The expression “money makes the world go round” could not be more accurate than it is now. With global efforts to push the energy transition forward, it’s more like money will determine humanity’s continued survival and whether global temperatures will be kept from going any higher than they already are. The transition of the global energy sector from an industry that completely relies on fossil fuels to one that works with an energy mix that emphasizes renewable resources is daunting. A lack of finances to fully realize the transition further exacerbates the dilemma, where experts have to tackle conflicting interests between energy needs and rising emissions. Natural gas is not only a practical low-carbon solution but a key financial and economic enabler that can provide the fiscal momentum to propel the energy transition forward while even cutting the costs of producing some renewables as well.
The first factor to take into consideration is the financial and economic might of the natural gas industry itself is large to ignore in the energy transition process. One study from McKinsey & Company titled “How Oil and Gas Companies Can Be Successful in Renewable Power” indicates that many of these companies are “…well positioned to become leaders in the energy transition. This is not only because of their global scale, the risk appetite of their investors, their large balance sheet and cash positions, and their long-standing relationships with energy customers and stakeholders, but also because of their unique capabilities related to offshore projects and hydrogen and sustainable-fuel production and transport.” Companies specifically involved with the production of natural gas not only offer a low-carbon alternative but additional investments to promote other renewable industries, such as green hydrogen and green ammonia.
Economic growth within the natural gas sector trickles down to stimulate the renewable energies industry as long as there is a setup and economic strategy for both markets to work together in symbiosis. This was further demonstrated by a study by Elena Verdolini, Francesco Vona, and David Popp titled “Bridging the Gap: Do Fast Reacting Technologies Facilitate Renewable Energy Diffusion?” from the National Bureau of Economic Research. It showed that “a 1% increase in the share of fast-reacting fossil generation capacity may have contributed to a 0.88% growth in renewables in the long run. These results are robust to various modifications in our empirical strategy, and most notably to the use of system-GMM techniques to account for the interdependence of renewable and fast-reacting fossil investment decisions.”
On a more technical level, some studies have shown that using natural gas as part of a mix to produce more environmentally friendly fuels could actually reduce the costs of the production process. From the journal Green Chemistry, one study titled “Economic and Environmental Potentials for Natural Gas to Enhance Biomass-to-Liquid Fuels Technologies” indicated “that different blending ratios of natural gas/biomass have a large effect on the economic and environmental performance of the GBtL fuels. Co-processing NG enables the economic feasibility of converting biomass to liquid fuel but at the expense of environmental sustainability. This study determined that the maximum amount of NG that can be blended with biomass would be 28% to meet the Renewable Fuel Standard (RFS) GHG emission targets for advanced fuels, with a resulting minimum fuel selling price (MFSP) of $2.75 per gallon gasoline equivalent (GGE).”
The same study added, “…..renewable liquid fuel could be cost competitive with fossil-derived liquid fuel if further improvements and optimizations could be made to blending ratios of NG, optimization of heat integration of the process, and reduction of excess hydrogen and excess electricity production.”
Despite the financial challenges that the energy transition may present, this is a step that humanity must take in order to meet the objectives of The Paris Agreement while ensuring sustainable economic growth. Natural gas is the remedy that will cure the world’s energy deficiencies while the global community awaits the introduction of renewables. It has not only proven itself as a low-carbon, efficient fueling alternative but as a lucrative opportunity to ensure that effectively executing the energy transition does not necessarily entail economic suicide. As highlighted by both Egyptian officials and notable experts from around the world, natural gas is the cash crop needed to pump all the necessary monetary resources to ensure a smooth transition and this is proven even on a scientific level. Drastic circumstances call for practical solutions and at this juncture, the global community is in need of more pragmatism than ever before.
