Shaping Asia’s energy future with natural gas
Maarten Wetselaar, Integrated Gas and New Energies director of Royal Dutch Shell PLC
MANILA, Philippines - President Trump’s decision to withdraw the USA from the landmark Paris climate accord must not become a distraction from urgent global efforts to combat climate change. Countries in Asia were among the most committed supporters of the Paris goals. Now is not the time to break stride, but to reinforce the resolve.
Energy demand is set to double this century, with the world’s population reaching 11 billion, up from 7.5 billion today.
As the world changes, so will the energy system that powers it, driven by the need to reduce carbon emissions and — crucially for Asia — tackle air pollution that blights so many lives.
Coal is a big contributor to that air pollution. This can, and must, change. Put simply: we will need more and cleaner energy if Asian countries are to continue to thrive in the coming decades.
Today, coal is still the biggest source of energy in the Asian region, at 47 percent of the energy mix, compared to natural gas at 10 percent. In some countries, coal’s share is rising.
For Asia’s population, renewable energy will be essential to meeting growing demand while tackling climate change and air pollution.
But renewables chiefly produce electricity. And there are parts of the economy, such as industries that produce iron, steel, cement, plastic and chemicals that cannot be electrified yet — certainly not at a reasonable cost. That’s one reason why Shell’s Scenarios team believes that 75 percent of overall global energy demand will be met by traditional sources like oil, gas and nuclear in 2050.
The coming decades will see a big change in the way energy is produced, used and made available to people. And I see a combination of renewables, such as wind and solar, and natural gas — the cleanest-burning hydrocarbon — playing an increasingly important role. Modern gas-fired power plants can quickly respond to an increase in demand for electricity when there’s no sun or little wind.
By the end of the century many millions of people in emerging economies will join the middle class. Most will use cell phones and refrigerators. Many will drive cars — or travel in driverless cars — as their quality of life improves.
All this will create enormous pressures on the global energy system. At the same time, we face serious environmental challenges. What kind of air will our children and grandchildren breathe? How will climate change impact the quality of life of people in the most exposed areas, such as coastal regions?
Natural gas is one of the few energy sources that can be used across all sectors of the global economy, including fuelling transport, heating and lighting homes, and powering industries. Reserves are abundant and available in many regions.
The environmental benefits are also clear. In power generation, for example, natural gas emits around half the carbon dioxide (CO2) emissions and less than one-tenth of air pollutants compared to coal.
Some countries are already taking significant steps to boost the use of natural gas.
China plans to raise the share of natural gas in primary energy from six percent today to 15 percent by 2030. It is also widely using gas for transport, with more than 200,000 trucks and buses fuelled by liquefied natural gas (LNG).
In the city of Lanzhou, strict air pollution policies reduced coal consumption by 40 percent and significantly increased the number of days with clear skies between 2012 and 2016.
Elsewhere, in India, where gas makes up only eight percent of the energy mix, the government is moving towards a greater use of gas in the economy, creating infrastructure such as gas pipelines and LNG terminals. In Gujarat, India’s most industrialized state, gas now makes up 25 percent of the energy system, fuelling transport and cooking, as well as major plants producing petrochemicals, fertilizers and glass.
In the Philippines, domestic natural gas production fuels 20 percent of electricity generation. With domestic supply forecast to decline, according to the Department of Energy, the government is introducing policies to promote LNG imports for power generation.
Policies of successive governments will determine the extent to which gas will play a key role in the coming decades. Their decisions must reflect the commitments made at the UN Paris climate summit.
Government-led mechanisms that put a price on CO2 emissions would stimulate the development of low-carbon and renewable technologies. Singapore, for example, will be the first country in Southeast Asia to have a carbon tax to encourage industries to reduce emissions.
Beyond policy choices from governments, a lot will also depend on the action of energy companies. For Shell’s part, we continue to increase our investment in natural gas, now around half of our total production. And we are exploring commercial opportunities in renewables.
Governments, companies and consumers have the power to shape a new energy future, where renewables and natural gas play critical roles. Now is the time to step up the drive to deliver on the environmental pledges made in Paris. Now is the time to act.
