The versatility of natural gas is one key to its expected prominent role in the energy transition, serving as an energy source for all sectors including heating, cooking and industrial applications. When it comes to greenhouse gas emissions, natural gas has a significant advantage over coal, emitting about half the CO2.
This makes it an attractive option for stabilizing the path to renewables while reducing carbon emissions in the short term.
1. Natural gas is a reliable, affordable energy source which enables innovation
The impact of the COVID pandemic as well as of recent extreme weather events has drawn attention to the systemic risks that impact energy security.
In many countries, nuclear power is being phased out or shelved, creating additional need for other technologies to provide a reliable baseload. Natural gas, as an easy to store, lower-carbon option, stands out as a good candidate to provide an uninterrupted, flexible energy supply in tandem with intermittent output from wind and solar while storage technologies are scaled up and innovative new energy pathways are explored.
In a 2019 report, the United Nations Economic Commission for Europe (UNECE) said that the ability of natural gas to provide a relatively low carbon backup at peak energy usage times, rather than play a traditional role of round-the-clock baseload, may prove to be its greatest contribution to the energy transition.
2. It acts as a bridging ingredient in the hydrogen revolution
Natural gas is also frequently cited as a driver of the energy transition because of its central role in the scaling up (production and transport) of hydrogen – which the European Union, among others, has predicted will play a key role in a future climate-neutral economy.
The EU's hydrogen policy notes that although the cost of producing 'clean hydrogen' (made entirely using renewable electricity) is falling, it remains comparatively high. The EU strategy envisions the development of 'clean hydrogen' as a gradual trajectory, initially including 'hydrogen' from natural gas.
3. It is a key tool in the fight against energy poverty
Although great progress has been made in ensuring access to electricity globally, in the Global South, over 700 million people remain cut off from electric power and clean cooking technologies. Almost 600 million of them live in Africa – and the continent accounts for less than 4 percent of annual global carbon emissions. Although renewable energy capacity is expanding rapidly, the technology faces challenges. For example, although Africa has 60% of the best solar resources globally, it is home to only 1% of installed solar PV capacity.
Natural gas is a plentiful and valuable resource for countries from Algeria and Egypt to Ghana, Senegal and Mozambique. According to a report by the United Nations Economic Commission for Africa, the continent's traditional reliance on biomass, coal and oil means that a combination of renewables and other cleaner fuels such as natural gas is important in fast-tracking the energy transition.
4. Along with Carbon Capture and Storage, it can transform the energy sector
In the short to medium term, and in conjunction with renewables and carbon capture, utilization, and storage (CCUS), new natural gas developments can complement the decarbonization of the energy sector.
According to the UNECE report, carbon capture, use and storage offers a real prospect for natural gas to work with renewable energy sources on decarbonization. In particular, it helps to address the problem of how to cope with hard-to-abate emissions from heavy industry, notably steel, cement and petrochemicals.
Scaling up of CCUS will be critical, given the scale and urgency of the decarbonization challenge – not only with respect to electricity generation, but also heating. An IHS Markit study illustrates how far the world is from electrification of heating – for instance, New York City's power system has 31GW total capacity, but would require 150GW capacity to electrify heating (133GW, with full deployment of heat pumps). Natural gas is unlikely, then, to be phased out in the near term, but will continue to play a role in the hydrogen production, in combination with accelerated deployment of CCUS until hydrogen produced from renewables or nuclear is economically viable as a fuel for heating.
Natural gas can contribute to climate targets, and serves as a bridge to overcome technology gaps.
In a report published earlier this year, the G20 observed that natural gas meets a considerable share of seasonal energy demand in many countries, offering resilience and security of supply in the face of adverse weather and volatile markets. In addition to this short-term role, the group suggested that an extensive roll-out of CCUS technology and hydrogen production in the longer term would enable natural gas to align with a net-zero pathway.