Natural Gas Emerges as Significant Transportation Fuel, says new IEA Report

MTGMR2013Natural gas will continue to increase its share of the global energy mix, albeit slowing from last year’s prediction of 2.7% down to 2.4% per year between now and 2018, the IEA said in its newly released Medium-Term Gas Market Report (MTGMR). Slowing is due to persistent demand weakness in Europe as well as difficulties in upstream production growth in the Middle East and Africa. However, prediction for natural gas as a transportation fuel continues to emphasize its strength as an emerging fuel for this era.

The report sees gas emerging as a significant transportation fuel. The Executive Summary states: “Gas use in road transport represented 1.4% of global gas demand in 2012, but this share should rise to 2.5% by 2018 as consumption grows to around 50 bcm in the same period (9.4% of additional gas demand).”

Thanks to abundant shale gas in the United States and amid more stringent environmental policies in China, gas is expected to do more to slow oil demand growth than electric vehicles and biofuels combined. From the Executive Summary: “China is dwarfing developments in other regions as its consumption triples to 39 bcm, due to the combination of the need to develop cleaner transport vehicles, attractive gas prices versus oil and the wish to reduce oil dependency through alternative vehicles technologies.”

“Even though we have revised our growth estimates downwards, the ‘Golden Age’ of gas remains in full swing,” said IEA Executive Director Maria van der Hoeven as she presented the report in Saint Petersburg. “Gas is already a major fuel in power generation, but the next five years will also see it emerging as a significant transportation fuel, driven by abundant supplies as well as concerns about oil dependency and air pollution. Once the infrastructure barriers are tackled, natural gas has significant potential for clean-energy use in heavy-duty transport where electrification is not possible.”

The report speaks to the need for simultaneous development of the full gas value chain, which implies developing sufficient gas supply and building liquefaction plants to feed LNG heavy-duty vehicles, as well as LNG or/and compressed natural gas refilling stations. Executive Summary: “The economics should be attractive for all parts of the gas value chain, in particular owners of fleets of cars or trucks. Use of LNG as a trucking fuel seems to answer many concerns, in particular the chicken-and-egg issue, as fleet owners can team up with LNG retailers and a positive return on investments can be reached within a few years. The car industry should be able to deliver a sufficient number of vehicles by introducing NGVs in their product range, and by working on decreasing the price premium over alternative gasoline or diesel vehicles, provided that economics and policy incentives generate demand for such vehicles. Necessary conditions include: the harmonisation of standards and rules; proper training of personnel involved in trucking; handling NGVs and filling stations; and retrofitting vehicles into NGVs.”

The report also acknowledges the growing demand and potential for demand from non-road sectors such as from marine and rail applications.

Further information is available from the IEA website, by clicking here.

(Source: IEA)

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