However well-documented the benefits of natural gas may be, a golden age of gas is not a given. The natural gas industry will have to work hard to achieve it, argued Ben van Beurden, CEO, Royal Dutch Shell plc in the recently held World Gas Conference in Paris. Excerpts from his presentation:
The benefits of natural gas are well-documented. It is flexible. Its supply is abundant and diverse. Its range of uses is still expanding. It is a low-carbon, clean-burning ally to renewables such as solar and wind. And it makes economic sense. Gas plants are cheaper to build and quicker to build than coal plants. And gas-fired power becomes even more attractive when you take the costs of tackling climate change and air pollution into account. The quicker the world turns from coal to gas and renewables, the lower these costs will be.
But, however well-documented its benefits may be, a golden age of gas is not a given. We will have to work hard together to achieve it. Especially since governments continue to promote the use of coal to power electricity in many countries. Along with investment, at least three things are crucial for a sustainable energy future. Firstly, fewer emissions from the energy system – including gas. Secondly, better energy and environmental policies. And thirdly, driving down costs of gas developments.
FEWER EMISSIONS
Let me start with emissions. One of the world’s toughest challenges is meeting greater long-term demand for energy. According to the International Energy Agency, IEA, demand is expected to be 37 per cent higher in 2040. Population growth, economic development and the need to provide access to modern energy to more people – these are critical factors in bolstering demand. But this is only one part of the picture.
Another big part of the picture is the role our sector can play in building a sustainable energy future… if we reduce the impact of energy production and use on the environment.
Reducing emissions from power generation should be a priority. Critical is a shift from coal to gas. When burnt for power, gas produces around half the CO2 and one-tenth of the air pollutants that coal does. A switch saves lives today and ensures a sustainable energy system tomorrow. And, as I said, natural gas is also flexible. A gas-fired plant takes less time to start and stop than a coal-fired plant. This makes gas an ideal partner to intermittent energy sources like wind and solar. Renewables are crucial to the future of the energy system. But they still depend on flexible back-up when the wind doesn’t blow or the sun doesn’t shine.
Pairing gas-fired power with renewables will be the fastest and cheapest route for many countries to lower emissions while maintaining a reliable energy system. The impact of coal-to-gas switching is clear, for example, in the US. There, replacing gas with coal in power generation – mainly as a result of shale gas developments – has tempered the growth of greenhouse gas emissions in the power sector.
Still, in order to make natural gas as attractive as possible, our industry should continue to lower the carbon intensity of the supply chain. From production, processing and transport, to distribution and end use. Promoting carbon capture and storage… CCS… is one way of doing that; reducing methane emissions is another. Shell acknowledges the importance of these challenges, and we take our responsibility seriously.
In Canada, for example, we’re helping to develop a large-scale CCS project called Quest – which is expected to come on-stream in the coming months. Shell also has research partnerships with leading academic institutes, for instance in Norway.
Many initiatives to reduce methane emissions are already in place at Shell, such as leak detection and repair … energy-efficiency measures … flare-reduction programmes… and venting-reduction programmes. And we will continue to focus on further reducing emissions. Shell has recently signed up to the World Bank’s initiative to end routine flaring by 2030.
BETTER POLICIES
Making more use of gas is crucial to safeguarding the environment while meeting the world’s energy needs. If gas is to realise its full potential, however, the right policies and regulatory structures are needed. There are some encouraging signs. China, for example, has special tariffs for gas-fired generation and is setting up emissions trading systems in six provinces. But globally we’re still a long way from having the right policies and structures in place. Key gas and LNG markets have, for example, failed to create carbon pricing systems that lead to a switch from coal to gas in power generation. Such a switch would seriously support a reduction in emissions.
