Smart investment in natural gas

Smart investment in natural gas
Document type
Corporate author(s)
Economic & Social Research Council
Date of publication
1 October 2013
Evidence Briefings
Trends: economic, social and technology trends affecting business
Business and management
Material type

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The impending closure of ageing power stations and the heightened interest in shale gas extraction has highlighted the potential of natural gas to enhance energy security, reduce carbon emissions, and lower energy prices. Gas is currently an integral part of the UK’s energy mix, providing around 40 per cent of our electricity generation. It will continue to play an important role in the energy mix over the coming decades, for both heating and electricity generation. However, the enthusiasm for gas investments is mixed with concerns over environmental impact and uncertainty about gas price and availability in the future.

The report ‘A UK ‘dash’ for smart gas’ has examined evidence on the opportunities and challenges of natural gas resources – including technological progress, international gas market dynamics, the UK’s carbon constraints and environmental impacts. The report outlines two key aspects that have influenced the natural gas debate in the UK: a renewed interest in gas-generated power, based on the assumption of potentially abundant and cheap natural gas resources; and expectations on domestic shale gas availability which could increase energy security and reduce vulnerability to fluctuating energy prices in international markets. The analysis suggests that basing substantial gas investment on the assumption of low prices and large unconventional reserves is a risky option. A preferable, lower risk option would be a ‘dash for smart gas’ – with targeted use of natural gas in areas where it offers the greatest impact in decarbonising the power sector.

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