| Subscribe to the Energy Expert RSS feed | Often overlooked is that both generation approaches are wasting upwards of 60% of the fuel in heat and other losses. This can only be changed by a radical shift in managing heat waste through extensive urban district energy systems or by a complete and rapid shift to distributed combined heat and power, or both. Neither seems very likely at present, so this accelerating, but relatively inefficient use of natural gas is likely to affect long-term pricing, probably upwards.
Along with electricity, transportation is a major part of the country’s carbon footprint, as well as its oil imports. There has been growing interest in looking at compressed natural gas, or CNG, as an alternative to diesel or gasoline, partly to reduce imports and reduce carbon emissions.
A quick look at some numbers for a small sized sedan car immediately highlights the complexity of this. In a gasoline version, CO2 emissions are roughly 160 grams per kilometer; in CNG, about 150; in a diesel, less than 120; in a gasoline hybrid, a little over a 100; and in a diesel hybrid less than 90. These numbers ignore any impacts from leaks in the supply chain of natural gas. Thus a strategy purely aimed at carbon reduction may not necessarily favor CNG for transportation. One aimed at import substitution could rapidly change the market again, putting demand and price pressure on domestic natural gas.
So how will all this affect the industrial user of natural gas? It is worth remembering that industrial use makes more efficient use of gas than either electricity generation or transportation. In any public discussion and comparison, industry should be armed with good data in readily understood form to keep this fact front and center in any policy discussions. The obvious comment is to not become complacent over this; any process can be more efficient.
Even plentiful shale reserves are not a guarantee of low prices for the long haul. Businesses sensitive to natural gas prices should probably hedge their bets against price increases with more aggressive efficiency programs. If the site’s electricity supplies are likely to experience significant fuel switching to gas, understanding the ways this could affect the generator’s greenhouse gas emissions and compliance costs could help shape risk mitigating strategies. This is also time to consider all the various options to generate your own electricity, especially if the site can support effective heat recovery.
Natural gas will be a key game changer over the next decade. Familiarity with the factors driving the gas market will help the energy manager and colleagues avoid potentially expensive risks.
