Energy professionals will gather here next Monday at the Singapore International Energy Week to discuss Asia's key energy issues. They are arriving at the right time, as the region is facing the challenge of shaping a new energy system. What will that energy system look like?
If the use of coal continues to grow, the impact of climate change and air pollution will only increase. Renewable sources such as solar and hydropower are undoubtedly a crucial part of Asia's energy future, but these still face technical and commercial challenges.
Nuclear is not regarded as an acceptable alternative in many countries, especially after the Fukushima disaster of 2011 in Japan. So, in my view, natural gas could and should play a crucial role in the Asian energy mix.
The global challenge is clear enough. The world's energy needs are growing at a fast rate. In the coming decades, there will be more people, more people living in cities, and more people with improving living standards. This is especially true for Asia. The International Energy Agency (IEA) says global demand is likely to increase by one-third from 2011 to 2035 - with China, India and other Asian countries accounting for a major part of demand growth.
At the same time, Asia is facing major environmental challenges. So the region doesn't only need more energy, it needs cleaner energy too. And, looking at Asia's reliance on energy imports, it also needs an economically sustainable energy mix. Here, natural gas could be of great help; it's abundant, affordable and acceptable.
Abundant, since the IEA estimates that the world holds enough technically available gas resources for over 235 years of production at today's rates. It's also linked to international markets through an expanding network of pipelines and supply chains of liquefied natural gas (LNG).
Affordable because in Asia, according to the analysts of Energy Intelligence, a gas-fired plant is two times less capital-intensive than coal and onshore wind, four times less than nuclear, and seven times less than offshore wind. And gas becomes increasingly competitive when you look at the full cost of electricity generation. This includes immediate costs of production, but also anticipated costs linked with climate change and air pollution caused by burning coal.
And acceptable, for gas is cleaner-burning than other hydrocarbons. When burned for power generation, for example, it emits 50 per cent less carbon dioxide (CO2) than coal. And carbon capture and storage (CCS) can make it cleaner still by capturing 90 per cent of its CO2. Compared with coal, gas also emits less than a third as much nitrogen oxides, one per cent as much sulphur oxides, and a negligible amount of the small particles that pollute the air of many Asian cities.
But, one might ask, how about renewables? Renewables alone, at least in the medium term, can't meet the total demand for energy. The IEA says that the global share of renewables in primary energy use could rise to 18 per cent in 2035. Renewables also depend on flexible back-up when the wind doesn't blow or the sun doesn't shine. Gas offers this flexibility - not just in power generation, but also in transport, industrial and residential use.
Great Future
At first glance, it looks like there's a great future for gas in Asia's energy mix. Demand has increased dramatically. Singapore and Malaysia began importing LNG last year. Before long, they could be joined by countries like Vietnam and the Philippines. And others are expanding their import capacity, including South Korea, China and India.
But, on a closer look, the picture is less promising. Since the beginning of this century, coal has been the world's fastest-growing primary energy source - mainly because of economic growth in Asia. It is true that China, for example, is moving to a greater proportion of cleaner energy sources. But coal, the most polluting fossil fuel, still holds a dominant 67 per cent share of the mix by the end of this year.
For many countries in Asia, gas is the fastest and most cost-effective way to secure energy supply, while bolstering the fight against climate change and air pollution.
Shell stands ready to help meet Asia's growing demand, offering affordable and cleaner- burning solutions such as LNG.
In 1964, Shell delivered the first cargo ever shipped from an LNG export facility. Today, we are involved in every stage of the LNG value chain - from finding, extracting and liquefying the gas, to shipping it, turning the LNG back into gas, and distributing it to our customers in Asia and elsewhere.
Singapore is a key partner of Shell in many areas. We have been active here since 1891. Today, Shell has more than 3,100 employees in Singapore, and we are one of the country's largest foreign investors. We believe that Singapore is well positioned to play a key role in the Asian gas trade. It is strategically located between gas-importing countries in Asia and gas-exporters from Australia and the Middle East. And its financial infrastructure, combined with a solid legal framework and a long-standing free-market approach to energy, strongly supports gas trading. In short, Singapore is the perfect place to make plans for the future of energy in Asia, in which natural gas - given the right policies - could have a significant role to play.
Maarten Wetselaar is executive vice-president at Shell Integrated Gas.
The article was published in The Business Times on 24 October 2014
By: The Business Times