International Gas Union Reaction to the IEA World Energy Outlook 2016
Greater Use of Natural Gas a Vital Part in Transition to Low Carbon Economy – Improving Air Quality and Enabling Renewables
Barcelona, 16 November 2016 – The International Gas Union (IGU) welcomes the positive outlook for the gas sector oulined in the 2016 World Energy Outlook (WEO – 2016) published by the International Energy Agency (IEA).
The IGU urges policymakers to set clear strategies and policies that support the expanced role of natural gas in the energy mix as they look to achieve a sustainable energy future. David Carroll, President of the IGU commented: “The latest WEO 2016 clearly outlines the strong case for natural gas. Any sustainable and affordable energy mix that addresses the continued growth in global energy needs and efforts to mitigate climate change has to include natural gas. Natural gas can improve air quality in our cities, enable renewable energies and a smooth transition to a lower carbon economy.”
In the IEA’s New Policies scenario – which takes into account the effects of all existing climate policies and declared policy intentions, including the likely results of the climate pledges made in the COP21 Paris Agreements – global natural gas demand grows by nearly half over the Outlook period. While an anticipated growth rate of 1.5% is lower than observed over the past 25 years (2.5%), natural gas continues to be seen as the fastest growing among fossil fuels and is expected to increase its share in global primary energy demand from 21% today to 24% in 2040.
What is more, also in the IEA’s 450 Scenario, which is even more aspiring in terms of climate change policies (assuming “a set of policies that is consistent with a 50% chance of limiting global warming to 2 degrees”), natural gas is acknowledged as a relatively clean and flexible fuel that is expected to further increase its share in the global energy mix.
The IGU is fully supportive of a transition to a lower carbon economy consistent with the outcome of COP 21, and recognizes the large part that renewable energy will play in that transition. The IGU welcomes the IEA’s view that natural gas is “especially advantageous to the transition if it can help smooth the integration of renewables into power systems along the way.” Natural gas is highly complementary to renewable energy and its versatility, price, and performance characteristics make it the best fuel to partner with renewable energy sources in multiple ways:
- Natural gas can help address the challenge of seasonal and daily output variability of wind and solar energy.
- Distributed natural gas-based energy systems can be integrated with renewable thermal and electric generating systems to offer another type of hybrid system.
- Natural gas infrastructure enables the broader use of biogas.
- Natural gas infrastructure can also enable the use of renewably generated hydrogen or synthetic natural gas as a storage medium for renewable energy or an alternative method of using renewable electricity.
- Natural gas systems provide the backbone for delivering clean and reliable energy to homes, as an energy and feedstock fuel for businesses and industry, and as an alternative fuel for land and marine transportation. The natural gas infrastructure brings renewable gas directly in the existing heating market.
For case studies that demonstrate the role that natural gas can play in each of these applications, please visit http://www.igu.org/news/case-studies-enabling-clean-energies.
The IGU recommends policy makers and governments that decisions on the generating mix should be based on the full underlying cost of power supply alternatives, including all cost elements related to output variability.
- Pricing mechanisms and Emissions Performance Standards need to account for the cost of externalities such as health care costs related to dirty and polluted air and emissions related to CO2.
- Policies should reward the flexibility provided by gas, which is currently not reflected in the Levelised Cost of Electricity metrics used by policy makers in their fuel choices.
- Well-designed capacity remuneration mechanisms (CRM’s), based on a market approach, can be a useful tool to recognize the correct market value of secure, flexible, and environmentally sustainable gas-fired power generation capacity that in turn supports and allows the greater deployment of renewable energies.
The IGU also recommends that greater emphasis and financial support should be placed on innovation and new technologies that focus on the complementary nature of natural gas and renewable energies.
In view of the complementary relationship between natural gas and renewable energies, the IGU calls on policy makers and goverments that the natural gas industry and renewable energy sector be strongly encouraged to continue to build on their collaboration and work to maximize the value of this partnership.