Energy Transition and Natural Gas: Reviewing the Role of Natural Gas in the Energy Transition – Lessons from the UK and EU

Abstract

The scramble to achieve net zero emissions by 2050 and fulfil their end of the bargain of the Paris Agreement, has seen governments race to phase out fossil fuels and embrace renewable energy technologies. Indeed, the hype to net zero has almost been equated to an outlaw of fossil fuels, due to levels of CO2 emissions linked to their production and consumption. Paradoxically, more than 80% of current global energy comes from fossil fuels, with 24% from natural gas. Despite a proliferation of recent policy support and prioritisation of renewable energy technologies investments, there yet remains a huge gap in energy supply as intermittent and unreliable supply from wind farms are unable to provide base load energy or cope with demand, with renewable energy providing just 13% of global electricity. Relatedly, rising energy prices, energy shortages and geopolitical disruptions such as the Ukraine war have unveiled just how vulnerable global energy systems and energy policies are. The research reviewed the role of natural gas during the energy transition. Importantly, it echoed a renewed understanding of the UK and EU governments, of the role of natural gas during energy transition, and advances the argument to support natural gas development as a complementary strategic energy choice for a realisation of net zero policy. The findings suggest that natural gas provides essential bridge fuel to net zero whilst reducing emissions through fuel switching to replace coal, helping to provide secure, reliable, and affordable energy during and after the energy transition. It also provides energy companies the cash flows required to fund their energy transformation strategies, featuring prominently in energy company portfolios beyond 2050. In the UK, replacing each barrel of oil equivalent (boe) of imported natural gas with domestic production could save 59KgCO2 emissions. From 2005 to 2023, this equated to 86 million tons of CO2, and 36 million tons (from 2019 to 2023), but this opportunity was lost due to growing LNG imports in the last decade and government policies which restricted fossil fuels indiscriminately. The research finds that further opportunities exist to reduce CO2 via fuel switching from coal to natural gas, globally. It is thus recommended that government policies which constrict the development of new energy from natural gas must be reviewed and natural gas investments must be supported like renewable energy projects. Natural gas and renewable energy are no competitors as far as the energy transition and net zero are concerned; they are joint energy assets to deliver the energy transition and a neglect of one source by policymakers could be detrimental to an attainment of our clean, secure, and affordable energy aspirations.