Long-term Implications of Globally Abundant Natural Gas

Haewon McJeon, Jae Edmonds, and the team.

Joint GCAM Community Modeling Meeting and GTSP Technical Workshop

Oct 1-4, 2013, College Park, MD

October 9, 2013 2

Background

The natural gas revolution

3

!   The application of technologies for accessing “unconventional” gas shales in the United States has dramatically increased gas production, and estimates of recoverable resources even more.

!   And, dramatically reduced natural gas prices.

Source:  EIA,  Annual  Energy  Outlook  2012    

Gas and the Global Energy System

October 9, 2013 4

!   Natural Gas has been a growing component of the global energy system for some time.

Grubler,  A.,  T.  B.  Johansson,  L.  Mundaca,  N.  Nakicenovic,  S.  Pachauri,  K.  Riahi,  H.-­‐H.  Rogner  and  L.  Strupeit,  2012:  Chapter  1  -­‐  Energy  Primer.  In  Global  Energy  Assessment  -­‐  Toward  a  Sustainable  Future,  Cambridge  University  Press,  Cambridge,  UK  and  New  York,  NY,  USA  and  the  InternaQonal  InsQtute  for  Applied  Systems  Analysis,  Laxenburg,  Austria,  pp.  99-­‐150.  

Grubler  et  al.,  2012:  Chapter  1  -­‐  Energy  Primer.  In  Global  Energy  Assessment  -­‐  Toward  a  Sustainable  Future.  

A brief history of thinking about Natural Gas Resources

October 9, 2013 5

!   In the 1990s total gas reserves were thought to be more abundant than oil, but gas production was expected to peak and decline before mid-21st century, because exploitable gas resources were economically limited to “conventional” resources. !   Unconventional resources were thought to be too expensive to be ever relevant.

!   In 1997, Rogner’s work on natural gas resources indicated that “unconventional gas” was abundant. But, modelers either were slow to incorporate unconventional gas (and oil) into their thinking or priced them as more expensive than “conventional” resources.

And then a technological revolution happened.

Key Questions

As application of new production technology spreads beyond the United States: !   How will this change our understanding of the scale and composition

of the evolving global energy system?

!   How will this affect energy security and international trade? !   How will this affect local and regional air quality?

!   What effect will this have on CO2 and other GHG emissions and the technologies for their use in the near term and long term? !   Globally and regionally !   With and without emissions mitigation policies

October 9, 2013 6

October 9, 2013 7

How Much Gas Is Out There?

!   How much natural gas is there and how much does it cost? !   How much in the larger sense means resource availability

!   Oil, Gas and Coal !   Conventional and unconventional for oil and gas !   Coal is just too abundant to divide up that way.

 -­‐  50,000  100,000  150,000  200,000  250,000  300,000  350,000  400,000  450,000  500,000

oil gas coal

EJ

unconventionalresourceunconventionalreserveconventionalresourceconventionalreserve

Fossil Fuel Resources

8

!   How much natural gas is there and how much does it cost? !   How much in the larger sense means resource availability

!   Oil, Gas and Coal !   Conventional and unconventional for oil and gas !   Coal is just too abundant to divide up that way.

 -­‐  10,000  20,000  30,000  40,000  50,000  60,000  70,000  80,000  90,000  100,000

oil gas coal

EJ

unconventionalresourceunconventionalreserveconventionalresourceconventionalreserve

Fossil Fuel Resources

9 Source:  Rogner,  2012  

How much does it cost?

!   To help us understand the implications of abundant and inexpensive natural gas availability for the global energy system, we have developed three alternative global resource supply curves.

!   Gas Technology Circa 1990 (Gas Tech 1990 or GT1990): assumes gas resource supply based on the state of technology that existed circa 1990s.

!   Gas Technology Circa 2000 (Gas Tech 2000 or GT2000): assumes gas resource supply based on the state of technology that existed in the early 2000s.

!   Gas Technology Circa 2010 (Gas Tech 2010 or GT2010): assumes that the new advanced technologies can be successfully deployed globally.

