Technological advancements in renewables are disrupting the traditional energy market but natural gas can still assist as a ‘transition’ fuel in reducing emissions in the overall economy, says a recent report.
However, for this to happen, investors would need to reinvent the natural gas business as gas could be essential in reducing emissions from hard-to-abate sectors and places that may boost natural gas, according to the report by Citi Bank has said.
The report said that natural gas is an energy source that could be part of the energy transition, and identifies five key demand areas where the proposition for natural gas is strong and could give it an edge as a transition fuel.
These are providing reliable electric grid supply; using its smaller footprint to provide power generation in urban areas and as a bunkering fuel to help reduce emissions in shipping.
The report says that finding the right product/market fit, innovating industry processes, and reinventing business practices are key for the industry to remain competitive.
But this will require that natural gas can resolve its methane leakage and carbon emission issues.
Natural gas can be effective in power generation and storage with the main benefit being seen in carbon capture utilization, storage, reliable short and long-term storage of energy.
Natural gas has the advantage of compact footprint for lower land-use intensity particularly in emerging markets a factor that will be useful to deal with rapid urbanisation.
In shipping, LNG has near-zero sulfur and nitrogen and 25 percent less CO2 emissions when compared to diesel and fuel. Natural Gas vehicles are also lower-emitting modes of transportation.
Hydrogen is essential for hard-to-abate sectors and even relevant for island nations. The report said the benefit is that blue hydrogen is very competitive as a decarbonized fuel or feedstock.
This reinvention will call for co-developing supply, midstream, and demand projects which could facilitate the use of gas as a transition fuel on the demand side, build infrastructure that could help with a future hydrogen economy, and make use of the gas resource.
Gas producers pooling together through a ‘development bank’ structure could help solve m between demand and infrastructure, the report said.
The UN expects urbanization rates will rise from a global average of less than 60 percent today to nearly 70 percent by 2050, with the biggest gains in emerging markets.
The high population density in emerging markets also increases power intensity levels and the need for new power generation. Gas-fired generation remains valuable for its compact land-use intensity versus renewable generation, the report said.