Implications of Abundant
Natural Gas
JAE EDMONDS AND HAEWON MCJEON
APRIL 2013
April 29, 2013
1
Gas and the Global Energy System
Gas is has been a growing component of the global energy system for some time.
April 29, 2013
Grubler et al., 2012: Chapter 1 - Energy Primer. In Global Energy Assessment - Toward a Sustainable Future.
2
A brief history of thinking about Natural
Gas Resources
In the 1990s total gas reserves were thought to be more abundant than oil, but gas
production was expected to peak and decline before mid-21st century, because gas
exploitable resources were economically limited to “conventional” resources.
Unconventional resources were thought to be too expensive ever to be relevant.
In 1997, Rogner’s work on natural resources indicated that “unconventional gas” was
abundant. But, modelers either were slow to incorporate unconventional gas (and oil)
into their thinking or priced them as more expensive than “conventional” resources.
And then a technological
revolution happened.
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3
The natural gas revolution
The application of technologies for accessing “unconventional” gas shales in the United
States has dramatically increased gas production, and estimates of recoverable
resources even more.
And, dramatically reduced natural gas prices.
Source: EIA, Annual Energy Outlook 2012
4
Key Questions
As application of new production technology spreads beyond the United
States:
How will this change our understanding of the scale and composition
of the evolving global energy system?
How will this affect energy security and international trade?
How will this affect local and regional air quality?
What effect will this have on CO2 and other GHG emissions and the
technologies for their use in the near term and long term?
Globally and regionally
With and without emissions mitigation policies
Implications for regional air pollution
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5
How Much Gas Is Out There?
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6
Fossil Fuel Resources
How much natural gas is there and how much does it cost?
How much in the larger sense means resource availability
Oil, Gas and Coal
100,000
90,000
80,000
unconventional
70,000
resource
60,000
unconventional
reserve
50,000
conventional
40,000
resource
30,000
conventional
20,000
reserve
10,000
-
500,000
450,000
400,000
350,000
300,000
250,000
200,000
150,000
100,000
50,000
-
unconventional
resource
unconventional
reserve
conventional
resource
conventional
reserve
EJ
EJ
Conventional and unconventional for oil and gas
Coal is just too abundant to divide up that way.
oil
gas
coal
oil
gas
coal
7
How much does it cost?
To help us understand the implications of abundant and inexpensive
natural gas availability for the global energy system, we have
developed three alternative global and regional resource supply
schedules.
Gas Technology Circa 1990 (Gas Tech 1990 or GT1990) this supply
schedule reflects an understanding of gas resource availability circa
1990s.
Gas Technology Circa 2000 (Gas Tech 2000 or GT2000) this supply
schedule reflects an understanding of gas resource availability in the
early 2000s.
Gas Technology Circa 2000 (Gas Tech 2010 or GT2010) this supply
schedule assumes that advanced technologies can be successfully
deployed globally.
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The three gas supply schedules (global)
2005 Extraction Cost (2005$/GJ)
GT1990 - Conventional Gas Resources Only, ca 1990s
GT2000 - Expensive Unconventional Gas, ca 2000s
GT2010 - Abundant and Inexpensive Gas Resources, 2010 and beyond
20
GT1990
GT2010
15
10
5
0
0
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GT2000
10000
20000
30000
Cumulative Resource (EJ)
40000
9
The Global Change Assessment Model
14 Region Energy/Economy Model
GCAM is a global integrated
assessment model
GCAM links Economic, Energy, Landuse, and Climate systems
Technology-rich model
151 Agriculture and Land Use Model
Emissions of 16 greenhouse gases and
short-lived species: CO2, CH4, N2O,
halocarbons, carbonaceous aerosols,
reactive gases, sulfur dioxide.
Runs through 2095 in 5-year timesteps.
Dynamic Recursive
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Open Source/Model and
Documentation available at:
http://www.globalchange.umd.edu/
models/gcam/
10
Gas and the Global Energy
System
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11
Adding Abundant but EXPENSIVE
unconventional gas to Conventional gas
Increased late 21st century production
When gas prices were driven up past present prices
Near-term gas production and use were similar in GT1990 and GT2000.
