advocacy messages for the natural gas sector

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Advocacy Messages for the Natural Gas Sector

Prepared for the International Gas Union by PFC Energy

October 20, 2010

Study on Natural Gas | PFC Energy |

Key Messages on Natural GasAdvocacy Messages and Key StakeholdersCountry Case Studies


Making the Case for Natural Gas

As the IGU concluded during the 24th World Gas Conference in Buenos Aires in 2009, “gas needs to have a more effective and consistent voice” in order to emphasize the merits of natural gas, promote its role in sustainable development, and highlight its role in a clean economy.

Among the challenges the IGU has identified are:

– Lack of familiarity among media and the public with the benefits of natural gas– Competition with large and well-established coal lobbies– Perception that gas is a dirty fossil fuel, along with coal and oil– Discomfort among some environmental groups with endorsing greater gas use– Dilution of the gas industry’s voice due to the evolution of energy companies

The IGU has also identified several opportunities:

– Growth of unconventional gas has awakened policymakers to the scale of gas resources and the potential for growth

– Focus on climate policy and energy security could boost the appeal of natural gas– New partnerships with interest groups are being explored

In addition to identifying the key advocacy messages for the natural gas sector, the IGU can benefit from calibrating those messages for different audiences.

In addition to identifying the key advocacy messages for the natural gas sector, the IGU can benefit from calibrating those messages for different audiences.


Natural Gas CARES for the World

Natural gas is clean.

Natural gas produces less nitrogen oxide than coal, and more than 50% less CO2 . Gas produces no sulphur and no solid waste.

Natural gas promotes

sustainable transport.

Natural gas vehicles can improve air quality and energy efficiency in large cities.

Natural gas is

abundant.

Global production will increase over the next 20 years, with growing supplies from both conventional and unconventional resources.

Natural gas is safe.

The natural gas sector has the best safety record in the industry.

Natural gas is available

now.

Natural gas is versatile.

Gas can serve as a flexible partner in power generation for intermittent energy sources like wind and solar, facilitating the phase-in of renewables.

Natural gas is the

affordable choice.

Modern gas- fired plants have a capital cost that is half that of coal, one-third the cost of nuclear and one-fifth the cost of onshore wind.

Natural gas does not require

subsidies.

Unlike heavily subsidized renewable technologies, natural gas use allows countries to affordably reduce their emissions.

Natural gas is efficient.

Modern gas- fired power plants are 40% more efficient than coal plants.

Natural gas saves time.

Gas-fired plants require less construction time than nuclear or coal plants.

Affordable Reliable Efficient

Gas is readily available from a variety of sources, both pipeline an d LNG. The environmental benefits of gas can be realized immediately.

Natural gas is a clean, affordable, reliable, efficient, and secure energy source—a message that should have broad appeal for policymakers and

the public.

Natural gas is a clean, affordable, reliable, efficient, and secure energy source—a message that should have broad appeal for policymakers and

the public.

Clean Secure


Natural Gas is Clean

Natural gas produces lower emissions than any other fossil fuel.– Natural gas combustion produces an average of 60 kgCO2 /MMBtu, while

burning coal produces 92-102 kgCO2 /MMBtu.

Gas-fired power generation produces far lower emissions.– The most advanced combined cycle gas turbine (CCGT) power plants can

produce less than 350 kgCO2 per MWh—half the amount produced by the most efficient coal-fired power plants.

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Lignite Anthracite Coking Crude oil LPG Natural gas

Emis

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CO2 Emissions Intensity Comparison of Coal, Oil and Natural Gas

Source: IPCC, PFC EnergyCoal

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European Powergen Lifecycle GHG Emissions by Fuel Type: Future Plants

Plant Emissions

Non-Plant Emissions


Natural Gas Promotes Sustainable Transport

Natural gas vehicles can promote air quality. Delhi’s switch to compressed natural gas (CNG) vehicles for public transport helped to reduce carbon monoxide and particulate levels.

Over the past decade, the number of natural gas vehicles worldwide has grown from 1.3 million to 11.4 million, and the number of countries using CNG in transportation has doubled.

Source: IANGV, PFC Energy

Million


Natural Gas is the Affordable Choice

The capital costs for gas-fired power plants in the United States and Europe are far lower than the costs per kW for coal and nuclear.

