The future of gas

Recently the Sustainable Gas Institute hosted Professor Jonathan Stern for their 2018 annual lecture. Sandro Luh, a visiting research student at the Department of Chemical Engineering has written a blog post about the lecture and some of the take-home messages.

Professor Jonathan Stern
Professor Jonathan Stern

Last week, more than 150 guests were welcomed by Professor Nigel Brandon, Dean of the Faculty of Engineering at Imperial College London, to a sold-out lecture given by Professor Jonathan Stern, the founder of the Natural Gas Research Programme at The Oxford Institute for Energy Studies (OIES).

Our distinguished guest speaker presented his research on: ‘Challenges to the Future of Gas: unburnable or unaffordable?’

While the Sustainable Gas Institute focuses on the technology-side of the natural gas value chain, OIES’s work is on social science and market aspects of natural gas, which offers an interesting and different perspective on the topic.

As an expert in gas markets, Jonathan delivered a deep and critical analysis of the developments of the market, the industry, and the research in the field of natural gas. He also highlighted the strengths and weaknesses of natural gas and concluded by revealing its potential in the future.

European challenges

According to Jonathan, it is important to distinguish between the challenges for gas in Europe, compared with a more global perspective. One of the main challenges for gas in Europe is a negative public perception about security of supply from Russia. However, real security problems for gas supply in Europe come from declining European gas production (by 2030 European gas production will be 43 % less than in 2014) and a failed diversification of pipeline gas imports. In addition, increasing demand for Russian gas from Asia may in the longer term affect the gas supply in Europe.

In Europe, there are also growing environmental concerns over greenhouse gas emissions, such as carbon dioxide (CO2) and particularly methane (the main component of natural gas). There is also increasing uncertainty about the prospects for development of Carbon Capture and Storage (CCS) technologies for decarbonising methane on a large-scale.

From left to right: Professor Nigel Brandon, Professor Jonathan Stern and Dr Adam Hawkes
From left to right: Professor Nigel Brandon, Professor Jonathan Stern and Dr Adam Hawkes

In this context, Jonathan emphasised that methane emissions need urgent attention from industry and policy makers. As there is still a huge lack of data in the whole gas value chain, industry should gather data in order to jointly develop effective measures for curbing methane emissions. He also urged other researchers to build on the work of the Sustainable Gas Institute to deliver more high-quality research in this field. A white paper published in 2015 by the Institute, “Methane & CO2 emissions from the natural gas supply chain” provided some insight in this topic. The researchers assessed our current knowledge of emissions globally, and identified a number of gaps in our understanding.

Affordability of gas

While greenhouse gas emissions are an important matter for energy researchers and policies in north-western Europe, in many other regions of the world, governments are more concerned about “air pollution, energy access and especially affordability of gas”.

“Every country behaves differently” was Jonathan’s main message. For example, Chinese policies are very focussed on improving urban air quality, while very little action has been taken about the worsening situation in Indian cities. Jonathan stressed that a major challenge for the gas industry in the next few decades, will be the affordability of gas (in relation to energy access and competitiveness against alternatives) in several regions of the world. Historical demand trends in OECD countries show that “gas use increased at prices below $6/MBtu, but declined at prices above $8/MBtu”.

Analysis of historical demand trends in the US, UK and Germany. Source: International Energy Agency, World Energy Outlook 2016, Figure 8.5, p. 342
Analysis of historical demand trends in the US, UK and Germany. Source: International Energy Agency, World Energy Outlook 2016, Figure 8.5, p. 342

Scenarios of natural gas prices [1] – but also very importantly current costs of new Liquefied natural gas (LNG) projects (which will comprise the majority of increased international gas trade) predict prices that exceed this range, natural gas will become unaffordable in many countries, without major government subsidy, commented Jonathan.

Jonathan also criticised academic models of the energy system that are dominated by carbon-reduction assumptions and insufficiently take into account affordability. The energy system model MUSE is currently being developed by our team at the Sustainable Gas Institute. It differs from other models by taking affordability into account and models real investors’ behaviour.

Real actions are inevitable

Jonathan Stern concluded his talk with a call for the natural gas community to recognise the time for slogans about decarbonisation must be backed by actions and investments.

For me personally, it was a very inspirational talk from a speaker who has put the finger on the point of contention of an entire industry. He gave a critical view on the potential developments of the gas market and made clear in which fields actions are needed to create a sustainable and green gas market in the future.

Sandro Luh

Sandro LuhSandro Luh is a visiting research student at the Department of Chemical Engineering of Imperial College London, who joined the Sustainable Gas Institute in September 2017 for half a year to write his master thesis. His background is in the field of mechanical engineering, which he currently studies at ETH Zurich (Switzerland) since 2012. Sandro’s work with the Sustainable Gas Institute will look into the technological and economical potentials of electrification in the industrial sector of the energy system.

[1] The presented scenarios were the “New Policies Scenario“ and the “Sustainable Development Scenario“ from the International Energy Agency, World Energy Outlook 2017, Table 1.4, p. 52

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