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Gas and the Sustainability Drive: what will it do the fuel mix?

Gas and the Sustainability Drive: what will it do the fuel mix?. Ian Cronshaw , Head of Energy Diversification Division International Energy Agency GIE Annual Conference, Bucharest 23 October 2008. OECD Europe--Gas Delivered. Spain’s economy slows— but not gas demand.

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Gas and the Sustainability Drive: what will it do the fuel mix?

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  1. Gas and the Sustainability Drive: what will it do the fuel mix? Ian Cronshaw, Head of Energy Diversification Division International Energy Agency GIE Annual Conference, Bucharest 23 October 2008

  2. OECD Europe--Gas Delivered

  3. Spain’s economy slows—but not gas demand

  4. Japan—demand growth surprises

  5. Increase in Global Natural Gas Demand, 2005-2030 400 20% % Share of increase in world primary natural gas demand, 2005-2030 350 300 13% 250 12% 11% billion cubic metres 10% 200 10% 9% 150 7% 100 5% 4% 50 0 Middle Trans. OECD OECD China Latin Rest of Africa OECD India N. America Europe America Asia East economies Pacific Natural gas demand grows by 2.1% per year through to 2030, from 2 854 bcm in 2005 to 4 779 bcm in 2030.

  6. OECD Power generation growthIncremental generation 2000-2007

  7. Changes in installed capacity in OECD Sources: IEA data, Platts and GWEC Policy uncertainty, especially with respect to climate change, favours gas as the short term default option for new investment

  8. Share of gas-fired power in electricity output, and demand of gas for power (Bcm at top of bars). Source: IEA data and forecasts from national government submissions Gas-fired power in the US increased by 10% last year. All larger OECD countries foresee further increases in gas demand for power.

  9. Monthly average prices of gas and power in the UK, coal, and CO² in EU ETS

  10. Investment:EPC unit costs in LNG rise sharply

  11. Investment: Pipeline projects in Eurasia

  12. Impact of financial crisis? • There is no major concern about gas consumption growth except timely construction of supply infrastructure • Financial crises may cause better sentiment for tangible projects with (fairly)stable return rate • Raw materials cost drop might be beneficial, but regulatory framework and formal difficulties associated with infrastructure projects that were a concern before the summer remain

  13. Average Annual Power Generation Capacity Additions in the “50% CO2 Reduction Scenario” 2010 – 2050

  14. Some summary observations • Demand growth still strong; both inside IEA and non member countries • Gas consumption growth strong in 2007-08 despite slowing/zero growth • Electricity and gas markets now strongly linked. • LNG grows fast, but demand grows faster • Europe imports by pipeline and LNG • Global Gas Market Interactions Increase

  15. Key message • In all scenarios, gas is a key source of energy for the foreseeable future • Gas meets some interlinked challenges: security of supply, environment , affordability • Gas power generation seems to be the default option providing needed flexibility and back up to wind and hydro power generation

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