Natural Gas Empowers Energy Transition Economy

Natural Gas Empowers Energy Transition Economy

As the energy transition is in full swing and research in renewable energy technologies has brought about the possibility of new ways of living sustainably, the fate of natural gas has come into question. Natural gas has had its fair share of criticism, but perhaps a more objective look at alternative views would reveal that the picture is more complex. Gas can play a number of different roles as an energy source in various regions and markets, depending on the needs of those particular areas, and can even be the ideal fuel to set the foundations for a low carbon energy transition while stimulating economic growth. Given the number of contradicting views on the matter, forming a reasonably accurate projection of what economic role gas may play in the future on a global scale is challenging, but trends indicate that gas is here for the foreseeable future.

From both environmental and economic perspectives, natural gas has been an incredible energy source for the electricity sector, being widely considered the largest gas consumer. According to a report from the Center for Strategic & International Studies, oil provided the world with close to a quarter of its electricity in 1973, but dropped to a mere 3% in 2018. However, gas has successfully taken oil’s place, being a better alternative fuel for electricity and providing up to 23% of the world’s electricity. Gas has also been instrumental in decarbonization since it managed to successfully displace coal and cut coal-related emissions by 43% in 2018 compared to when emissions reached its highest point in 2005.

Trends have shown also that natural gas continues to play a vital role in sustaining industry, with industrial operations accounting for 14% of global gas demand in 2017. Gas is a particularly popular option in the petrochemical field making up close to 10% of global gas demand, according to the Center for Strategic & International Studies. The International Energy Agency (IEA) stated in its 2018 report that minimal efforts have been made to develop a low-carbon pathway for chemicals and none of them involved moving away from using natural gas. Though some may think that the efforts to decarbonize the industrial sector may endanger the future of natural gas in this particular field, it remains to pose more of a long-term threat since gas is more cost-effective, readily available, and cleaner than other types of energy sources, such as coal.

For heating buildings and power generation, natural gas has also been highlighted as the ideal energy source as well. A study from the Center for Strategic & International Studies indicates that almost 75% of gas used in buildings originates from 10 international markets. The US, Russia, Iran, and China make up more than half of that amount. No country has been able to completely replace natural gas in buildings, though natural gas producers do consider district heating to be a long-term threat that needs to be addressed if they expect to remain competitive in this particular market.

Pricing by itself is arguably a factor that can sustain the existence of natural gas within the future energy transition market. Since regions vary in technological advancement and economic performance, natural gas is not only convenient but needed in areas where the development of other low-carbon renewable technologies is slow due to either the lack of sufficient funding or know-how.

In further exploring the concept of pricing as a key survival factor, it is also worthy of noting that most economists would agree natural gas will still be a fundamental part of the energy mix in regions where its price is low, such as the former Soviet Union, the Middle East, Asia, and Africa. These markets also generally match the profile of those nations with struggling economies, slow development, and less technological advancement, and hence, the existence of natural gas as an energy source is perhaps their only answer to achieving both sustainable economic growth and decarbonization.

On the other hand, since it is expensive in Europe (even more so, given the recent shortages), there are arguments that it is possible that the Europeans will push further to be less dependent on natural gas than other markets, but the move towards a gas-free economy might prove to be more challenging than they expect. Europe’s most recent moves to build infrastructure to import and store even more natural gas as an alternative to Russia’s energy supplies is a clear indication that they are not planning to ditch gas any time soon, especially with billions being invested in implementing the necessary infrastructural development.

Current conditions and trends have forced most experts to agree that natural gas definitely has a place in the future global energy economy and will play a significant role in propelling both Egypt and the world through the energy transition. The majority of assessments would indicate that even as the energy transition progresses and renewable energy technologies begin to take prominence, natural gas would still make a fundamental component of the energy mix. Yet, what’s most important is not just what makes up the energy mix itself, but rather how it is used to ensure a prosperous relationship with the environment. That is what will ultimately determine humanity’s continued survival.


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