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Gas technologies need additional capital to achieve full potential

Oil&Gas Materials 9 July 2020 22:52
Gas technologies need additional capital to achieve full potential

BAKU, Azerbaijan, July 9

By Leman Zeynalova - Trend:

For gas technologies to achieve their full potential, significant additional capital investment will be required to enable sufficient infrastructure expansion to meet demand, Trend reports citing the International Gas Union (IGU).

To maximize the sustainable development benefit from gas, an estimated $415 billion to $820 billion of investment will be required annually through 2040, IGU said in its report.

“The wide range of estimated required capital expenditure reflects the high level of uncertainty around future technology costs, with the low end of the range representing the potential for further cost-reducing innovation. Mobilizing capital from both public and private- sector sources in the near term will be critical for deploying these technologies, leading to greater competitiveness from scale and learning effects,” read the report.

IGU estimated that investment in gas power generation capacity has averaged $50 billion per year for the past three years.

“But to achieve the sector’s full potential to reduce global GHG emissions (by 3.3 GT of CO2 by 2040), investment would need to total between $170 billion and $270 billion per year to 2040,” the report says.

IGU believes that for transmission and distribution infrastructure, an estimated $60 billion to $110 billion per year would be required just to expand access to gas in new regions.

“The most pressing need for gas infrastructure investment is in Asia, where access to gas is limited today. Across non-OECD Asian countries,
gas contributes less than 10 percent of total energy supply while coal provides more than 50 percent. This is due in large part to poor access: while the population of Asia is five times that of Europe, the total combined length of the region’s gas
pipelines is less than in Europe,” reads the report.

Beyond enabling near-term fuel switching, current natural gas infrastructure investments provide a pathway for low-carbon gas in the future, according to IGU.

“In power generation, existing policies and carbon pricing measures are not yet sufficient to warrant market-driven upfront investment in CCUS. However, given the availability of plant retrofits, it would be possible to add CCUS in future as the price of carbon increases. Similarly, for natural gas access in industry and buildings, the development of pipeline infrastructure now can enable renewable gas, as well as some hydrogen blending in the future.”

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