A new era for CCUS driven by contrasted policies and business models: US and European approaches

According to a new report by CEDIGAZ, CCUS is coming back into the limelight, especially in the US and in Europe, in the wake of the Paris agreement, boosted by a growing interest in hydrogen, rising carbon prices, new supporting policies and new business models.

There are currently 20 new, large-scale, CCUS projects planned around the world, nine of them in Europe. While projects developed in the middle of the 2000s mainly targeted coal-fired power plants and stored the captured carbon, the focus of the new projects is different as they tend to concentrate on industrial and manufacturing processes and on carbon utilization rather than just storage. Several projects involve production of clean hydrogen from natural gas, a cheaper option than hydrolysis using renewable power. New business models aim at reducing costs by dis-integrating the CCUS value chain into its three components of capture, transport and storage, and by addressing clusters of industrial facilities to achieve economies of scale.

Natural gas demand grows strongly by 40% from 2017 to 2040, supported by air quality policies, abundant low-cost supplies and the expansion of LNG trade

CEDIGAZ, the International Information Center on Natural Gas, has just released its « Medium and Long Term Natural Gas Outlook 2019 ». Cedigaz Scenario incorporates government ambitions in the context of the energy transition that is underway. It is built upon the implementation of strong energy efficiency programmes and increased diversification of the energy mix based on the NDCs. Cedigaz Outlook 2019 highlights that natural gas has a crucial role to play to support the energy transition and meet all targets of the NDCs. However, this will not be enough to reach the +2°C target: emissions in the Cedigaz scenario would put the world closer to a +3°C path. The future expansion of natural gas in the energy mix is driven by the competitiveness and abundance of gas resources in gas-rich markets (North America, Russia, Middle East, Mozambique), which will expand LNG export capabilities. Positive developments of unconventional gas, especially in the US, and liquefied natural gas markets will continue to reshape natural gas supplies.

THE GLOBAL GAS MARKET IN 2018

Natural gas supply and demand grew at their fastest pace since 2010

 

According to CEDIGAZ report “The Global Gas Market – 2019 Edition”, 2018 has been a remarkable year for the global natural gas market.

Global natural gas demand surged 4.7% to 3850 bcm, driven by the US and China. The US was the standout performer, accounting for 45% of the global increase in both the consumption and supply of natural gas.

2018 marks the second year of strong growth of natural gas demand, after a 3.5 % rise in 2017. It also recorded the highest growth of gas demand since the post-crisis rebound of 2010.

This fast expansion was driven by the abundance of competitive gas supply, especially in the US and in Russia and by supportive energy and environmental policies, in some countries, particularly in China. Investment in transport infrastructure also contributed to bolster gas penetration in key markets.

China became the largest net importer of natural gas in the world before Japan. Chinese net imports jumped by 32% and accounted more than 80% of the global increase in net imports, once again highlighting the crucial role of China in absorbing global gas production.

Like in 2017, the expansion of natural gas demand was part of a substantial global growth in world energy demand, driven by a robust global economy and extreme weather conditions.

Strong gas demand growth in Asia contributed to a rise in market prices in key areas and prevented the formation of a global LNG bubble.