When the world's leading governments committed last fall in Paris to cut greenhouse gas emissions enough to reduce global climate change impacts, one immediate question was where natural gas would fit. That concern has only grown as the administration of US President Barack Obama has tried to move aggressively to curb methane emissions from oil and gas operations.
As executive director of the Joint Institute for Strategic Energy Analysis at the National Renewable Energy Laboratory in Golden, Colo., Doug Arent works at the policy intersections of energy, finance, and society. "Gas competes or relatively supports flexibility better than other sources in a low-carbon power system," he said during a May 11 presentation at the Center for Strategic & International Studies.
Arent's research concentrated on electric power generation, and not other gas applications such as home heating and transportation. He called the goal of 80% decarbonization by 2050 that was set at the Paris talks "a pretty steep step, but achievable." Using more gas to generate electricity will help make it happen, Arent said. "Its role will depend on pricing and availability."
Utilities will need to be more nimble and robust, Arent said. "Their biggest question will be what the most prudent investment would be. There's concern about overreliance on a single fuel source," he said.
Power generation from gas will need to climb to reach mid- and low-carbon targets in 2030, he said. A hybrid of gas and renewables looks the most promising, Arent said. "The technologies themselves are growing more competitive," he said. Gas assets could provide significant revenue later on, even if they don't produce much energy, because they would provide flexibility, Arent said.
But it will be necessary for the gas industry to begin managing emissions more effectively soon to ensure the fuel remains part of a decarbonization system, he warned.
Social license issue
"There's been a lot of conversation during the downturn not just about becoming more efficient, but also preserving human capital. I think that's a healthy development," he said. "In methane, the biggest issue is social license, particularly as local communities try to exercise more control."
When it comes to the best abatement opportunities, Arent said leak detectors and repair and load management are low-cost options. "Pipeline replacement is more expensive, but could provide jobs," he added.
"In most decarbonization scenarios, gas capacity grows in the near and medium terms, but utilization declines in the longer run. That should affect investment decisions," Arent said. Once carbon reduction moves past 50%, gas will remain economic only with carbon capture and storage. "The power generation industry will need to become more financially nimble," he said. "Systems with more gas generation will require less storage."
Nick Snow
NICK SNOW covered oil and gas in Washington for more than 30 years. He worked in several capacities for The Oil Daily and was founding editor of Petroleum Finance Week before joining OGJ as its Washington correspondent in September 2005 and becoming its full-time Washington editor in October 2007. He retired from OGJ in January 2020.
