To Cut Down Air Pollution China Will Switch To Natural Gas For Power Generation – Right Now Good Business For Exporters, But China Will Soon Develop Large Domestic Shale Gas Deposits

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By Paolo von Schirach

December 21, 2011

WASHINGTON – Qatar may not be too pleased that the US is now self-sufficient in terms of natural gas production. In fact America has so much shale gas, (extracted through hydraulic fracturing), that it may even become an exporter. But not to worry. There is the whole of Asia to compensate for the loss of the US market. Bloomberg reports that China is focusing now on natural gas as an alternative to polluting coal for power generation. Chinese economic growth entails a huge increase in electricity demand. But if future demand is to met only through coal fired plants, as it is now the case, China air quality, already very bad, would probably get to be intolerable.

Most electricity from coal

Pennenergy reports that: ”Gas-fired generation accounts for a minuscule portion of China’s power supply, with less than 1 percent of total capacity. According to the International Energy Agency, China drew nearly 80 percent of its electricity from coal fired power in 2008, with nearly another 17 percent from hydroelectricity“.

Given this very small base, gas fired plants will have to grow exponentially in order to make a difference in overall air quality. And this is a real challenge.

New environmental standards

The English language China Daily reported that the Institute of Public and Environmental Affairs recently released a report suggesting that smog is caused mostly by industrial pollution. Power generation represents about 1/4 of total noxious emissions. The Chinese government is trying to force change by imposing much stronger environmental standards that will force the switch to less polluting fuels, such as gas. So expect a boost to natural gas production and imports from major producers such as Russia and Qatar.

Sustainable development

Bottom line, starting now, the issue for China is no longer ”growth at all costs“. It has to be “sustainable growth“; and natural gas will have to play a much larger role, given its more benign impact on the environment.

Down the line there may be a silver lining for China, as the country, according to most estimates, has the largest (yet still untapped) shale gas deposits in the world. In the US, abundant and cheap shale gas has proven to be a major energy and economic gift. China has four times the US population, therefore the natural gas benefits will be spread more thinly. But all that new cheap energy will help.

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