The Future of Natural Gas
Natural gas has moved to the center of the current debate on energy, security and climate. This study examines the role of natural gas in a carbon-constrained world, with a time horizon out to mid-century.
The overarching conclusions are that:
• Abundant global natural gas resources imply greatly expanded natural gas use, with especially large growth in electricity generation.
• Natural gas will assume an increasing share of the U.S. energy mix over the next several decades, with the large unconventional resource playing a key role.
• The share of natural gas in the energy mix is likely to be even larger in the near to intermediate term in response to CO2 emissions constraints. In the longer term, however, very stringent emissions constraints would limit the role of all fossil fuels, including natural gas, unless capture and sequestration are competitive with other very low-carbon alternatives.
• The character of the global gas market could change dramatically over the time horizon of this study.
The physical properties of natural gas, the high degree of concentration of the global resource and the history of U.S. energy policy have profoundly influenced the use of natural gas and the market structure governing its trade:
• the substantially lower carbon footprint of natural gas relative to other fossil fuels,combined with the development of North American unconventional natural gas supply and the high cost and slow pace of lower carbon alternatives, has focused attention on natural gas as a “bridge” to a low-carbon future;
• there are regionalized markets in North America, Europe and industrialized Asia,each with a different market structure; and
• “feast or famine” expectations for U.S. natural gas supply, associated with priceswings and policy changes, have often led to costly investment decisions.
The confluence of these factors is central to today’s energy and climate change policy debate. The primary motivation for this study is to provide integrated, technically grounded analysis that will inform this debate. The analysis must deal with multiple uncertainties that can profoundly influence the future of natural gas:
• the extent and nature of greenhouse gas mitigation (GHG) measures that will beadopted in the U.S. and abroad;
• the ultimate size and production cost of the natural gas resource base in the U.S.and in other major supplier countries;
• the technology mix, as determined by relative costs of different technologies overtime and by emissions policy; and
• the evolution of international gas markets, as dictated by economics, geologyand geopolitics.
This study analyzes various possibilities for the last three of these, principally by application of a well-tested global economic model, for different GHG policy scenarios.
Our audience is principally U.S. government, industry and academic leaders and decision-makers interested in the interrelated set of technical, economic, environmental and political issues that must be addressed in seeking to limit GHG emissions materially. However, the study is carried out with an international perspective.