Even in China, the capital costs for gas-fired power generation are competitive with coal.

Source: PFC Energy

$

On a per kW basis, natural gas is very competitive relative to other fuels.


Natural Gas Does Not Require Subsidies

Unlike heavily subsidized renewable technologies, natural gas use allows countries to affordably reduce their carbon emissions.

Government subsidies and direct spending accounted for about one-third of the $145 billion invested in clean energy projects worldwide in 2009.¹

In the United States, for example, subsidies provided for energy include:

– Renewable Energy Production Tax Credit– Nuclear Energy Production Tax Credit– Energy Investment Tax Credit– Loan Guarantees– Clean Coal Technologies Investment Tax Credit– Local and State Incentives

1. Source: Bloomberg New Energy Finance

Natural gas, unlike most renewable technologies, does not require government subsidies to remain competitive—allowing countries to

achieve emissions targets while avoiding market distortions.


Natural Gas is Available Now

In contrast to renewable technologies that in some cases will require decades of research and innovation, the environmental benefits of gas can be realized today.

Using gas to displace coal in power generation offers an immediate opportunity to reduce emissions. In the United States, coal accounts for 80% of CO2 emissions from the power sector and 33% of all US CO2 emissions—and doubling the utilization rates at existing gas-fired plants could displace enough coal to reduce coal-related emissions by 20%.¹

The Intergovernmental Panel on Climate Change (IPCC) has noted that as the fossil fuel with the lowest CO2 intensity, natural gas offers an immediate opportunity to reduce emissions.

1. Source: US Congressional Research Service


Natural Gas is Versatile

Gas can serve as a flexible partner in power generation for intermittent technologies like solar and wind, facilitating the phase-in of renewables.

Wind power, for example, typically has a very low capacity factor—in most cases between 20% and 40%—meaning that those energy sources are effectively idle for 60% to 80% of the time.

Because gas is a mid, base and peak-load fuel, it complements the growth of renewables.

Renewable Energy Research Laboratory, University of Massachusetts, and US DOE


Natural Gas is Efficient

Modern gas-fired power plants are 40% more efficient than coal-fired plants. Combined cycle gas turbine (CCGT) plants can achieve thermal efficiency rates of 55-60%, compared with thermal efficiency of 42% for coal and 33% for nuclear.

CCGT plants—producing both electricity and heat—have boosted overall plant efficiencies considerably, reducing the GHG emissions per unit of energy generated.

Sample Gas Turbine Performance

First operation year of prototype machine 1981 1992 2002

Gas Turbine Power Output (MW) 144 278 334

Gas Turbine Efficiency (% Lower Heating Value, or LHV) 34.8 38.7 39.5

Combined Cycle Efficiency (%LHV) 51.4 59.0 59.3

Source: Mitsubishi Heavy Industries Review, Dec. 2007


Natural Gas Saves Time

Gas-fired power plants require less construction time than either coal-fired plants or nuclear facilities.

A typical gas-fired power plant can take only two years to construct—less than half the lead time required to build a coal- fired plant, and less than one-third the time required to construct a nuclear plant.

This shorter construction time makes it easier for firms to make efficient investment decisions.

Nuclear plants in particular have been subject to extreme cost overruns and larger-than-expected decommissioning costs. The lengthy construction time (often more than six years) and the volatile regulatory climate for nuclear are serious disincentives for potential investors.

Natural gas-fired plants have a clear advantage over coal and nuclear with regard to construction time.


Natural Gas is Abundant Conventional Gas Production to Grow Over Next Two Decades

Global gas production will increase over the next 20 years, with growing supplies from both conventional and unconventional resources.

Australasia, Russia and the Former Soviet Union and the Middle East are all expected to increase gas production over the next 15-20 years.

There are many questions still to be answered about the extent of unconventional gas resources, but the potential resources are enormous.

Source: PFC Energy, Global Gas Supply Forecast


Natural Gas is Abundant Unconventional Gas Resources (in-place)

Coal Bed MethaneTight GasShale Gas

Estimated Resources

8.2

9.7

5.5

3.4

3.4

1.1

1.0

Continent total shown in quadrillion cubic feet

Sources: PFC Energy Global LNG Service, Rogner 1997

Unconventional gas resources are nearly five times as large as the global conventional gas

reserves, according to some estimates. The key question is: how much of it is recoverable?