October 9, 2013 10

0

5

10

15

20

0 10000 20000 30000 40000

2005  Extraction  Co

st  (2

005$/G

J)

Cumulative  Resource  (EJ)

GT1990 GT2000 GT2010

The three gas supply schedules (global)

!   GT1990 - Conventional Gas Resources Only, ca 1990s !   GT2000 - Expensive Unconventional Gas, ca 2000s !   GT2010 - Abundant and Inexpensive Gas Resources, 2010 and beyond

October 9, 2013 11

0  

5  

10  

15  

20  

0   5000   10000   15000   20000   25000   30000   35000   40000  

2005  Extrac+on

 Cost  (2005$/GJ)  

Cumula+ve  Resource  (EJ)  

GT1990   GT2000   GT2010  

The Global Change Assessment Model

! GCAM  is  a  global  integrated  assessment  model  

! GCAM  links  Economic,  Energy,  Land-­‐use,  and  Climate  systems  

! Technology-­‐rich  model  ! Emissions  of  16  greenhouse  gases  and  

short-­‐lived  species:    CO2,  CH4,  N2O,  halocarbons,  carbonaceous  aerosols,  reacQve  gases,  sulfur  dioxide.  

! Runs  through  2100  in  5-­‐year  +me-­‐steps.  

! Dynamic  Recursive  

! Open  Source/Model  and  DocumentaQon  available  at:  hHp://www.globalchange.umd.edu/models/gcam/  

 

14 Region Energy/Economy Model

151 Agriculture and Land Use Model

October 9, 2013 12

Gas and the Global Energy System — Without Climate Policy

October 9, 2013 13

Gas and the Global Energy System

October 9, 2013

0

50

100

150

200

250

300

350

2005

2010

2015

2020

2025

2030

2035

2040

2045

2050

2055

2060

2065

2070

2075

2080

2085

2090

2095

Globa

l  Natural  Gas  Produ

ction  (EJ) GT2000

GT1990

Adding Abundant but EXPENSIVE unconventional gas to Conventional gas

14

!   Increased late 21st century production !   When gas prices were driven up past present prices

!   Near-term gas production and use were similar in GT1990 and GT2000.

We  will  focus  on  the  period  to  2050  

0

50

100

150

200

250

300

350

2005

2010

2015

2020

2025

2030

2035

2040

2045

2050

2055

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2065

2070

2075

2080

2085

2090

2095

Globa

l  Natural  Gas  Produ

ction  (EJ) GT2010

GT2000

Abundant AND inexpensive gas changes our understanding of the near term

15

!   Abundant and inexpensive gas is becomes widely available in North America by 2015 and globally by 2020.

!   The increase in natural gas production accelerates. !   And lowers the price of natural gas around the world.

U.S. N. Gas Price N. Gas Production

Abundant AND Inexpensive gas changes our understanding of the near term

16

!   Abundant and inexpensive gas is introduced in North America in 2015 and globally in 2020.

!   The increase in natural gas production accelerates. !   And lowers the price of natural gas around the world.

U.S. N. Gas Price Global LNG Price

168   210   198  99  

224   307  121  

354   313  

0  

400  

800  

1200  

2005   2050  GT2000  

2050  GT2010  

EJ/yr  

trad  biomass  geothermal  solar  wind  hydro  nuclear  biomass  coal  natural  gas  oil  

2050 Global Primary Energy Consumption

October 9, 2013 17

168   210   198  99  

224   307  121  

354   313  

0  

400  

800  

1200  

2005   2050  GT2000  

2050  GT2010  

EJ/yr  

trad  biomass  geothermal  solar  wind  hydro  nuclear  biomass  coal  natural  gas  oil  

493

1,005 1,007

-­‐50

-­‐25

0

25

50

2015 2020 2025 2030 2035 2040 2045 2050

EJ/yr

net  changebatteryCHPsolarwindhydrogeothermalnuclearbiomassliquid  fuelgascoal

Abundant and Inexpensive Gas Penetrates Global Power Production !   Abundant and inexpensive natural gas displaces other energy carriers

in power generation !   Where it helps lower generation costs

18

Change  in  Fuel  Mix  for  Power  Genera+on  resul+ng  with  Abundant  and  inexpensive  natural  gas    rather  than  expensive  unconven+onal  gas  

-­‐50  

-­‐25  

0  

25  

50  

2015   2020   2025   2030   2035   2040   2045   2050  

EJ/yr  

net  change  ba^ery  CHP  solar  wind  hydro  geothermal  nuclear  biomass  liquid  fuel  gas  coal  