GT2000
300
GT1990
250
200
150
100
2095
2090
2085
2080
2075
2070
2065
2060
2055
2050
2045
2040
2035
2030
2025
2020
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2015
0
2010
50
2005
Global Natural Gas Production (EJ)
350
12
Abundant AND Inexpensive gas changes
our understanding of the near term
Abundant and inexpensive gas is introduced in North America in 2015
and globally in 2020.
The increase in natural gas production accelerates.
And lowers the price of natural gas around the world.
GT2000
2005$/GJ
250
200
150
100
2055
2050
2045
2040
2035
2030
2025
2020
2015
0
2010
50
N. Gas Price
domestic natural gas GT2000
domestic natural gas GT2010
LNG imports GT2000
LNG imports GT2010
2005
2065
2010
2070
2015
2075
2020
2080
2025
2085
2030
2090
2035
2040
2095
2045
2050
300
2005
Global Natural Gas Production (EJ)
GT2010
9
8
7
6
5
4
3
2
1
0
2060
N. Gas Production
350
13
2050 Global Primary Energy Consumption
1200
1,005
1,007
EJ/yr
800
493
400
0
121
99
168
2005
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354
313
224
307
210
198
2050
2050
GT2000 GT2010
trad biomass
geothermal
solar
wind
hydro
nuclear
biomass
coal
natural gas
14
Abundant and Inexpensive Gas Penetrates
Power Production
Abundant and inexpensive natural gas displaces other energy carriers
in power generation
Where it helps lower generation costs
Change in Fuel Mix for Power Generation resulting with Abundant and
inexpensive natural gas rather than expensive unconventional gas
50
EJ/yr
25
Global power sector
consumption in
2005 = 185 EJ/yr
0
-25
-50
2015 2020 2025 2030 2035 2040 2045 2050
net change
battery
CHP
solar
wind
hydro
geothermal
nuclear
biomass
liquid fuel
gas
coal
15
2050 Global Final Energy Consumption Change
40
EJ/yr
20
0
-20
-40
Global consumption
in 2005 (EJ)
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building
industry
113
152
transport electricity
88
others
renewables
nuclear
district heat
trad biomass
hydrogen
electricity
biomass
coal
gas
liquid fuel
185
16
But, a 20% increase in gas use is a much
smaller change in global energy use.
This effect is more pronounced in some regions with existing
infrastructure for natural gas based economy (e.g. FSU).
Primary Energy Consumption (EJ/yr)
80
70
Former Soviet Union
GT2000
GT2010
60
50
40
30
20
10
0
2005
2010
2015
2020
2025
2030
2035
2040
2045
2050
Global
Gas Trade
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Cumulative Natural Gas Net Export
2005-2050
Gas Tech ca. 2000
Gas Tech ca. 2010
Former Soviet Union
Canada
Middle East
Africa
Australia_NZ
Southeast Asia
Latin America
China
Eastern Europe
Korea
India
Japan
USA
Western Europe
Former Soviet Union
Canada
Middle East
Africa
Australia_NZ
Southeast Asia
Latin America
China
Eastern Europe
Korea
India
Japan
USA
Western Europe
-600
-400
-200
0
200
Cumulative Natural Gas Net Export (EJ)
400
600
-600
-400
-200
0
200
Cumulative Natural Gas Net Export (EJ)
400
600
Global natural gas consumption in 2005 = 99 EJ/yr
Cumulative USA natural gas consumption in 2005-2050 = 1200 EJ ~ 1600 EJ
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Gas and Greenhouse
Emissions—Without Climate
Policy
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20
Carbon and Energy
How does abundant gas affect expected greenhouse gas emissions?
CO2, and total climate forcing.
Carbon and energy
Petroleum = ~20 PgC/EJ
Coal = ~27 PgC/EJ
Natural gas = ~14 PgC/EJ
Nuclear, Solar, wind, geothermal, and other renewable energy forms
= ~0 PgC/EJ
Bioenergy is 0 net emissions for the energy sector, but indirect land use
change emissions are accounted.
Methane emissions have a (100 year) Global Warming Potential of
~25 gCO2/gCH4
12% of methane emissions was from natural gas in 2005.
