Salisu Kwalami Haruna, Senior Gas Market Analyst | GECF| Gas Market Analysis Department
In September 2015, the UN General Assembly adopted Resolution 70/1 ‘Transforming Our World: The 2030 Agenda for Sustainable Development’ as a leading global framework for international co-operation.
Shortly after, 17 Sustainable Development Goals (SDGs) were announced as part of the Agenda and the COP 21 Paris Climate Agreement focusing on climate change, and pathways to limit the average global temperature increase to well below 2 0C above pre-industrial levels by 2100. The SDG No. 7: “Ensure access to affordable, reliable, sustainable and modern energy for all” is pivotal for the realization of many SDGs and has a significant role to play in harmonizing the three pillars (economy, social and environment) of sustainable development. The type of fuel(s) used to meet the growing energy consumption is crucial for the achievement of the above stated objectives. The report takes a critical look at the energy sector, with particular emphasis on natural gas as a fuel of choice of sustainable development, and matters arising that could impact the growth of the natural gas market and sustainable energy transitions.
This article summarizes the main findings of a detailed report developed by the Secretariat on the subject. The mentioned report highlighted some of the energy trajectories and the imbalances of the sources of primary energy that could impact the realization of globally recognized Agendas and aspirations towards sustainable energy transitions. Energy consumption continues to grow in 2017, about 2% y-o-y to reach 13, 511 million tons of oil equivalents (Mtoe) as economic conditions improve, based on data from BP released in June 2018. This is slightly above the 10-year average growth rate of 1.6% post-2008 financial crisis when growth was stunted due to industrial sector slow down and increasing energy efficiency gains in some parts of the world. The Asia Pacific region, led by China and India, drove the global primary energy consumption in 2017 representing 43% of the total. The primary energy mix is still dominated by fossils fuels (oil, gas, and coal), with about 85% of the primary energy consumption in 2017 from these fuel types, and will continue to be so in the foreseeable future depending on energy and environmental policies trajectories, technological development as well as energy market conditions. However, the types of fuel used (fossil fuels, nuclear and renewables) to meet the growing energy consumption, their respective shares in the mix, will determine how the SDG 7 and the Climate Accord will be realized.
All primary sources of energy recorded growth in 2017 with renewable energy (including hydroelectricity generation) and natural gas having the highest jump at around 17% and 2.7% respectively, while coal recorded the least jump at 0.7%, y-o-y. While coal had the least growth in 2017, the absolute volume of coal consumption is still quite high at 3,732 mtoe, equivalent to ~ 28% of total primary energy mix - behind oil but ahead of all the other primary sources of energy including natural gas and renewables, which contributed slightly above 24% and 10% respectively.
The increase in natural gas consumption was driven by colder winter, competitiveness of natural gas in major gas consuming markets/regions, flexibility of natural gas systems in meeting a large swing in gas demand at peak periods, as well as gas-oriented policies that support coal to gas switching in the power sector in key gas consuming countries in Europe and Asia. Although renewable energy sources - including wind, solar and hydroelectricity-for power generation, recorded a big growth in 2017, the total share in the primary energy mix is still small compared to that of the fossil fuels, reflecting the dominance of the latter fuels in the primary energy mix.
It should be noted that some types of renewable energy sources are environmentally-unfriendly as to be treated as sustainable fuel of the future. For example, a large percentage of the renewables came from the use of wood (dung, wood sticks etc.) in poor areas for cooking and heating resulting in indoor air pollution with detrimental health and environmental effects while wind and solar-based power generation, the mainstream renewable energy sources, actually contribute a small percentage of the renewable energy sources and indeed the primary energy mix.
The growth in natural gas and the renewables is nevertheless encouraging; however, still more than 1 billion people are without access to electricity and 2.5 billion people use inefficient and polluting solid biomass for cooking. With regard to GHG emission vis-à-vis the current energy mix, ~33.4 Gtons of CO2 were emitted in 2017, around 1.3% jump y-o-y, and slightly above the last 5 – year average of 33 Gtons of CO2 emissions. If the current energy consumption trend continues, more GHG emissions including CO2, and CH4 could be generated with negative impact on the realization of the objectives of the UN’s SDGs and the Paris Climate accord.
The need for increasing the role of natural gas in the energy spectrum towards sustainable energy transitions was emphasized and some positive factors in favor of natural gas were identified:
1. Vast natural gas resources that could last for more than two centuries based on the current global gas consumption rates and depending on technology and prices;
2. Fair distribution of natural gas across regions and with more gas trade in pipelines and LNG forms, more of this reliable source of energy could reach energy-deficient areas;
3. Versatility of natural gas, finding application in many sectors such as direct source of energy, feedstock to gas-based industries, LPG for clean cooking, etc.;
4. Fewer emissions per mmBtu of energy from natural gas compared to other fossil fuels;
5. The flexibility and cleanliness of natural gas make it a complementary fuel for the up-take of wind and solar renewable energy sources, that are by nature intermittent;
6. Affordability of natural gas on a level playing ground if subsidy is removed from some fuels and or harmful environment impact of some polluting fuels is considered.
The report provided some concluding remarks by highlighting that to ensure accelerated growth of natural gas as a fuel of choice for sustainable development, all hands need to be on deck to facilitate its further expansion. The capital intensive nature of the gas industry requiring huge investments to provide the necessary infrastructure across the gas value chain was re-iterated. This calls for technological ingenuity, innovative project financing mechanisms to complement equity share as well as a stable source of cash flow to secure project financing. Barriers to the penetration of natural gas should be addresses through collective efforts by all relevant stakeholders. All these would not be achieved if the decision makers are not fully sensitized about the issues at hand and or the energy consumers are not aware of the inherent benefits of switching to natural gas, as the fuel of choice. Therefore the role of gas advocacy, dialogue and collaboration, at all levels, were earmarked as pathways towards supporting the growth of natural gas in the energy mix. The GECF Secretariat has been providing a credible platform for an all-inclusive dialogue, data exchange, debates and views on the natural gas market in particular, and the energy sector in general, to a diverse group of audience towards positioning natural gas as fuel of choice for sustainable development.