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Hydra by dffhrtcv3

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									the Future of the Market for Natural Gas
           four storylines to 2040




                                     C.J. Jepma


                                       Foundation JIN
                                       Meerkoetlaan 30a
                                       9765 TD Paterswolde

                                       tel.: +31(0) 50 309 68 15
                                       e-mail: jiq@jiqweb.org
     Goal of the study


The ultimate goal of the study is to assess
what strategic action may be required from
international gas market players in order to
optimally address the various developments
foreseen in the structure, size, and position
of the international gas market as a result
of the present and possibly changing trend
towards more sustainable energy
production, use and implementation.
         New challenges to the gas industry


   Can natural gas play an important role as
    transition fuel towards a carbon free energy
    system, and how will this work out in the
    future role of gas on the energy market?

   Will security of supply of energy issues
    increasingly dominate public concern, and
    how may this affect the gas market
    conditions?
         New challenges to the gas industry


   To what extent may climate change and
    other environmental and safety concerns
    affect the trends in fossil fuel and renewable
    fuel use, and how will this affect the gas
    market share?

   Will internationalisation and liberalisation of
    the gas market lead to more flexible but less
    predictable gas flows, and to what extent
    can flexibility in demand be matched by
    flexibility of supply?
                  Scenario – World Energy Council


                        1990                  2040
                        base
                        year   A1   A2   A3          B    C1   C2
Primary Energy (Gtoe)    9     25   25   25          20   14   14
Coal                     24    15   32    9          21   11   10
Oil                      34    32   19   18          20   19   18
Gas                      19    19   22   32          23   27   23
Nuclear                  5     12    4   11          14    4   12
Renewables               18    22   23   30          22   39   37

Final Energy (Gtoe)     6      17   17   17          14   10   10
Solids                  30     16   19   18          23   20   20
Liquids                 39     42   36   33          33   34   34
Electricity             13     17   18   18          17   18   17
Other                   18     25   27   31          28   29   29

Carbon Emissions(GtC)    6     12   15   9           10   5    5
        Scenario – World Energy Council


   Share of gas in primary energy is scheduled
    to increase from 19% in 1990 to levels
    ranging from 22-32% in 2040.
        Scenario – IPCC/SRES


Envisage a number of possible developments:
 diffusion of existing technologies and knowledge
  from the present industrialised countries to the rest
  of the world, slow technological development
 industrialised countries strongly shift away from
  their traditional economic development path:
  emergence of ‘knowledge’ economies
 world will follow a new Kondratieff wave leading to
  enhanced economic growth with new high-
  technology industries and with opportunities for
  developing to catch up their development
                   Scenario – IPCC/SRES

                         International cooperation




                    B1                               A1




    Public                                                    Private
responsibilities                                          responsibilities




                    B2                               A2




                           National sovereignty
Scenario – IPCC/SRES
                Scenario – IEA


                         1978   2002    2010    2020    2030    2002-2030*
Coal                     1407   2389    2763    3193    3601      1.5%
Oil                      2413   3676    4308    5074    5766      1.6%
Gas                      892    2190    2703    3451    4130      2.3%
Nuclear                  29     692     778     776     764       0.4%
Hydro                    104    224     276     321     365       1.8%
Biomass and waste        687    1119    1264    1428    1605      1.3%
  of which traditional   490    763     828     888     920       0.7%
renewables                4      55     101     162     256       5.7%
Total                    5536   10345   12194   14404   16487     1.7%
                    Scenario – IEA

World primary energy demand by fuel (in Mtoe)
7000

6000

5000


4000

3000

2000

1000

  0
      1970    1980        1990         2000       2010     2020    2030

             Coal       Oil      Gas          Nuclear    Hydro    Other
               Scenario – Shell

Primary energy shares in          Coal          Hydro

the DaU-scenario                  Traditional   Nuclear

                                  Oil           New Renewables
80
                                  Gas           Biofuels


60


40


20




 1850          1900        1950          2000   2050
          Scenario – Shell (DaU)