Sources include: emissions from FF, e.g. coal mining, gas transmissions
& distribution, gas venting, etc., (also land use, agriculture, animal
husbandry, waste …)
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Carbon-energy ratios in the larger economy
XGAS: Expensive unconventional gas scenario
Average carbon intensities (kgC/GJ):
Natural gas
~14
Petroleum
Coal
Average global 2030
~20
~27
~17
Regional average carbon-energy ratios in 2010 (kgC/GJ):
Average US
~16
Average China
~22 (modern ~24)
Average India
~16 (modern ~20)
Average W. Europe
~15
Average Africa
~11 (modern ~15)
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CO2 Emissions: Abundant and Inexpensive
versus Expensive Unconventional Gas
20
10
5
0
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GT2010
2005
2010
2015
2020
2025
2030
2035
2040
2045
2050
GtC
15
23
CO2 Emissions: Abundant and Inexpensive
versus Expensive Unconventional Gas
20
GtC
15
10
5
GT2000
• Virtually no change in Fossil
Fuel CO2 emissions.
• Slightly higher in the early
years due to increased
energy consumption.
• Slightly lower in the later
years due to crowding out
coal.
0
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2005
2010
2015
2020
2025
2030
2035
2040
2045
2050
GT2010
24
Climate Forcing: Abundant and Inexpensive
versus Expensive Unconventional Gas
Radiative forcing increases slightly.
Reduced SO2 from coal burning reduce cooling effect.
Increased fugitive methane emissions from natural gas extraction.
Smaller countervailing effect of reduced fugitive methane emissions
from coal mining.
Reduced Black Carbon emissions from coal burning.
Slightly reduced CO2 emissions from reduced biomass land use
change emissions.
450
350
250
2005
2050
GT2000
2050
GT2010
Concentration
(ppmv CO2-eq)
Radiative Forcing (Wm-2)
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850
750
650
550
Radiative Forcing Difference
Radiative Forcing Difference
Radiative Forcing
6
5
4
3
2
1
0
-1
-2
CO2
CH4
N2O
Other Kyoto Gases
SO2
All Other Gases
Net Total
2.0%
1.5%
1.0%
0.5%
0.0%
-0.5%
25
Why did CO2 emissions not decline?
Two effects of abundant and inexpensive “unconventional”
gas
1. Carbon-intensity reduction effect—on average more gas
means a lower carbon-energy ratio
2. Demand expansion effect—on average energy is less
expensive, so people use more.
These two effects roughly cancel—at a global scale.
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ΔMtC
0
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-20
Eastern Europe
China
Canada
Western Europe
USA
Southeast Asia
Middle East
Latin America
Korea
Japan
India
Former Soviet Union
-60
Australia_NZ
-40
Africa
Regional changes in carbon emissions
60
40
20
2030
2050
-80
-100
27
Global Primary Energy Consumption Change
Global Total
≈ 493 EJ/yr in 2005
80
In general
changes are
modest
EJ/yr
40
0
-40
2015
2020
2025
2030
2035
2040
2045
2050
-80
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trad biomass
geothermal
solar
wind
hydro
nuclear
biomass
coal
natural gas
oil
net change
28
-40
2015
2020
2025
2030
2035
2040
2045
2050
-80
20
USA
0
-10
-20
2015
2020
2025
2030
2035
2040
2045
2050
EJ/yr
10
trad biomass
geothermal
solar
wind
hydro
nuclear
biomass
coal
natural gas
oil
net change
10
0
-10
-20
2015
2020
2025
2030
2035
2040
2045
2050
0
China
8
Africa
4
0
-4
-8
2015
2020
2025
2030
2035
2040
2045
2050
EJ/yr
40
20
EJ/yr
Global
trad biomass
geothermal
solar
wind
hydro
nuclear
biomass
coal
natural gas
oil
net change
EJ/yr
80
trad biom
geotherm
solar
wind
hydro
nuclear
biomass
coal
natural g
oil
net chan
trad biom
geotherm
solar
wind
hydro
nuclear
biomass
coal
natural g
oil
net chan
29
Gas and Emissions Mitigation
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30
Abundant natural gas and greenhouse
gas emissions mitigation
How is that understanding different compared with our earlier
understanding?
Which policy?—Stabilization of greenhouse gas concentrations (the
goal of the Framework Convention on Climate Change)
Analysis assumptions:
Ambitious policy goal: 450 ppm CO2-e (2.6 Wm-2) in 2100
Idealized policy
All regions face a common carbon tax
All sectors face a common carbon tax
The carbon tax rises over time at the idealized “Hotelling” rate.
