries Forum (GECF)
5th Session of the Group of Experts on Gas Salle V, Palais des Nations Geneva, 22-23 March 2018
Contents
• How can gas and LNG help access to affordable, reliable,
sustainable and modern energy for all?
• Can gas improve energy efficiency of the electricity system?
• How about climate objectives?
• How can gas improve social and economic conditions (poverty,
hunger, health) and promote decent work and economic growth?
• What are interlinkages between gas and Goal 6 (clean water and
sanitation), Goal 9 (industry, innovation and infrastructure), Goal
11 (inclusive, safe, resilient and sustainable cities), Goal 12
(sustainable consumption and production patterns)?
2
How can gas and LNG help access to affordable, reliable, sustainable and modern energy for all?
3
0
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0.25
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0.35
2010 2011 2012 2013 2014 2015 2016 2017
German electricity taxes (€/kWh) Spanish electricity taxes (€/kWh)
German electricity prices (€/kWh) Spanish electricity prices (€/kWh)
Electricity prices (€/kWh) and electricity taxes (€/kWh) in Germany and Spain (2010 – 2017)
• The cost of producing electricity from natural gas remains competitive
• In many countries with a high penetration of renewable energies, the price of electricity
has increased significantly to support the cost of subsidies
Can gas improve energy efficiency of the electricity system?
• On the average, gas-fired power plants are much more efficient than coal-fired power plants (47% vs 36%)
• Combined-cycle power generation using natural gas can reach more than 60% energy efficiency
• We estimate average thermal power plant efficiency at around 40% (including coal, gas and oil fired power plants)
• Efficiency can be further improved by:
• Supporting innovation to improve gas power plants efficiency; optimizing the cost of gas technologies
• Improving the efficiency of co-generation; investing in steam/heat networks
• Developing hybrid solutions for natural gas and renewables (e.g. pilot-scale gas and solar hybrid units); this also provides an interesting opportunity to enhance implementation capacity and position gas for the scale-up of future renewable energy use
4
Role of natural gas in meeting climate objectives
• National climate policies and mitigation measures outlined in
countries’ NDCs/INDCs largely overlook the potential contribution
of natural gas in meeting climate objectives
• More than 50 countries have increased the share of natural gas
and decreased the share of coal in their energy mixes between
2012 and 2016
5
Role of natural gas in meeting climate objectives
6
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6
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0.0%
5.0%
10.0%
15.0%
20.0%
25.0%
30.0%
35.0%
40.0%
45.0%
50.0%
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ton
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2/
toe
% s
har
e in
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al e
ner
gy m
ix
United Kingdom: Percentage of natural gas and coal in the energy mix, plus emissions intensity (2005 - 2016)
CO2 emissions per unit of generation (right axis) Coal Gas
0
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United States: Percentage of natural gas and coal in the energy mix, plus emissions intensity (2005 - 2016)
CO2 emissions per unit of generation (right axis) Gas Coal
• Coal to gas switching has resulted in CO2 emissions reductions in the United States and the United Kingdom
How can gas improve social and economic conditions (poverty, hunger, health) and promote decent work and economic growth?
• Gas based industries (e.g. petrochemicals and steel) stimulate economic activity • Integration of economic value chains; for example: the gas-based fertilizer
industry can support agricultural productivity • Agricultural productivity is of paramount importance for economic development in
developing countries
• In India and sub-Saharan Africa agriculture accounts for around 18% of GDP
• Access to clean and modern energy services • Natural gas is an excellent alternative to traditional biomass fuels for cooking
• There are important synergies between clean energy for cooking and other SDGs • SDGs 5 and 8 (gender equality and economic growth): women are primarily
responsible for cooking and preparing fuel
• SDG 3 (health): through improved indoor air quality and reduced physical impacts from collecting fuel
• SDG 4 (education): particularly for women and girls, time saved through access to modern energy can be redirected towards education
7
What are interlinkages between gas and Goal 6 (clean water and sanitation), Goal 9 (industry, innovation and infrastructure), Goal 11 (inclusive, safe, resilient and sustainable cities), Goal 12 (sustainable consumption and production patterns)?
• Natural gas can be used in desalination with fewer CO2 than oil- and coal-based technologies. • Reliability and flexibility of natural gas important in reducing water stress
• Algeria and other Middle Eastern countries have achieved successful results
• Water utilities in urban centers are dependent on energy to provide clean drinking water and sanitation services
• Potential for innovation in gas-based industries: • Chemicals and transportation
• The GECF Gas Research Institute aims to support R&D and innovation in the natural gas industry and gas supply chains, including optimization and dissemination of best practices
• Safe and resilient cities through reliable and flexible power generation • Access to electricity is correlated with improved safety, especially for women and girls
• Supporting the development of cleaner transportation systems
8
Population growth and household wealth will be the main drivers of global energy demand growth
9
GDP (2016$ PPP trillon) Population (mn)
119
26731
91
27
13
135
0
50
100
150
200
250
300
2016 2040
7410
9143
118
598
1016
248
1484
5000
5500
6000
6500
7000
7500
8000
8500
9000
9500
2016 2040
• Global GDP is expected to grow by 3.7% over the next five years, a slight upswing from the 3.4%
seen over the previous five years.
