IEA hails China's new policy for gas usage
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China's new policy for gas usage could usher in a golden era for a greater role of natural gas in the global energy mix, the International Energy Agency (IEA) said.
"Despite minimal growth in gas-fired power generation in China from 2000 to 2009, its 12th Five-Year Plan (2011-2015) reflects a major policy shift, which aims to give gas a much more important role in the broader energy system," the IEA said in a special report entitled Are We Entering The Golden Age of Gas?, which was released on Monday in London.
China's 12th Five-Year Plan has strong implications for gas usage, targeting an 8.3 percent share in the primary energy mix in 2015 or 260 billion cubic meters (cu m) annually, based on China's goal for energy consumption.
This is an upward shift from 85 billion cu m of gas consumed in 2008, or 3.8 percent in the energy mix.
Focusing on energy efficiency and the usage of cleaner energy, the 12th Five-Year Plan charts a course to more sustainable economic growth.
Gas demand in China, now about 100 billion cu m a year and almost equal to Germany's, may soar to match that of the 27-nation European Union by 2035, according to the IEA report.
The new report, part of the World Energy Outlook 2011 series, presented an illustrative "high gas scenario", which incorporates a combination of new factors that will result in a more prominent role for natural gas.
These factors are ample availability of gas, which lowers average gas prices, implementation of China's policy for gas usage, lower growth of nuclear power and more usage of natural gas in road transportation.
As the most important country in shaping the future of energy markets, China's energy demand and its exponential economic growth mean that its policy can dramatically affect the trajectory of global gas demand, the report noted.
The report said that natural gas is a particularly attractive fuel for countries and regions - such as China, India and the Middle East - that are urbanizing and seeking to satisfy rapid growth in energy demand.
"These countries and regions will largely determine the extent to which natural gas use expands over the next 25 years," the report said.
It went on to predict that the global usage of gas would rise by more than 50 percent from 2010 levels.
Gas will overtake coal as the most popular fuel after oil, with its share of the global energy mix increasing to more than 25 percent by 2035, according to IEA.
"We have seen remarkable developments in the natural gas market in recent months. There is a strong potential for gas to take on a larger role, but also for the global gas market to become more diversified and therefore improve energy security," said Nobuo Tanaka, executive director of the IEA, at the launch of the report.
However, the report also presented a cautious note on the climate benefits of such an expansion, noting that an increased share of gas in the global energy mix is far from enough on its own to put the world on a carbon emissions path that is consistent with a global temperature rise of no more than two degrees Celsius.
While natural gas is the "cleanest" fossil fuel, Tanaka added it is still a fossil fuel.
He said increased use of natural gas could muscle out low-carbon fuels, such as renewable and nuclear energy - particularly after Japan's nuclear accident and the likelihood of a reduced role for nuclear energy in some countries.
"An expansion of gas usage alone is no panacea for climate change," he said.
The IEA advises 28 developed economies, providing research, statistics, analysis and recommendations. China is not part of the IEA but the agency provides analyses of the country.
