Everything Points To More Natural Gas Demand This Decade

24 Sept. 2020-Natural gas has often been vilified as just another fossil fuel contributing to the climate crisis. While gas-fired power generation and the natural gas value chain do emit greenhouse gases, natural gas burns cleaner than other fossil fuels, most notably coal, and can play a major role in replacing coal-fired power generation, immediately contributing to lower emissions from the electricity sector.

Natural gas also has an important role to play in helping power grids with flexible and reliable baseload that is capable of meeting peak demand, securing grids and ensuring they will be capable of accommodating a growing share of renewable energy generation, mostly from solar and wind.

All scenarios point to renewables growing at the fastest pace over the coming decades—there is no doubt about this. But if grids are to be able to handle the surge in renewable power sources, they need to be flexible and resilient to provide power even when the sun doesn’t shine or the wind doesn’t blow.

With coal on the path of irreversible decline in developed economies such as the United States and Europe, natural gas could save the day, replacing coal to ensure that grids can handle growing shares of renewable power, at least until major breakthroughs in energy storage potentially limit the need of stable fossil fuel power generation 24/7 which could also meet peak demand.

Until renewables can power up 100 percent of electricity, if they ever could, and until cost-efficient, large-scale, and reliable energy storage solutions are found, every part of the world – from the top U.S. solar state California to every state in India – will continue to need natural gas in their power mix, regardless of whether they like it or not, Mark Le Dain, VP Strategy at energy tech firm Validere, writes in Forbes. California, the largest U.S. solar state which has an ambitious program to drastically cut emissions and boost the share of renewables in its power generation, became this summer a textbook example of having to rely on some part of natural gas generation because there wasn’t sufficient energy to meet the high demand during the heatwave.

In August, California energy consumers were warned of rolling outages. At the start of September, the State Water Resources Control Board extended the phase-out dates of four natural gas-fired plants of one to three years, saying that “The plants are needed to provide more energy grid stability and reliability, as additional energy and storage resources are built over the next three years.”

“We need to pay attention to the integrity of the electrical grid. Because if we do not, we are going to lose this whole green thing we’re doing. We’re going to lose the public,” Patrick O’Donnell, a state Assemblyman from Long Beach, told the California water board, as carried by the Los Angeles Times.

In other words, consumers want reliable electricity supply. Natural gas can help with that and even contribute to lowering emissions if it continues to replace coal-fired generation.

Between 2011 and 2019, as many as 103 coal-fired power plants were converted to natural gas or replaced by natural gas-fired plants in the United States, EIA estimates.

Due to the rapid replacement of coal with natural gas, U.S. energy-related CO2 emissions saw the largest decline among all countries, 2.9 percent, in 2019, the International Energy Agency (IEA) says.

Last year, natural gas accounted for 38.4 percent of U.S. utility-scale electricity generation, followed by coal with 23.5 percent, nuclear with 19.7 percent, and renewables including hydropower with 17.5 percent.

Through 2050, natural gas is set to keep its share at around 36 percent, according to the reference case in EIA’s Annual Energy Outlook covering forecasts until 2050. However, over the next 30 years, coal is set to lose more than 10 percentage points of market share and slump to 13 percent of power generation, while renewables are set to jump to 38 percent and surpass natural gas in the mix.

In the largest energy-hungry developing economies, India and China, the share of coal is set to decline through 2050 in all three scenarios, according to BP’s Energy Outlook 2020. Renewables–and to a lesser extent, gas–will be the key growth energy sources, according to BP.

Natural gas is by no means a clean fuel, but it is cleaner than coal and could support a greater global transition to renewable energy.