Natural Gas is Safe

The natural gas industry has an excellent safety record, with fewer risks for severe accidents than those presented by other energy sources.

Gas-fired power generation also excels in terms of local environmental safety. Gas-fired plants produce fewer pollutants than coal-fired plants, generating far lower levels of sulfur oxides and nitrogen oxides—primary contributors to acid rain and smog—as well as mercury.

The favorable safety and environmental profile of gas power plants aids in the siting and permitting process.

Source: Canadian Energy Research Institute, 2008


North America: Key Messages for GasCore Message Appeal to Various Stakeholder Groups

1. Natural Gas is CleanHigh. The emissions profile of gas-fired power plants is seen as a positive— but more could be done to promote the positive environmental attributes of gas.

2. Natural Gas Promotes Sustainable Transport Low. Potentially a longer-term interest, but still in its infancy.

3. Natural Gas is the Affordable Choice High. Scale of unconventional gas production is leading to new assessment of the longer-term outlook for US gas prices.

4. Natural Gas Does Not Require Subsidies

Medium. Gas is beginning to be seen as a fuel that can provide short-term environmental gains at low cost.

5. Natural Gas is Available Now High. New recognition of scale of shale gas in North America has changed considerations of energy security.

6. Natural Gas is VersatileHigh. Both policymakers and the public are generally supportive of investment in renewable technologies, but skeptical of their reliability and cost-effectiveness.

7. Natural Gas is Efficient Medium. Focus is mainly on energy security and environmental benefits, with secondary focus on energy efficiency—although efficiency targets will increase.

8. Natural Gas Saves Time Low. This is probably a secondary concern.

9. Natural Gas is Abundant High. Rapid growth in unconventional gas has led to new perspective on gas and its future role in the US and Canadian economies.

10. Natural Gas is SafeMedium. Hydrocarbon companies may have trouble convincing a skeptical public of their positive safety record, given a series of recent accidents and concerns over unconventional gas exploration.


Europe: Key Messages for GasCore Message Appeal to Various Stakeholder Groups

1. Natural Gas is Clean High. The favorable emissions profile of natural gas should be a major source of support.

2. Natural Gas Promotes Sustainable Transport

Medium. CNG vehicles generally play a smaller role in Europe than in several of the larger emerging markets, and that seems unlikely to change in the near future.

3. Natural Gas is the Affordable Choice High. Aggressive emissions reduction targets make this message very important.


High. Recent experience with subsidies for renewable energy—for example, solar power in Spain—has been problematic.

5. Natural Gas is Available Now Medium. Although there is great interest in the “shale gas revolution,” shale gas exploration remains a North American story for now.

6. Natural Gas is Versatile High. This message should resonate with countries seeking to expand the role of intermittent power sources like wind and solar.

7. Natural Gas is Efficient High. Case studies like the UK’s expanded use of CCGT plants should resonate with policymakers and others concerned about energy efficiency.

8. Natural Gas Saves Time Medium. The short lead time for construction of gas-fired power plants could be an attractive aspect for policymakers.

9. Natural Gas is Abundant

High. While European countries seek to understand the factors that gave rise to the unconventional gas boom in North America and to apply them at home, they will also be interested in how an improved global supply outlook affects gas pricing.

10. Natural Gas is SafeMedium. The EU is currently engaged in a full review of environmental and safety regulations for the offshore oil sector. Making the case for the safety record of the natural gas industry will be increasingly important.


Latin America: Key Messages for GasCore Message Appeal to Various Stakeholder Groups

1. Natural Gas is Clean High. As in other regions, the positive aspects of gas-fired power generation should win broad appeal, and may be under-recognized at present.


High. Several countries in the region, notably Argentina and Brazil, are among the top ten worldwide in terms of NGV fleet size.

3. Natural Gas is the Affordable Choice Medium. Relative to other regions, particularly North America, this message may not yet be resonating with governments and policymakers.


Low. Subsidies for renewable energy technologies may be less of a concern in Latin America as compared to North America or Europe.

