Why the world will be using natural gas for many years to come – and it’s bad news for your energy bill
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Fossil fuel giant Shell has said that natural gas consumption across the world will soar by 60 per cent in the next 15 years.
The estimate is a blow to decarbonisation hopes after the UN warned last year that the world is heading towards a 3.1 per cent rise in temperatures, which could trigger more extreme weather.
But the fuel is also considered to be cleaner than coal, which has seen a global decline in demand as more countries opt for liquefied natural gas (LNG), which is methane put under pressure to ship it in tankers.
“Europe and Japan will continue to require LNG to fill a widening gap between energy diversification ambitions and actual investment levels,” Shell said in its report. “LNG is becoming a cost-effective fuel for shipping and road transport that can bring down emissions.”
It comes as Shell’s big UK-based rival BP said it would cut renewable investments and spend more on oil and gas projects.
The shift in policy – BP had been looking to switch from fossil fuels to renewables – comes after some shareholders demanded better financial performance.
BP said renewable investment will be slashed by $5bn (£3.95bn) a year to $1-2bn, while $10bn will be invested in fossil fuels.
The companies’ supportive stance on fossil fuels comes as energy bills rise for Britons, with much of the leap a result of natural gas prices.
Last year, the UK generated more than half of its electric power from low-carbon sources – wind, solar and nuclear. But 28.5 per cent of its electricity generation came from natural gas, particularly during dark or still winter days when sun and wind are in short supply.
This flexibility gas offers – it can very quickly be switched on and off to fill the gaps left by the sun at night time or the wind when it is still – means it is still a crucial part of the mix.
How crucial is it?
What were you up to on January 8? It was on this day that the UK came closest in many years to a blackout when gas prices surged to more than £1,000 per megawatt hour and two power station companies were paid more than £12m for three hours of electricity because other sources were not available.
According to Professor John Underhill, university director for energy transition at Aberdeen University, about 75 per cent of the energy needs for the UK still comes from natural gas and oil. This is because electricity is only a part of the demand. Transport largely uses petrol and diesel from oil and industry and heating uses large amounts of gas.
What’s the plan to get us off foreign supplies?
The government promised it would save households £300 a year by 2030. But the Bank of England expects inflation to rise to 3.7 per cent this year, well above its 2 per cent target, largely because of a rise in energy costs.
To bring prices to heel, many more cheaper generation projects such as wind farms will need to be connected to the grid and ways will have to be found to store the energy for winter days when more is needed.
Progress on this storage is “not going at the speed one would need”, said Prof Underhill.
Ed Miliband, the energy secretary, said: “The way to deliver energy security and bring down bills for good is to deliver our mission to make Britain a clean energy superpower – with homegrown clean power that we in Britain control.”
But this will mean much quicker access to the grid. Currently, there are waits of up to eight years to add new windfarms and other green generation to the grid.
In the meantime, gas will be needed and the government could consider extending the life of the UK’s gas fields since using local gas is more environmentally friendly than shipping it from Qatar, the US and other far-flung places.
Having some sort of permitting whilst being clear that gas use will be on the decline could aid UK energy security, he said. Bad practices such as flaring, where waste gas is burned off should be banned, keeping the gas as low-emissions as possible.
“Make sure that with regulation that you ban flaring and that emissions are captured and stored safely in the ground,” he said.