Global  power  sector  consumpQon  in  2005  =  185  EJ/yr    

Global  consump+on    in  2005  (EJ)  

-­‐40

-­‐20

0

20

40

building industry transport electricity

113 152 88 185

EJ/yr

othersrenewablesnucleardistrict  heattrad  biomasshydrogenelectricitybiomasscoalgasliquid  fuel

2050 Global Final Energy Consumption Change

October 9, 2013 19

-­‐40  

-­‐20  

0  

20  

40  

building   industry   transport   electricity  

113   152   88   66  

EJ/yr  

others  renewables  nuclear  district  heat  trad  biomass  hydrogen  electricity  biomass  coal  gas  

October 9, 2013 20

Gas and CO2 Emissions—Without Climate Policy

0"

5"

10"

15"

20"2005"

2010"

2015"

2020"

2025"

2030"

2035"

2040"

2045"

2050"

GtC$

GT2000"

CO2 Emissions: Abundant and Inexpensive versus Expensive Unconventional Gas

21

0"

5"

10"

15"

20"2005"

2010"

2015"

2020"

2025"

2030"

2035"

2040"

2045"

2050"

GtC$

GT2000"

GT2010"

CO2 Emissions: Abundant and Inexpensive versus Expensive Unconventional Gas

•  Virtually  no  change  in  Fossil  Fuel  CO2  emissions.  

•  Slightly  higher  in  the  early  years  due  to  increased  energy  consumpQon.  

•  Slightly  lower  in  the  later  years  due  to  crowding  out  coal.  

22

0  

5  

10  

15  

20  

2005  

2010  

2015  

2020  

2025  

2030  

2035  

2040  

2045  

2050  

GtC  

GT1990  GT2000  GT2010  

Carbon and Energy

!   How does abundant gas affect expected greenhouse gas emissions? !   CO2, and total climate forcing.

!   Carbon and energy !   Petroleum = ~20 kgC/GJ !   Coal = ~27 kgC/GJ !   Natural gas = ~14 kgC/GJ !   Nuclear, solar, wind, geothermal, and other renewable direct emissions

= ~0 kgC/GJ Bioenergy is net zero emissions for the energy sector, but indirect land use change emissions are accounted.

October 9, 2013 23

Carbon-energy ratios in the larger economy

!   Average carbon intensities (kgC/GJ):

!  Natural gas ~14 !   Petroleum ~20 !   Coal ~27 !   Average global 2010 ~16 !   Average global 2030 ~17

!   Regional average carbon-energy ratios in 2010 (kgC/GJ): !   Average US ~16 !   Average China ~22 (modern ~24) !   Average India ~16 (modern ~20) !   Average W. Europe ~15 !   Average Africa ~11 (modern ~15)

October 9, 2013 24

all  energeis  emission  instensity  kgC/GJ   t2010   t2030   t2050  Africa   11.3   12.2   13.5  Australia_NZ   19.2   18.0   17.1  Canada   11.3   11.3   11.7  China   21.8   22.7   21.5  Eastern  Europe   18.1   17.8   17.7  Former  Soviet  Union   15.8   15.6   15.0  India   16.3   18.0   18.6  Japan   16.4   15.8   15.9  Korea   15.7   14.7   14.6  LaQn  America   12.9   13.3   13.5  Middle  East   16.4   15.6   14.8  Southeast  Asia   14.7   15.6   16.6  USA   16.3   15.6   15.3  Western  Europe   14.7   14.5   15.2  global   16.4   16.8   16.9  

-­‐100

-­‐80

-­‐60

-­‐40

-­‐20

0

20

40

60

Africa

Australia_N

ZCanada

China

Eastern  Europe

Form

er  Soviet  U

nion

India

Japan

Korea

Latin

 America

Middle  East

Southe

ast  A

sia USA

Western  Europ

e

ΔMtC 2030

2050

Regional changes in carbon emissions

25

Largest  for  China  

October 9, 2013

-­‐100  

-­‐80  

-­‐60  

-­‐40  

-­‐20  

0  

20  

40  

60  

Africa  

Australia_N

Z  Canada  

China  

Eastern  Eu

rope

 Form

er  Soviet  U

nion

 India  

Japan  

Korea  

LaQn

 America  

Middle  East  

Southe

ast  A

sia  

USA

 Western  Europ

e  

ΔMtC  

2030    2050    

Why did CO2 emissions not decline?