• The global population will reach 9.2 bn by 2040— a 1.7 bn person increase from today
• This substantial population increase is paired with an 80% forecasted increase in average GDP
per capita relative to current levels
Global energy demand to rise by 29% between 2017 and 2040
0
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Global energy demand by fuel type
• Global energy demand is projected to grow by 1.1% per annum, amid population and economic
growth, as well as expanding middle class in developing countries
• The share of gas in the overall energy mix will increase strongly in 2040. Moreover, natural gas will
occupy the second place in the global energy mix, overtaking coal
10
MtoeGlobal energy mix in 2016 and 2040
22%
32%
27%
5%
2%
12%
2016
13.8 Gtoe
26%
29%20%
6%
2%
17%
2040
17.8 Gtoe
Natural Gas Oil Coal Nuclear Hydro Renewables
11
• Developing and emerging economies, including non-OECD Asia (3.5%), Africa (2.5%), and the Middle East
(2.2%), will lead gas demand growth by 2040
• Power generation will remain the largest natural gas consuming sector. It will consume 2329 bcm, or
43% of global gas demand in 2040
Global natural gas demand increases to 5395 bcm in 2040
5395
Natural gas demand by region (bcm) Natural gas demand by sector (bcm)
2457
3219
3791
4496
0
1000
2000
3000
4000
5000
6000
2000 2010 2016 2020 2030 2040
Non-OECD Asia North America Middle East
CIS OECD Europe Latin America
OECD Asia-Pacific Africa Non-OECD Europe
0
1000
2000
3000
4000
5000
6000
2000 2010 2016 2020 2030 2040
Domestic Sectors Industry Feedstocks
Transport Power Generation Heat Generation
Hydrogen Generation Refinery Other Uses
3534
Natural gas and renewables provide 48% of global electricity generation
12
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TWh
• Global electricity demand is expected to grow at an annual average growth rate of 2.2%, amid
GDP growth in developing and emerging economies, and the fight against energy poverty
• The share of gas in the power generation sector will increase from 23% in 2016 to 28% in 2040,
which will represent the largest market share of any fuel
Global power generation mixGlobal electricity demand
0%
5%
10%
15%
20%
25%
30%
35%
40%
45%
Natural Gas Oil Coal Nuclear Hydro Renewables
7498416%
10447322%
5051211%
9659721%
13893130%
Conventional-Existing Projects Conventional-New Projects
Unconventional - Existing Unconventional - YTF
Conventional - YTF
10635159%
144208%
5948433%
GECF Members GECF Observers Non-GECF
Total natural gas resources by type (bcm) Total natural gas reserves (bcm)
• The world possesses an ample amount of natural gas, totalling 465 tcm. Almost 180 tcm are identified as
proven conventional reserves
• The current resource to production ratio is about 60 years for proven reserves )include existing projects,
new projects, and unconventional reserves(. This figure represents 130 years for the total resource base
(including YTFs)
13
Global abundance of natural gas resources
0
1000
2000
3000
4000
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6000
2016 2020 2025 2030 2035 2040
bcm
6% 8%
23% 21%
5% 4%
17% 18%
7%13%
27%
24%
3%3%7%2%
6% 5%
0%
10%
20%
30%
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60%
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100%
2016 2040
Natural gas production share by regionNatural gas production outlook by region
• Production in non-OECD Asia almost triples, Africa doubles and OECD-Europe halves
• North America, CIS and the Middle East dominate gas production over the outlook period
• Natural gas production will be more widespread in all world regions by 2040
14
Marketed gas production increases to 5395 bcm in 2040
Natural gas trade will increase by 50%
0
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2016 2030 2040
bcm
69% 66%65%
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2016 2030 2040
• Natural gas trade (LNG and pipeline) increases from about 1 tcm to more than 1.5 tcm
• GECF countries contribute to 65% of total exports
• Southeast Asia and Europe loose shares, while the CIS, Africa and the Middle East gain
Natural gas trade outlook Share of regions in global gas trade
15
Energy demand decouples from economic growth as services and manufacturing add more to GDP
16
Energy intensity of GDP (toe/USD PPP, 2010=100)
• During 2010-2017, energy intensity decreased 13% globally, China leaded the way with over 30% decrease
• By 2040, additional 40% decrease in the intensity is expected
74.9
32.6
84.5
45.1
90.1
55.8
86.5
55.8
98.7
69.4
87.1
50.7
30.0
40.0
50.0
60.0
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China India Southeast Asia OECD Africa World
Between 2012 and 2016, in 56 countries and area the share of gas increased and the share of coal was stable or declined
17
-14%
-12%
-10%
-8%
-6%
-4%
-2%
0%
2%
4%
6%
8%
10%
12%
Alg
eria
An
gola
Cen
tral
Afr
ica
East
ern
Afr
ica
Nig
eria
Sou
th A
fric
a
Sou
ther
n A
fric
a
Wes
tern
Afr
ica
Arm
enia
Aze
rbai
jan
Bel
aru
s
Kaz
akh
stan
Ru
ssia
Uzb
eki
stan
Bo
livia
Ecu
ado
r
Oth
er
Car
ibb
ean
Par
agu
ay
Pu
ert
o R
ico
Uru
guay
Ven
ezu
ela
Iran
Iraq
Jord
an
Ku
wai
t
Sau
di A
rab
ia
Yem
en
Ban
glad
esh
Ch
ina
Ho
ng
Ko
ng
Ne
pal
Oth
er
Asi
a
Taiw
an
Alb
ania
Bu
lgar
ia
Cyp
rus
Mac
edo
nia
Mal
ta
Can
ada
Mex
ico
Un
ited
Sta
tes
Au
stra
lia
Cze
ch R
epu
blic
Esto
nia
Fran
ce
Ge
rman
y
Icel
and
Ital
y
No
rway
Po
lan
d
Po
rtu
gal
Un
ited
Kin
gdo
m
Bru
nei
Dar
uss
alam
Mal
aysi
a
Mya
nm
ar
Sin
gap
ore
Natural Gas Coal
Between 2012 and 2016:Global energy consumption: 68.1 GtoeEnergy consumption of above 56 countries: 50.2 Gtoe, or 74% of the global consumption
• Natural gas is far from zero-carbon, but reduces CO2 emissions because it mostly displaces high-carbon coal.