Dynamics as
Usual         1975   2000    2025   2050
Oil           2740   3724    4918   5363
Coal          1639   2178    2998   2763
Coal CH4/H2                   94    375
Gas           1101   2178    3911   4145
Nuclear        94     679     820   749
Hydro          398    703     960   913
Biofuels                      117   1218
Other
renewables            94    1171     4473
Total         5972   9555   14988   20000
          Scenario – Shell (SCA)


Spirit of the      1975   2000     2025    2050
Coming Age
Oil                2740   3724     5457    4333
Coal               1639   2178     3513    2787
Coal CH4/H2                         141    2272
Gas                1101   2178     5152    9274
Nuclear             94     679     1077    1967
Hydro               398    703     1148    1499
Biofuels                            164    9555
Other renewables           94       890    3841
Total              5972   9555     17541   35527
          Four non-traditional storylines

   the role of gas as a transition fuel in a rapidly
    greening world
   security of supply in a world with increasing
    gas supply - infrastructure constraints
   other fuels, both traditional (incl. nuclear) and
    renewable ones, are increasingly successful in
    increasing their share in overall energy supply
   the flexibility to generate sufficient swing to
    serve increasingly volatile demand patterns in
    a decentralising energy supply world.
        Transition storyline


Assumptions
 increasing awareness of climate change risks
 fast and massive introduction of commercially
  viable applications of renewable energy
 the use of green gas (= biomass-based) is strongly
  promoted
 decentralized energy systems based on micro CHP,
  small-scale renewables, and green gas become
  increasingly popular
 large-scale biomass plantations are set up,
  especially in the tropics
        Transition storyline


Rationale
 Russian Kyoto ratification, EU ETS starts‘05
 potentially catastrophic unstable regime of
  intermittent abrupt climate change
 negotiations on the post-Kyoto period regime
 trade policy measures are increasingly accepted
 domestic power production based on coal is
  already being phased out
 market share of CHP has already increased fairly
  rapidly in industrialised countries
        Security of Supply storyline


Assumptions
 growing concern about the availability of energy
 oil reserves are depleted
 the share of renewables remains low, nuclear
  option under debate, coal is phased out for
  environmental reasons – gas is strategic option
 Europe, NAFTA, Japan, China and India
  increasingly compete for the available gas
  resources
 concerns about terrorist attacks
 regions increasingly try to become less dependent
  on imports
                     Renewables growth and boundaries

     EJ
75
            green power niches open
            strong government support

          environment and security concerns



50



                                                intermittence constraints emerge


                                                stagnant OECD demand and weak power prices
25
                                                planning blockages stall expansion




 2000                  2010                   2020               2030
         Gas Imports as a % of total energy
         consumption

20
                                       Japan


                                       Europe
15




10




 5

                                       North East Asia


 1970   1980   1990   2000   2010   2020
                      Primary energy demand in terms of
                      solid, liquid, gas or direct electricity
% of primary energy
                                                  Solids
100
                                                  Liquids

                                                  Gases (CH4 and H2)
80
                                                  Direct Electricity
                                                  (hydro, nuclear,
60                                                new renewables)



 40


 20




   1850                1900      1950      2000             2050
        Coal, oil and nuclear storyline


Assumptions:
 nuclear power becomes increasingly fashionable
 clean coal technologies will take a giant leap
  forward
 considerable new supply of oil is generated
 carbon credits prices per tCO2 keep fluctuating in
  the €10-40 range: no trigger for large-scale
  introduction of renewables
 concerns about climate change grow less
 energy prices remain at a fairly modest level (€20-
  50/barrel oeq.)
 natural gas is increasingly facing legislative and
  regulatory difficulties
        Flexibility storyline


Assumptions:
 flexibility by production is increasingly taken over
  by flexibility in storage and import through LNG
 politics and policy driven regulatory regimes lead
  to underinvestment or at least suboptimal
  investment in gasinfrastructure
 gas is seen as providing the flexibility needed
 gas production flexibility is less and less available
 international conflicts and interventions lead to
  increasing tensions and regionalised international
  gas markets.

								
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