5. Natural Gas is Available NowMedium. This message has already resonated with countries in the region that are increasingly reliant on LNG supplies, in part due to the obstacles to developing regional gas resources.

6. Natural Gas is VersatileHigh. Hydro plays an important role in the fuel mix for several countries, but has high variability; the supplemental role that could be played by gas is important.

7. Natural Gas is Efficient Medium. The efficiency benefits of greater gas use should resonate with governments seeking to avoid waste and excessive costs in power generation.

8. Natural Gas Saves Time Medium. Policymakers may be unaware of the benefits associated with gas-fired power plants.

9. Natural Gas is Abundant Medium. The Southern Cone countries in particular are keen to avoid gas shortages and to avoid costly short-term solutions in substituting for gas.

10. Natural Gas is Safe Medium. As with most other regions, more could be done to publicize the strong safety record of the natural gas sector.


Middle East/North Africa: Key Messages for GasCore Message Appeal to Various Stakeholder Groups

1. Natural Gas is Clean Medium. This is a growing concern, but the MENA region lags several others with regard to GHG emissions targets.

2. Natural Gas Promotes Sustainable Transport Low. Iran, with one of the world’s largest NGV fleets, is the exception.

3. Natural Gas is the Affordable Choice Medium. The advantages of natural gas use could be better disseminated, particularly as burning fuel oil has created a growing economic drain.


Low. Natural gas and product use is already heavily subsidized in much of the region.

5. Natural Gas is Available Now Medium. Several countries in the Gulf have already become seasonal LNG importers.

6. Natural Gas is Versatile High. An important message for countries facing very large increases in power demand as well as significant seasonal spikes in demand.

7. Natural Gas is EfficientHigh. This message should resonate with a number of countries that are currently burning large amounts of oil in power generation, sacrificing enormous value.

8. Natural Gas Saves Time High. Policymakers may be unaware of the benefits associated with gas-fired power plants.

9. Natural Gas is Abundant Low. Although the region has massive gas reserves, many will be expensive and difficult to develop, and continue to pose technological challenges.

10. Natural Gas is Safe Medium. As with most other regions, more could be done to publicize the strong safety record of the natural gas sector.


Asia Pacific: Key Messages for GasCore Message Appeal to Various Stakeholder Groups

1. Natural Gas is Clean Medium. Abundant coal supplies in several countries diminish somewhat the appeal of this message.

2. Natural Gas Promotes Sustainable Transport High. Relative to other regions, natural gas vehicles are widespread.

3. Natural Gas is the Affordable Choice Medium. Wide variations, but generally gas-fired power generation is more expensive in this region, reducing the appeal of this message.


High. Many countries in the region are attempting to reduce their subsidy burdens; any message regarding lower government expenditure would be welcomed.

5. Natural Gas is Available Now High. Several of the OECD Pacific countries are large importers of LNG and have long-term energy security interests in ensuring supplies.

6. Natural Gas is Versatile Medium. Those countries in the region that are more aggressively pursuing investment in alternatives may welcome this message.

7. Natural Gas is EfficientHigh. Some of the more resource-poor countries in the region are leaders in energy efficiency, while China has set a fairly ambitious goal for reducing its energy intensity.

8. Natural Gas Saves Time High. Economies undergoing rapid growth have a vested interest in accelerating available electricity supplies.

9. Natural Gas is Abundant High. Very strong interest in China, India, Indonesia and elsewhere in exploring unconventional gas production.

10. Natural Gas is Safe Medium. This is a growing concern, both in terms of worker safety and local environmental quality—both are important issues in China.


Russia and Central Asia: Key Messages for GasCore Message Appeal to Various Stakeholder Groups

1. Natural Gas is Clean Medium. Abundant coal supplies in Russia and Kazakhstan diminish somewhat the appeal of this message.


Low. Other than in Uzbekistan, which is promoting a GTL project, this is a longer- term interest. CNG transport is not widespread in these countries.

3. Natural Gas is the Affordable Choice

Medium. In Turkmenistan, gas is free while in Russia and Uzbekistan, it is subsidized. Subsidies are being gradually lifted in Russia, making gas more expensive. In Kazakhstan, gas-fired power generation is more expensive than coal, reducing the appeal of this message for Astana.

