Abstract
Recent technology innovation in the natural gas industry has powered a shale gas boom, enabling the narrative that natural gas is a transition fuel to a low-carbon future. However, this narrative has not manifested itself uniformly around the world and, more fundamentally, it must be tested and revised periodically to reflect rapidly changing market, supply chain, and environmental realities. The growth in production has put downward pressure on prices, incentivized increased consumption and trade in the coming years, leading to the coming of age of the global market for liquefied natural gas (LNG). LNG from areas with high levels of production can increasingly respond to demand growth elsewhere; however, questions about infrastructure availability, competition with other energy sources, and end use blur our understanding about environmental outcomes. New markets for natural gas face new medium and long-term challenges through capital investments in long-term infrastructure which creates a risk of displacing lower carbon options and prolonging higher emitting facilities. We explore the narrative of natural gas as a transition fuel, and how it has thus far manifested itself in various key markets. The United States is our region of focus on the supply side due to the recent shale gas boom and emission reductions from the coal-to-gas transition in the power sector. We make reference to producing regions involved in the international trade of liquefied natural gas. Questions related to demand from the European Union, OECD Asia, and parts of non-OECD Asia are discussed. China and India—representing the centers of prolific anticipated demand growth—are discussed in terms of challenges to domestic supply growth and competing environmental and political objectives.
Highlights
Recent technology innovation in the natural gas industry has powered a shale gas boom, enabling the narrative that natural gas is a transition fuel to a low-carbon future
We explore the narrative of natural gas as a transition fuel, and how it has far manifested itself in various key markets
This changed with the shale boom, where new studies confirmed that the magnitude of methane leaks from natural gas production systems is uncertain and may even be great enough to change this broadly accepted assumption [1]
Summary
Energy Transit (2017) 1:5 leaking from natural gas production systems—from well through delivery at a power plant—must be kept below 3.2% of natural gas produced [12]. There is some empirical evidence that suggests that the long-term GHG emission reduction benefits of natural gas are negligible [18] This argument is largely based on the notion that long-term investments in natural gas infrastructure crowd out investments in low-carbon technologies and energy efficiency [19]. Exemplifying this improvement was the recent record set by the Southwest Power Pool achieving 52% wind energy on the grid on 1 day in February of 2017 [20] This trend will likely be reinforced as various battery technologies become mature in the coming years, and electricity storage, even if not immediately at a large scale, can help balance the grid. According to the US Environmental Protection Agency (EPA), the majority of
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