China Making a Major Shift to Natural Gas

(3Bl Media/Justmeans) - Two weeks ago we wrote about the surprising announcement that Beijing would be banning the burning of coal by 2020. Though the move was largely prompted by the intolerable levels of air pollution, there is also growing evidence that they are determined to clean up their act on carbon emissions.

A recent report from IEA says that a “golden age” of natural gas is coming to China. The report predicts a 2.2% annual growth in global demand for gas through 2019, driven largely by China where demand is expected to nearly double. That forecast is actually down slightly from the previous year, due to “slow economy, supply constraints, sluggish LNG trade, and competition from coal and renewables in the power sector.” Europe, in particular, saw a sharp drop in demand for gas. Even oil grew faster than gas last year which managed only a modest 1.2% pace. But that will likely be superseded by growing Chinese demand, which according to the report grew at a 13.3% rate.

Liquefied natural gas is expected to meet most of this increase, with supplies coming from Australia, Canada and the United States, whose combined exports are expected to grow by 40% over that time period. The lion’s share of that will come from Australia. North America is expected to contribute 8% of the global LNG trade by 2019.

Chinese demand for gas in the power, industrial and transport sectors is expected to increase by 90%. It will be price, though, not ideology, driving this transition. Says Maria van der Hoeven, Exective Director of IEA, “High LNG prices are threatening to crimp demand as many countries are increasingly unwilling, or unable, to afford these supplies – and that could open the door to coal. Looking ahead, unless we see timely investment in new production and LNG facilities and the reversal of the recent cost inflation of LNG, only a very strong climate policy commitment could redirect Asia’s coal investment wave to gas."

Indeed there is a tricky balance when it comes to the high prices being paid for gas in Asia. On the one hand, it is motivating investments in export infrastructure in the US and elsewhere. On the other hand, as Ms. van der Hoeven suggested, some Asian countries are beginning to look back at coal.

My readers know that I am not a huge fan of exporting natural gas from the US. I am certainly not alone in this. Bill McKibben points out that natural gas is not as environmentally benign as first thought. Plus, exports would likely raise prices at home.

One of my denialist detractors has said, in what I suspect was an attempted rhetorical flourish, that there is no such thing as clean energy. That’s like saying there’s no such thing as a perfectly decent human being. That might be true, but using that to justify bad behavior is pure rubbish.

Still, the fact of our stupendous appetite for energy, which underlies just about everything we do, has put us in the position of taking a lesser-of-two-evils approach. And while we don’t like what it is doing to our environment here at home, there might be some consolation, if indeed it led to the closing of coal plants in China.

Image credit: Tod Baker: Flickr Creative Commons