Guest post: Is gas a bridge to nowhere for UK climate policy?

Steve Pye is a principal research associate at the UCL Energy Institute, specialising in energy systems analysis.

Gas is hugely important for meeting the energy needs of the UK. In 2016, it was used to produce more than 40% of the total electricity generated and was the primary source of heating for around 85% of UK households (23m).

Yet there is a crucial question as to whether gas, which accounts for more than a third of UK emissions, can continue to play a role in the provision of energy, given the UK’s current climate ambition and the need to increase that ambition following the Paris Agreement.

Recent analysis by the Tyndall Centre suggests its role will be extremely limited, due to the limited remaining carbon budget, lack of progress on carbon capture and storage (CCS) and the potential for fugitive emissions of methane from the gas sector. It concludes that in Europe: “Fossil fuels (including natural gas) have no substantial role in an EU 2C energy system beyond 2035.”

In our new paper, published in the journal Energy Policy with Christophe McGladeand colleagues in the UK Energy Research Centre, we explore whether gas could act as a “bridge”, helping the UK shift to a low-emission energy system, because it could displace fossil fuels, such as coal and oil, which have higher emissions per unit of energy. The paper also assesses whether gas has any significant role to play in the longer term.

Given the UK’s current reliance on gas for energy and the large infrastructure that supports its extraction, transport and use, these are crucial questions for decision-makers to tackle. Reinvesting in or making new investments in gas infrastructure risks locking in fossil fuels, the use of which may not be compatible with the emission reductions needed.

Could gas act as a bridge in the UK?

By “bridge” the analogy is one where increased gas use helps to meet climate policy objectives. Either the level of gas use increases from current levels, growing for a given period of time, before declining (absolute bridge) or it is higher over a period of time than would have otherwise been the case with weak or no climate policy (relative bridge). Both concepts are illustrated below.

Different models for a gas ‘bridge’. Source: authors’ own work

Our paper finds that gas is unlikely to play a major bridging role under either of the above definitions. In a scenario exploring how UK climate targets can be met (labelled “Maintain” in the second figure, below), gas use increases by a small amount (<3%) between 2015 and 2020, before falling continuously to 2050, to a level which is half of what we use in today’s energy system.

The lack of a bridging role reflects the limited scope for displacing coal out of the system, particularly in the electricity generation sector. Coal generation fell to record lows in 2016, accounting for only 9% of total generation, down from almost 40% in 2012.

This trend is likely to continue with a government pledge to phase out all coal plants by 2025. The lack of a bridge in the analysis also reflects that unabated gas generation results in emission levels that are not consistent with emission reductions required in 2030.

So while gas displaces some coal initially (prior to 2020), as is currently being observed today in the UK’s electricity generation sector, the modelling points to a cost-effective pathway where new investment is focused on renewables and in energy efficiency measures.

Total gas consumption in selected model scenarios meeting the UK climate targets with CCS (“Maintain”) and without CCS (“Maintain (techfail)”), and not meeting climate targets (“Abandon”). Source: McGlade et al (2017).

What role for gas in the longer term?

While gas use must decline from its current level to meet the UK’s emission reduction targets, that does not necessarily mean that it will disappear completely.

Our analysis shows that the level of gas in 2050 could still be between 40 and 60% of current levels (as shown in the “Maintain” case in 2050 in the graph, above).

However, such a level is wholly contingent on the building of carbon capture and storage (CCS) systems, thereby allowing for continued use of gas in industry and power generation, and for new uses, such as production of hydrogen (see figure, below).

Without CCS, gas use in 2050 drops to around 10% of current consumption levels, as shown by the “Maintain (techfail)” case, below. This includes almost no gas use in the building sector, implying a complete transformation of how we heat our homes and offices. Gas use in buildings is lower in this case because in the absence of CCS, end use sectors have to make larger emission reductions.

Gas consumption by sector in model scenarios meeting the UK climate targets. Source: McGlade et al (2017).

So a future with gas means CCS deployed at scale. However, the current signs are not promising. The lack of action on CCS persists, despite the numerous modelling studies that highlight its importance for decarbonisation. In the UK, while there was a general commitment in the recent Clean Growth Strategy to this technology, there are concerns that this does not match the resource required.

Policy implications

There are a number of important issues raised by our paper that need to be considered in the policy process.

First, high levels of investment in new gas power generation, as coal is replaced, is likely to be shortsighted, due to the need to supply electricity that has a much lower carbon intensity in 2030. Electricity needs can instead be met cost-effectively by renewables and through reduced demand resulting from efficiency measures in buildings.

Second, CCS will be a prerequisite for continued use of gas in the system in the long term and, therefore, serious investment is likely to be needed for industrial-scale demonstration in the next decade if this is to become a viable option.

Third, a strategy for decarbonising heat is needed, with large-scale effort on deploying alternatives to gas heating in buildings and industry. While the modelling shows widespread implementation of these alternatives in the 2030s, a clear strategy, related policy mechanisms and supply chains need to be in place much earlier, due to the scale of the challenge.

The analysis points to a set of important decisions that need to be made now and in the 2020s, notably on the restricted role of gas-fired generation, heat decarbonisation and development of CCS.

Delaying action on this runs the risk of too much gas remaining in the system, putting in jeopardy the carbon targets in the late 2020s and early 2030s (4th and 5th carbon budget periods). This also needs to be put in the context of stronger UK ambition following COP21 in Paris, which arguably requires a strengthening of the UK’s current climate ambition.