Global gas industry trends

(1) The role of natural gas in the energy transition has been further highlighted

In the context of climate change, the low-carbon transformation of the global energy system, coal-based thermal power generation is limited, and in the face of extreme climate impacts, the instability of intermittent energy is fully manifested, at this time, the most realistic choice to increase output and flexible peak regulation is natural gas. Considering the impact of extreme weather and climate events on the energy supply system as the old and new energy systems transition, the role of natural gas in the energy transition will be further highlighted.

In the medium and long term, countries' clean transition to low-carbon or even zero-carbon energy is bound to have a huge impact on the growth of fossil energy demand, including natural gas. However, in the short and medium term, the pressure of emission reduction drives the energy policies of various countries to lean towards the use of clean energy, and the global trend of carbon reduction and emission reduction will provide greater room for the growth of natural gas consumption.

In addition, in the context of climate change, the low-carbon transformation of the global energy system, coal-based thermal power generation is limited, and in the face of extreme climate impacts and epidemic impacts, the instability of intermittent energy is fully manifested, and the imbalance between supply and demand is further aggravated. European countries have been trying and exploring the energy transition for a long time, but through the energy supply shortage and soaring prices represented by natural gas, even the "leader" of the global energy transition, the European region has not been able to cope with the impact of extreme climate change on the energy supply system. It exposes the shortcomings in the stability of the energy system and the emergency support ability, so that in the case of insufficient supply of new energy caused by climate, short-term price fluctuations are induced, and then the transmission and diffusion between different energy varieties and regions, causing global energy prices to rise.

According to the current status quo of technological development, when renewable energy encounters climate change, the most realistic choice to increase output and flexibly peak regulation is natural gas. As the world tries to reduce coal and increase the use of clean energy, countries are increasingly dependent on natural gas. Considering the impact of extreme weather and climate events on the energy supply system as the old and new energy systems transition, the role of natural gas in the energy transition will be further highlighted.

The United Nations Intergovernmental Panel on Climate Change (IPCC) released the Working Group I report of the Sixth Assessment Report, Climate Change 2021: The Physical Science Basis, in August this year. The report believes that climate change will intensify in all regions in the coming decades. As global temperatures rise, the intensity and frequency of extreme heat events are increasing rapidly. Long-term climate uncertainty, especially the high probability of extreme weather, will increase short-term gas demand.

(2) The natural gas industry is developing towards low carbon

In order to achieve large-scale development of natural gas in the future low-carbon world, the most critical thing is to decarbonize. The natural gas market and key industry players are exploring the possibility of reducing carbon emissions using a variety of tools, including CCUS technology, hydrogen and carbon offset mechanisms.

1. CCUS technology is introduced into the whole industry chain

Carbon capture and storage (CCS) technology can achieve effective storage of carbon dioxide without changing the energy structure, which is an important way to deeply reduce carbon dioxide emissions. Carbon capture, utilization and storage (CCUS) is the development of CCS. After purifying the captured carbon dioxide, it is put into a new production process for recycling and reuse, so as to make it a resource. It can not only achieve carbon dioxide emission reduction, but also produce economic benefits, and is more practical. The promotion and application of CCUS technology provides strong support for the low-carbon development of the whole natural gas industry chain. On the one hand, CCUS technology helps oil and gas production operations achieve net zero emissions, oil and gas companies often use old oil and gas fields to implement carbon dioxide storage, through the capture of carbon dioxide to drive oil production. For example, Saudi Aramco uses carbon dioxide captured in natural gas projects for enhanced oil recovery, and Saudi Aramco believes that the circular carbon economy is the best system to ensure continued economic growth while reducing carbon emissions globally. On the other hand, the use of CCUS technology in natural gas power generation and other fields has expanded space for the growth of natural gas consumption. In its October 2020 report, "The Role of CCUS in low-carbon power generation Systems," the IEA pointed out that CCUS technology can provide effective support for natural gas power plants to play a more important role in the future power system.