Full suite of technologies available
Nuclear, CO2 capture and storage (CCS), bioenergy, forest sequestration,
renewable energy, energy efficiency
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Fossil Fuel Consumption
300
250
200
150
100
50
0
GAS
400
400
350
300
250
200
150
100
50
0
OIL
Primary Energy Consumption (EJ/yr)
350
GT2000
GT2000 450 CO2e
GT2010
GT2010 450 CO2e
Primary Energy Consumption (EJ/yr)
Primary Energy Consumption (EJ/yr)
400
350
300
250
200
150
100
50
COAL
0
2005 2015 2025 2035 2045
2005 2015 2025 2035 2045
2005 2015 2025 2035 2045
Abundant and inexpensive gas
Abundant and inexpensive
Abundant and inexpensive
increases gas usage in climate
gas reduces oil demands,
gas reduces coal
mitigation scenarios.
but not much.
demands, but not much.
Larger than in the expensive gas
Climate policy reduces the
Climate policy reduces the
reference scenario.
demand for oil, but also, not
demand for coal use, a lot.
But, not as large as in the Abundant
much.
and inexpensive gas reference
scenario—i.e. climate mitigation does
not enhance gas usage.
Fossil Fuel Consumption
300
250
200
150
100
50
0
GAS
400
400
350
300
250
200
150
100
50
0
OIL
Primary Energy Consumption (EJ/yr)
350
GT2000
GT2000 450 CO2e
GT2010
GT2010 450 CO2e
Primary Energy Consumption (EJ/yr)
Primary Energy Consumption (EJ/yr)
400
350
300
250
200
150
100
50
COAL
0
2005 2015 2025 2035 2045
2005 2015 2025 2035 2045
2005 2015 2025 2035 2045
Abundant and inexpensive gas
Abundant and inexpensive
Abundant and inexpensive
increases gas usage in climate
gas reduces oil demands,
gas reduces coal
mitigation scenarios.
but not much.
demands, but not much.
Larger than in the expensive gas
Climate policy reduces the
Climate policy reduces the
reference scenario.
demand for oil, but also, not
demand for coal use, a lot.
But, not as large as in the Abundant
much.
and inexpensive gas reference
scenario—i.e. climate mitigation does
not enhance gas usage.
Fossil Fuel Consumption
300
250
200
150
100
50
0
GAS
400
400
350
300
250
200
150
100
50
0
OIL
Primary Energy Consumption (EJ/yr)
350
GT2000
GT2000 450 CO2e
GT2010
GT2010 450 CO2e
Primary Energy Consumption (EJ/yr)
Primary Energy Consumption (EJ/yr)
400
350
300
250
200
150
100
50
COAL
0
2005 2015 2025 2035 2045
2005 2015 2025 2035 2045
2005 2015 2025 2035 2045
Abundant and inexpensive gas
Abundant and inexpensive
Abundant and inexpensive
increases gas usage in climate
gas reduces oil demands,
gas reduces coal
mitigation scenarios.
but not much.
demands, but not much.
Larger than in the expensive gas
Climate policy reduces the
Climate policy reduces the
reference scenario.
demand for oil, but also, not
demand for coal use, a lot.
But, not as large as in the Abundant
much.
and inexpensive gas reference
scenario—i.e. climate mitigation does
not enhance gas usage.
Carbon Price
120
2005$/tCO2
100
GT2000 450 CO2e
GT2010 450 CO2e
80
60
40
20
0
2005 2010 2015 2020 2025 2030 2035 2040 2045 2050
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Summary
Natural gas has been increasing its market share for decades
Technologies that make commercially available gas more abundant
and less expensive accelerate this trend
This has major implications for competition among all primary energy
sources; for energy production, transformation, distribution and end
use; energy security; local and regional air pollution; investments in
facilities and infrastructure; supply and value chain interactions within
and among sectors and regions and trade
Gas displaces other fuels but does not significantly alter the overall
scale of the global energy system through 2050
Gas trade patterns change significantly, e.g. the USA becomes a small
net exporter
Availability of abundant, less expensive gas through 2050 does not
significantly change
Global fossil fuel CO2 emissions or total radiative forcing, or
The carbon price required in an idealized mitigation scenario
END
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