!  On average natural gas’ Carbon-Energy ratio is only slightly lower than the average for the world. !  Abundant gas not only displaces coal, but also

other low-carbon energy, so on average the decline in the Carbon-Energy ratio is small.

!  There is a small increase in aggregate energy use, so there is a small take-back effect from the increase in system scale.

October 9, 2013 26

October 9, 2013 27

Gas and Greenhouse Emissions—Without Climate Policy

Gas and Non-CO2 GHG Emissions !   How does abundant gas affect expected greenhouse gas emissions?

!   CO2, and total climate forcing.

!   Carbon and energy !   Petroleum = ~20 kgC/GJ !   Coal = ~27 kgC/GJ !   Natural gas = ~14 kgC/GJ !   Nuclear, Solar, wind, geothermal, and other renewable energy forms = ~0 kgC/GJ.

Bioenergy is 0 net emissions for the energy sector, but indirect land use change emissions are accounted.

!   Methane emissions have a (100 year) Global Warming Potential of !   ~25 gCO2/gCH4

!   12% of methane emissions was from natural gas in 2005. !   Sources include: emissions from FF, e.g. coal mining, gas

transmissions & distribution, gas venting, etc., (also land use, agriculture, animal husbandry, waste …)

October 9, 2013 28

-­‐2-­‐10123456

2005 2050GT2000

2050GT2010

Radiative  Forcing  (W

m-­‐2)

250

350

450550650750850

Concen

tration  

(ppm

v  CO

2-­‐eq

)-­‐2  -­‐1  0  1  2  3  4  5  6  

2005   2050  GT2000  

2050  GT2010  

Radia+

ve  Forcing  (W

m-­‐2)  

TOTAL RADIATIVE FORCING IS ONLY SLIGHTLY ALTERED.

Will Abundant Gas INCREASE total GHG emissions?

October 9, 2013 29

RadiaQve  Forcing  

CO2CH4N2OOther  Kyoto  GasesSO2All  Other  GasesNet  Total

250  

350  

450  550  650  750  850  

Concen

tra+

on    

(ppm

v  CO

2-­‐eq

)  

-­‐0.5%  

0.0%  

0.5%  

1.0%  

1.5%  

2.0%  

Radia+

ve  Forcing  Differen

ce  

-­‐2  -­‐1  0  1  2  3  4  5  6  

2005   2050  GT2000  

2050  GT2010  

Radia+

ve  Forcing  (W

m-­‐2)  

!   Increased fugitive methane emissions from natural gas extraction. !   Reductions in coal use

!   Reduce cooling from SO2 from coal burning !   Reduce fugitive methane emissions from coal mining. !   Reduce Black Carbon emissions from coal burning.

!   Slightly reduced CO2 emissions from reduced biomass land use change emissions.

Offsetting changes

October 9, 2013 30 RadiaQve  Forcing  Difference  

CO2CH4N2OOther  Kyoto  GasesSO2All  Other  GasesNet  Total

-­‐0.5%

0.0%

0.5%

1.0%

1.5%

2.0%

Radiative  Forcing  Diffe

rence

250  

350  

450  550  650  750  850  

Concen

tra+

on    

(ppm

v  CO

2-­‐eq

)  

-­‐0.5%  

0.0%  

0.5%  

1.0%  

1.5%  

2.0%  

Radia+

ve  Forcing  Differen

ce  

Local and Regional Environmental Quality

!   The penetration of gas into the market reduces local and regional air pollutants, e.g. black and organic carbon and sulfur emissions

!   These reductions confer non-greenhouse environmental benefits.

!   Ground water has been an issue and needs continued attention.

October 9, 2013 31

SUMMING UP

!   Natural gas has been increasing its market share for decades !   Technologies that make commercially available gas more abundant and

less expensive accelerate this trend !   This has major implications for competition among all primary energy

sources; for energy production, transformation, distribution and end use; energy security; local and regional air pollution; investments in facilities and infrastructure; supply and value chain interactions within and among sectors and regions and trade

!   Gas displaces other fuels but does not significantly alter the overall scale of the global energy system through 2050

!   Availability of abundant, less expensive gas through 2050 does not significantly change !   Global fossil fuel CO2 emissions or total radiative forcing !   Or the carbon price required in an idealized mitigation scenario

October 9, 2013 33

END