4. Natural Gas Does Not Require Subsidies Low. Subsidies are prevalent in all countries in the region.

5. Natural Gas is Available NowHigh. Russia, Turkmenistan and Uzbekistan have abundant gas supplies for domestic use. In Kazakhstan, stepped up development of gas resources is planned.

6. Natural Gas is Versatile High. Russia and the Central Asian countries are all aggressively pursuing investment in gas and may welcome this message.

7. Natural Gas is Efficient Medium. Focus is mainly on reducing gas flaring and environmental benefits, with secondary focus on energy efficiency—although efficiency targets will increase.

8. Natural Gas Saves TimeMedium. This is probably a secondary concern. Construction of new gas-powered generation is limited. Nuclear generation is viewed as a strategic sector in Russia and Kazakhstan and is promoted regardless of time concerns.

9. Natural Gas is Abundant High. Very strong interest in all countries in exploring for and developing gas reserves for domestic use and export.

10. Natural Gas is SafeMedium. In its E&P phase, the development of high pressure, high CO2 gas onshore (Kazakhstan and Turkmenistan) and offshore (Kazakhstan) raises concerns for accidents and safety. As a fuel for daily consumption, however, it is considered safe.


Stakeholders and Interests in Natural Gas

Stakeholder Group Examples Interest in Natural Gas Level of Influence1=Low, 5=High

GovernmentsFederal and state governmentsEnergy and infrastructure agenciesMinistries

Varies widely, but the gas industry competes for attention and focus with other industry groupsCompeting policy objectives and pressures: cost vs. climate concerns, local vs. regional interests, various fuel lobbies

5

Multilateral Agencies/Organizations

G-20EU, ASEAN, OAS, SCO

Global climate change policyRegional gas and trade cooperationGeopolitics of energy

3

International Financial Institutions (IFIs) and Development Banks

World Bank and IFCAsian Development BankAfrican Development BankExport-Import (Ex-Im) banks

Financing of power projectsInfrastructure fundingFocus on sustainable development

2

Hydrocarbon Sector Industry Groups

IEAANGAIPPF

Strong focus on gas abundance storyKey is aligning message, building alliances, seeking new outlets

2

Other Commercial Groups

Chambers of Commerce Promoting and protecting economic growthBenefits to industry 1

Non-Governmental Organizations (NGOs)

Worldwatch InstituteResources for the FuturePew Center on Global Climate Change

Climate changeAir qualityGroundwater protectionWildlife protection

3

Media Organizations Print mediaTelevision

Environmental issues: emissions, pollution, safetyEconomic impactImpact on growth of renewable energy

4


Potential Partners: North America

Potential Partners in Advocacy Work:America’s Natural Gas Alliance (ANGA)

Why ANGA?– Overlap – ANGA’s mission is to draw attention to the abundance of natural gas and it

role in sustainable economic development– Effectiveness – ANGA provide an example of effective lobbying and advocacy work– Complementarity – ANGA is focused on US issues, but could appreciate the

opportunity to build alliances with an international membership organization

Pew Center on Global Climate ChangeWhy Pew?

– Engagement With Environmental Community – As one of the most high-profile NGOs dealing with future energy and environment policy, the Pew Center could be a good ally—and could provide an opportunity learn how to calibrate gas advocacy messages for a different audience

– Publications – Pew Center publications have already focused on the future role for natural gas in the energy mix


Potential Partners: Latin America

Potential Partners in Advocacy Work:ARPEL (Regional Association of Oil Companies, Gas and Biofuels in Latin America and the Caribbean

Why ARPEL?– Scope – includes nearly 90% of upstream oil and gas companies. Its 24 members

include both NOCs and private companies– Overlap – ARPEL has an existing program on Climate Change and Energy Efficiency– Leverage – The membership of many NOCs and state companies ensures access to

policymakers at the national level

ECLAC (Economic Commission for Latin America)Why ECLAC?

