Natural gas faces the competition from coal in Asia’s electricity industry

Gas producers, exporters and commercial companies are banking in Asia – the largest and fastest growing energy market in the world – to lead to increased gas demand in the coming decades.

But while the total gas consumption in Asia will certainly extend to today’s levels, gas traders may need to mitigate their optimism in the light of increasing carbon capacity throughout the area.

Asia’s largest economies have three times more carbon burning capacity under the construction of gas burning capacity, according to Global Energy Monitor (GEM) and are already based on carbon for about 45% of regional electricity production.

Big economies in Asia – including China, India, Japan and Vietnam – also develop much more solar, wind and hydroelectric capacity than gas capacity, in the context of an ongoing effort to produce pure domestic energy.

This combination of a sharp increase in carbon capacity alongside the net power of the record can serve to limit the growth of natural gas use across the area, especially if global gas prices remain higher and more volatile than alternative energy.

Power conductor

In 10 of Asia’s largest economies – China, India, Japan, South Korea, Indonesia, Vietnam, Thailand, Taiwan, the Philippines and Pakistan – there is just over 1 million megawatts (MW).

Of this whole, solar farms represent the largest share (26%or 270,000 MW), while the new carbon burning capacity is the second largest share (24%), with only 250,000 MW.

Wind parks and hydroelectric power plants represent an additional 20% each, while gas -fired power plants represent a 7% share of about 70,000 MW.

Nuclear plants account for an additional 4%, while bioenergy and geothermal facilities each represent for less than 1%.

Coal comfort

The oversized share of the carbon in the thermal power footprint of Asia is driven by various factors.

Coal -burning factories are directly competing with the gas in networks that can adjust the production of both for the management of system requirements.

In Europe and North America, carbon production has lost ground due to gas due to pollution reduction efforts and, as the ever -increasing gas distribution networks have allowed the cost of adopting gas power in most areas.

On the contrary, coal has represented over half of all Asia’s electricity production for more than two decades and has set up a record of electricity in each of the last four years, data from Energy Think Tank Ember shows.

This deep carbon penetration has been facilitated by a rapid and dense construction of carbon distribution and storage that have ensured that energy companies had a constant offer of relatively cheap carbon as needed.

However, gas distribution and storage networks remain sparse in Asia and are often more expensive for the construction of the comparable carbon system due to the need to maintain gas under specially constructed tanks and pipes.

As a result, most Asian electricity companies who choose to expand carbon production against the construction of new gas plants, especially when utilities are under pressure to add production as quickly and cheaply as possible.

In China, the world’s largest consumer power and carbon user in the world, the expansion of natural gas electricity production is ongoing, amid efforts to reduce carbon pollution.

But even there, there is almost five times more new carbon capacity under construction than natural gas capacity, which will serve to keep carbon as the main source of energy for several decades.

Deceleration of recruitment

In addition to the cost of building power plants, pipelines and storage systems, there are other issues that have stopped extensive gas intake in Asia.

An important concern for exploitation of the energy system is the concentration of gas production between the three countries – the United States, Russia and Iran – which represent almost half of world production, according to the Institute of Energy.

Russia and Iran have undergone international sanctions in recent years that have made it difficult to market or trade in their products for small utilities.

Meanwhile, the US – the world’s leading gas producer – seem to have invoices as part of the trade negotiations in the context of President Trump’s second term, which increases the risk of retaliation in Asia that could make the US boundaries from the limits.

This means that almost half of the global gas supply comes from countries that could be considered as potentially unreliable trade partners and could expose gas importers to expensive supply chain disorders.

Cross -border gas pipelines are also under a regular threat of withdrawal or sabotage during political disputes, while the cost of shipping through the sea is often more often than a carbon load of comparative size.

Finally, about 80% of world carbon supplies come from Asia, which means that Asian electricity producers are usually able to replenish stocks shortly by many suppliers.

This proximity to competing suppliers helps maintain carbon prices under control during any local supply disorder and prevents electricity businesses from needing expensive stocks.

This in turn means that carbon will probably remain the main source of energy across Asia, and even efforts to boost gas exports from other areas are steadily rising in the coming years.