The use of natural gas in transport has the potential to change the role of energy infrastructure, politics and investing, but without the right mix of government policies and business commitment fuel consumption patterns will lag broader shifts that include a shift in consumption power to emerging economies.
“The demand pattern absolutely shifts to the East” in the period to 2050, with the inflection point occurring in the population heavyweights of India and China around 2025, World Energy Council Policy and Scenarios director Karl Rose told Breaking Energy at an industry event in late April.
The role of natural gas is being driven by price, with an acceleration of compressed natural gas in transport by companies and operators like cities that had already been considering the switch. While the fuel is cleaner-burning than diesel, at the moment it is not the “clean” part of natural gas that is driving the transition, largely focused in North America where natural gas prices are near historic lows rather than in Europe where natural gas pricing remains linked to expensive petroleum and supply is scarcer, Rose said.
“It requires a leap of faith to end up with substantially more CNG transport” for businesses and governments, many of which have focused on the potential for electric cars while pulling “insufficient policy levers” to actually prompt a widespread transition to EVs, Rose said. He was speaking on the sidelines of the World Energy Leaders Summit in Istanbul, Turkey. For more coverage of and analysis from that event from Breaking Energy, read more here.
“There’s no reason [natural gas transport] couldn’t catch on in the emerging world,” Rose said, although there are no signs of a widespread transition yet. “Asians are starting off fresh without the dedication to diesel that exists in the European transport sector.”
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While challenges to infrastructure exist, the right incentives could allow a relatively smooth transition of existing liquefied petroleum gas infrastructure to natural gas use for suppliers looking to access transport markets. For privately-owned oil companies that are increasingly becoming natural gas companies (like Rose’s former employer Shell), that could be an important shift; private oil companies are unable to grow their oil reserves because the large reserves are owned by national oil companies.
“Its all about access,” Rose said, who said that national oil companies could encourage the use of natural gas for transport in their own domestic markets so that the more-expensive crude oil could be exported.
Rose led a team that produced transport scenarios out to 2050 for the World Energy Council, which has the full report available for download on its website here.
In the report, which sketches out two basic paths to 2050 along free-market and government-intervention models, the authors focus on all three aspects of WEC’s energy “trilemma.”
“Only with discovery, promotion and development of new energy resources, matched to innovation and improvements in current technologies, catalysed by optimally formulated policies can we hope to ensure a more sustainable transport future for current and future generations,” the report says.
Among other forecasts, the Global Transport Scenario 2050 says total fuel demand in all transport modes could rise as much as 82% above 2010 levels under certain approaches, while the transport sector fuel mix will be increasingly dominated by jet fuel (rising 200-300% over the period) rather than gasoline (which could drop 16-63%).