– Mandate – Regional group that promotes economic and social development– Targeting – ECLAC could be a partner in raising awareness of gas’ role in sustainable

development– Visibility – As a regional commission of the UN, ECLAC has a unique institutional

standing


Potential Partners: Europe

Potential Partners in Advocacy Work:Eurogas

Why Eurogas?– Overlap – Eurogas has similar goals with regard to ensuring a robust role for natural

gas in future energy policy – Access – Eurogas communicates directly with EC committees, and has a stated goal

of focusing on EU energy policies– Membership – Its Executive Committee includes past and present officials from GdF

Suez, Eni, E.ON Ruhrgaz and OMV

IEAWhy IEA?

– Influence – The IEA’s publications on the oil and natural gas sector are among the widest-read in the industry

– Events – Numerous events held by the IEA could be a good forum for the IGU to promote its advocacy messages to a wider audience

– Unique institutions – The IEA’s Standing Group on Long-Term Cooperation and Standing Group on Global Energy Dialogue are designed to promote cooperation and information-sharing on transnational issues


Potential Partners: Middle East/North Africa

Potential Partners in Advocacy Work:OAPEC (Organization of Arab Petroleum Exporting Countries)

Why OAPEC?– Visibility – OAPEC is one of the most high-profile international groupings in the MENA

region, and can provide a regional platform for messages on gas– Need for Partnerships – OAPEC may be quite happy to have an ally in raising

awareness of natural gas trends and their implications for the region– Publications – OAPEC publishes data and statistics, but could probably benefit from

an increased focus on gas—opportunity for IGU to direct its key messages to a ready audience of stakeholders

– Agenda – OAPEC could provide the IGU with a forum to discuss issues that are of growing importance to policymakers:

• Energy efficiency profile of natural gas, particularly in power generation• Abundance of unconventional gas supplies and implications for gas prices and LNG flows


Potential Partners: Asia Pacific

Potential Partners in Advocacy Work:

ASEANWhy ASEAN?

– Scope – Opportunity for the IGU to engage with policymakers concerned with energy security, natural gas availability and the environmental profile of gas

– Overlap – ASEAN already has a Center for Energy, with Working Groups on energy efficiency and conservation as well as regional energy planning – both represent a natural fit for the IGU’s representation of the gas sector

– Mandate – ASEAN’s role in promoting regional trade and economic development makes it a natural target for the IGU’s work on promoting the role of gas in sustainable development

– Messaging – The IGU could play an important role in partnering with ASEAN’s Center for Energy to provide reliable information on unconventional gas resources and the impact on policymaking elsewhere

Shanghai Cooperation Organization (SCO)Why SCO?

– Membership – SCO consists of a unique mix of countries, including several large oil and gas producers, and provides a unique forum for regional dialogue

– Need for Partnerships – As a relatively new organization that is gaining more traction, the SCO is still developing its policy agenda on energy issues, and would likely welcome support

– Timeliness – Several of the Central Asian countries involved in the IGU will face decisions in the coming years on how best to make use of new domestic gas supplies


Potential Partners: Russia and Central Asia

Potential Partners in Advocacy Work:Shanghai Cooperation Organization (SCO)Why SCO?

– Membership – SCO consists of a unique mix of countries, including several large oil and gas producers, and provides a unique forum for regional dialogue

– Need for Partnerships – As a relatively new organization that is gaining more traction, the SCO is still developing its policy agenda on energy issues, and would likely welcome support

– Timeliness – Several of the Central Asian countries involved in the IGU will face decisions in the coming years on how best to make use of new domestic gas supplies


How to Reach Key Audiences – Policymakers, the Public, the Media?

Effective public relations and advertising are crucial, and several interest groups have provided very good examples:– ANGA– American Coalition for Clean Coal Electricity– European Wind Power Association

More effort could be made to publish op-eds in general media that are directed toward the public, not just policymakers. This would likely entail:– Emphasis on the positive environmental profile of gas extraction and gas-

fired power generation– Highlighting the importance of gas in economic development– Making succinct points about the advantages of natural gas

Search for new target audiences—regional governments, industry associations and others– Example: Western states in India that are currently dependent on coal from

the east. Here Reliance would be a likely ally.



