Continued from previous page
Recent general modelling studies by Donovan et al. (1997) and
Bernstein et al. (1999) suggest that, in Annex B countries, policies
to reduce GHGs may have the least impact on the demand for oil, the most impact
on the demand for coal, with the impact on the demand for natural gas falling
in the mid-range. These results are different from recent trends, which show
natural gas usage growing faster than use of either coal or oil, and can be
explained as follows.
- Current technology and infrastructure will not allow much switching from
oil to non-fossil fuel alternatives in the transport sector, the largest user
of oil, before about 2020.
- The electric utility sector, the largest user of coal, can switch to natural
gas, but the rate of switching will be limited by regional natural gas availability.
- Given the above considerations, modelling studies suggest that Annex B countries
are likely to meet their Kyoto Protocol commitments by reducing overall energy
use, which is likely to result in a reduction in natural gas demand.
Given the agreement in the modelling studies and the logic that can be used
to support the conclusions, this finding is established, but incomplete.
The GHG mitigation benefits of using natural gas depend on minimizing losses
in its use. CH4, the chief constituent of natural gas, is a GHG,
and will be emitted to the atmosphere in natural gas leaks, most of which occur
in older, low pressure distribution systems. CH4 losses also are
often a by-product of coal production. A full comparison of the benefits of
switching from coal to natural gas, a step often included in mitigation strategies,
requires a lifecycle analysis of CO2 and CH4 emissions
for both fuels.
Brown et al. (1999) used GTEM, a general equilibrium model described
above, to evaluate the impact of the Kyoto Protocols commitments, with
and without unrestricted international emissions trading, on the production
of natural gas. They found the effect of emissions trading on projected natural
gas production is mixed, with some countries seeing higher production rates
and others, lower production rates. Because of the many assumptions that have
to be made and the sector-specific impacts of emissions trading, only low confidence
can be assigned to specific numerical results.
Table 9.5 summarizes a number of global economic modelling
studies which project the impact of measures to mitigate CO2 emissions
on the demand for natural gas, expressed as the ratio in change in gas demand
to the change in CO2 emissions. The results are highly variable;
the mean ratio is 0.14 with a standard deviation of 0.88. Table
9.5 shows that some studies have pointed towards stronger gas demand of
CO2-abatement measures compared to the reference cases.
|Table 9.5: Changes in carbon dioxide emissions and
gas demand from the reference case in alternative emissions abatement studies
|| Change in CO2 emissions (%)
|| Change in natural gas demand (%)
|| Ratio of changes in gas demand to changes in CO2
|Hoeller et al. (1991)
|Bossier and De Rous (1992)
|Proost and Van Regemorter (1992)
|Burniaux et al.(1991)
|Ghanem et al.(1998)
|Birkelund et al. (1994)
|Bernow et al. (1997)
|Gregory et al. (1992)
|Scenario B Kratena and Schleicher (1998)
|Mitsubishi Research Institute (1998)
Longer term, natural gas would be the easiest of the fossil fuels to convert
to hydrogen. This would significantly increase demand for natural gas. For technical
details see Chapter 3.
22.214.171.124 Ancillary Benefits of GHG Mitigation in the Oil
and Gas Industry
If, as projected, GHG mitigation policies reduce the growth in demand for crude
oil they will result in several ancillary benefits: the rate of depletion of
oil reserves will be slowed; and air and water pollution impacts associated
with oil production, refining and consumption will be reduced, as will oil spills.
Reduced growth in demand for natural gas will have similar benefits: slower
rate of depletion of this natural resource, less air and water pollution associated
with this industry, and less potential for natural gas explosions.