Gas technologies may achieve emissions reductions of 12 GT per year by 2040

Oil&Gas Materials 9 July 2020 22:52 (UTC +04:00)

BAKU, Azerbaijan, July 9

By Leman Zeynalova - Trend:

Significant investment in renewable gas, hydrogen, and CCUS technologies will be required to develop entirely
new value chains for the provision of low-carbon gas and deliver on the significant potential of natural gas
to reduce the emissions intensity of energy systems, Trend reports citing the International Gas Union (IGU).

Of the total investment required through 2040 to maximize the sustainable development impacts of natural gas, and help meet the Paris climate goals, roughly half would need to be in low-carbon gas technologies, IGU said in its report.

“The required investment in natural gas infrastructure is large in absolute terms, but it can deliver a high level of emissions reduction per dollar spent. Gas technologies have the potential to achieve emissions reductions totaling 12 GT per year by 2040. This would require a maximum of $820 billion per year of investment, thus making it roughly $68 per ton of reduction at the high end, and about half that on the low end of investment requirements,” the report says.

By comparison, the IEA, in its Sustainable Development Scenario, estimates that renewable power generation can achieve 7GT of emissions reductions per year through 2040, but this would require more than $1 trillion of annual investment in generation and transmission capacity58 (roughly $142 per ton of reduction).

IGU believes that while the cost structures of renewable power and natural gas are very different (renewable power mainly involves upfront capital expenditures, whereas gas technologies require a mixture of capex and opex), the lower capital intensity of gas technologies and the lower integration costs are advantages, given competing demands for capital.

“Beyond broad-based infrastructure enabling access to gas in new geographies, targeted support is required to facilitate the adoption of new gas technologies for specific forms of consumption. This is critical in the transport and buildings sectors, for example, where consumers face adoption barriers in the form of upfront capital requirements,” reads the report.

While the use of natural gas can lower operating costs over time, incremental capital costs can prevent adoption from the outset, according to IGU.

“To overcome this barrier, measures such as low-interest and on-bill financing could help to minimize any initial financial burden.”