Effective public relations and advertising:

ANGA consistently mentions four core messages for gas in the United States: Clean, Abundant, Domestic, Jobs

Source: America’s Natural Gas Alliance



“The American Coalition for Clean

Coal Electricity” Focuses its

Message on Jobs, Affordability Energy

Security

Source: American Coalition for Clean Coal Electricity


Case Studies: Lessons Learned From Countries That Prioritized Natural Gas

1. Government support can play a critical role2. Early investments in infrastructure often must be led by the state3. Efforts to boost natural gas use are often driven by very different

objectives4. Policy interventions depend on local dynamics—and in advocating for

the gas sector, it is important to understand which messages will resonate. Feedback from IGU members could shape this approach.

2007 Emissions: Business as Usual vs. Actual 2007 Fuel Use by Sector (BAU=100)

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UK - Power Sector

South Korea -Residential

Iran - Commercial

Argentina - Transport

2007 Emissions Business as UsualCO2 Reduction from Actual 2007 Gas Penetration

4% reduction

9% reduction

12% reduction

22% reduction


UK: Natural Gas Penetration in the Power Sector

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UK: Natural Gas in the Power Sector Case Study

The growth in natural gas use for power in the UK, which was driven by the rapid adoption of combined-cycle gas turbine (CCGT) technology, is a exemplary case of

natural gas becoming the preferred fuel choice due to efficiency gains and environmental benefits, pushing out coal.

The growth in natural gas use for power in the UK, which was driven by the rapid adoption of combined-cycle gas turbine (CCGT) technology, is a exemplary case of

natural gas becoming the preferred fuel choice due to efficiency gains and environmental benefits, pushing out coal.


UK: Natural Gas in the Power Sector Case Study

UK gas demand grew at a steady but slow pace in the 1980s, experiencing a jolt in the early 1990s with the introduction of CCGTs into the power mix.

– Since 2000, total gas demand growth in the UK has come from power, while all other sectors have trended downward led by industry and residential.

Beginning in the early 1990s, the UK system has relied increasingly on CCGTs, which accounted for some 45% of power generation in 2009, growing 10% since 2000.

Due to the rise in natural gas penetration in the power mix since 1990, PFC Energy estimates that the UK achieved a 22% reduction in CO2 emissions by 2007.

UK: Gas Consumption by Sector

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UK: Power by Production Type

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A supportive government with a clear agenda to boost the role of natural

gas in power generation created significant efficiency gains in the UK.

A supportive government with a clear agenda to boost the role of natural

gas in power generation created significant efficiency gains in the UK.


Focus on Latin America: Natural Gas Penetration in the Transportation Sector

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1990 1995 2000 2005 2007

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Bolivia

ColombiaBrazil

World Average

Argentina: Natural Gas in the Transport Sector Case Study

Argentina holds the second largest fleet of NGVs worldwide. Today, ~20% of fuel used in the transport sector is natural gas. Argentina’s ability to increase natural gas penetration in transportation from only 2% in 1990 to 18% in 2007 has allowed it to reduce transport CO2 emissions by 4%.

Argentina holds the second largest fleet of NGVs worldwide. Today, ~20% of fuel used in the transport sector is natural gas. Argentina’s ability to increase natural gas penetration in transportation from only 2% in 1990 to 18% in 2007 has allowed it to reduce transport CO2 emissions by 4%.


Argentina: Natural Gas in the Transport Sector Case Study

NGV growth in Argentina resulted from: domestic market dynamics (higher

prices for gasoline relative to natural gas) and policy

interventions (early support for infrastructure and

campaigns emphasizing CNG safety).

NGV growth in Argentina resulted from: domestic market dynamics (higher

prices for gasoline relative to natural gas) and policy

interventions (early support for infrastructure and

campaigns emphasizing CNG safety).

Argentina has the world’s second-largest NGV fleet, and one of the world’s highest penetration rates for NGVs at approximately 20% of the total vehicle fleet. More than 80% of the NGV fleet consists of non-commercial users (private vehicles rather than trucking or taxi fleets).

CNG use in vehicles began in the 1980s, but accelerated throughout the 1990s and particularly the early 2000s due to increasing investments in retail networks. The development of Argentina’s gas pipeline network also facilitated the expansion of CNG.

The initial phase (1984-1988) of the CNG program involved extensive state support and guidance.

In the mid-1980s, early investments in refueling stations and CNG conversions for municipal vehicles were led by the state.