• Asian gas demand grew due to its flexibility and government policies, such as climate change. • EU’s gas demand recovered, as the retirements of coal and nuclear power plant.
CO2 emissions have been slowing down, or even
declining in many selected countries
• Between 2012 and 2016, many countries with increasing natural gas share, have seen their emissions declined (Ex: United States (-4%), Italy (-9%), France (-8), UK (-18%), or stabilized (ex. South Korea, and Mexico).
• China has increased their CO2 emissions, but the average growth rate of its emissions decreased significantly compared to previous period, marking an important slowdown (For China emissions, Average Annual Growth Rate 2008-2012: 7.6% Vs. AAGR 2012-2016: 0.5%).
• Natural gas penetration against carbon intensive fuels is a main contributor to the recent CO2 emissions slowdown and reduction of carbon intensity.
• In 2016, coal-to-gas switching in the US power sectors, accounting for 33% of the emissions reduction, while wind generation was responsible for only 19% of the emissions reduction.
MtCO2
481 210
8,882
534
5,220
407 353 768 385 297 514 208446 224
9,045
514
5,037
399 324783
352300 420 249
0
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2012 2016
18
Many of the countries increasing natural gas and
decreasing coal shares have achieved decrease in their
carbon intensity
• Our analysis of the selected countries showed that large part of these countries including big consumers of Energy have reduced their carbon intensity, mainly by increasing the role of natural gas against coal between 2012 and 2016.
Bubble size: Share in global energy consumption
-0.05
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Shar
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as c
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.p.
Carbon intensity change, tCo2/toe
UK
China
US
Canada S. Africa
Australia
Russia
Malaysia
Taiwan
Czeck rep.
Germany
Bulgaria
France Italy
Poland
19
Global picture: Observed changes of carbon intensity and
of natural gas shares (for more than 100 countries)
• Our analysis of more than 100 countries (representing more than 96% of primary energy consumption in 2016), showed that more than 1/3 (representing more than 60% of global primary energy consumption in 2016), have reduced their carbon intensity, mainly by increasing the share natural gas between 2012 and 2016.
China
UK
Countries which reduce their carbon intensity and increased gas share
Bubble size: Share in global energy consumption
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-0.50 -0.40 -0.30 -0.20 -0.10 0.00 0.10 0.20 0.30 0.40 0.50
Shar
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as c
han
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.p.
Carbon intensity change, tCo2/toe
20
This relationship between carbon intensity and
penetration of gas could be appreciated for the big energy
consuming countries
• United States and China, the biggest energy consumers, have achieved large reduction of their carbon intensity by increasing gas consumption.
• The reduction of natural gas shares in India and also in Germany (between 2012 and 2016), as well as the increasing use of coal have contributed in increasing carbon intensity of these countries.
Bubble size: Share in global energy consumption
-0.050
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0.070
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Shar
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as c
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.p.
Carbon intensity change tCO2/toe
India
Japan
RussiaBrazil
S. Korea
USA
Mexico
Canada
Iran
Thailand
S. Africa
Australia
Indonesia
E. Africa
China
United Kingdom
FranceItaly
Germany
Nigeria
21
Conclusions
22
• Demand for energy is rising and will position natural gas as the fastest growing
fossil fuel
• Natural gas supply will remain strong
• The role of natural gas in achieving GHG emissions reductions and SDGs has
much untapped potential
• The GECF Countries have the largest share of gas reserves and production
capacity in the world, and will maintain their role as reliable suppliers that are
capable of satisfying global energy needs
• GECF Countries will continue their position as major gas suppliers
Thank you!