The state company Gas del Estado played a key role in publicizing the virtues of natural gas—promoting it as an inexpensive, safe and environmentally sound alternative— and in certifying the early conversion kits.

Over time, independent retailers became the dominant players in expanding the retail network, and the state’s role diminished to cover only regulations.

Argentina: NGV Vehicle FleetMillions

Source: IANGV, PFC Energy


South Korea: Natural Gas in the Residential Sector Case Study

For over two decades, gas use in the residential sector in South Korea has grown tremendously. South Korea’s LNG imports have been crucial to cutting coal

consumption and meeting demand growth.

For over two decades, gas use in the residential sector in South Korea has grown tremendously. South Korea’s LNG imports have been crucial to cutting coal

consumption and meeting demand growth.

South Korea: Natural Gas Penetration in the Residental Sector

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mmtoe

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50%HeatElectricityCombustible renewables and wasteSolar/wind/otherNatural gasPetroleum productsCoal and coal productsGas Penetration (right axis)


South Korea: Natural Gas in the Residential Sector Case Study

The residential sector in South Korea has been quite successful in replacing coal with cleaner-burning natural gas for its heating needs.

The shift away from coal in the fuel mix has allowed the residential sector to avoid harmful CO2 emissions it would have otherwise emitted if coal maintained such high penetration rates.

PFC Energy calculates a 12% reduction in CO2 emissions by 2007 relative to the “business as usual” case if South Korea had maintained its 1990 fuel mix.

Looking to the future, South Korea plans to further reduce its dependence on oil and coal in its total energy mix and to increase the share of natural gas.

– Between 2009 and 2013, oil is forecasted to expected to lose 3.3% of its market share and coal 1.6%. Over the same period, natural gas’ market share will rise by more than 2%.

South Korea: Gas Demand

0.0

0.4

0.8

1.2

1.6

1991

1993

1995

1997

1999

2001

2003

2005

2007

2009

bcf/d

Residential & Commercial Industry Power Other

South Korea: Coal and Natural Gas Penetration in the Residential Sector

67%

4%

14%

28%

5%

45%41%

4%

0%

25%

50%

75%

Coal Penetration inResidential Sector

Natural Gas Penetration inResidential Sector

1990 1995 2000 2007 1990 1995 2000 2007

South Korea’s concerted efforts to prioritize gas rather than coal have

allowed it to cut emissions and achieve greater efficiency—while still meeting

rapidly growing demand.

South Korea’s concerted efforts to prioritize gas rather than coal have

allowed it to cut emissions and achieve greater efficiency—while still meeting

rapidly growing demand.

Strategic Advisors in Global Energy

Main regional offices:

AsiaPFC Energy, Kuala LumpurLevel 27, UBN Tower #2110 Jalan P. Ramlee50250 Kuala Lumpur, MalaysiaTel (60 3) 2172-3400Fax (60 3) 2072-3599

PFC Energy, ChinaKerry Center N-11371 Guanghua RoadChaoyang DistrictBeijing 100020, ChinaTel (86 10) 6599-7937Fax (86 10) 6530-5093

EuropePFC Energy, France19 rue du Général Foy75008 Paris, France Tel (33 1) 4770-2900Fax (33 1) 4770-5905

PFC Energy International,Lausanne19, Boulevard de la Forêt 1009 Pully, Switzerland Tel (41 21) 721-1440 Fax: (41 21) 721-1444

Middle EastPFC Energy, Bahrain Bahrain Financial Harbor (BFH)East Tower5th Floor P.O. Box 11118Manama- BahrainTel (973) 7705 8880

North AmericaPFC Energy, Washington D.C.1300 Connecticut Avenue, N.W. Suite 800Washington, DC 20036, USATel (1 202) 872-1199 Fax (1 202) 872-1219

PFC Energy, Houston4545 Post Oak Place, Suite 312 Houston, Texas 77027-3110, USA Tel (1 713) 622-4447 Fax (1 713) 622-4448

www.pfcenergy.com | [email protected] regional offices are shown in blue.

PFC Energy consultants are present in the following locations:

Beijing

Brussels

Delhi

Ho Chi Minh City

Houston

Kuala Lumpur

Lausanne

London

Manama

Mumbai

New York

Paris

Vancouver

Washington, DC

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