PESD has concluded a two year collaborative study on the Indian natural gas market with A.T. Kearney. The study explores gas demand to the year 2025 in industrial applications under a range of different policy and economic scenarios.

Industrial consumers will benefit from increased supplies from LNG to displace expensive liquid fuels, but cheap coal remains the dominant fuel for many industrial applications.

PESD has concluded a two year collaborative study on the Indian natural gas market with the Integrated Research and Action for Development (IRADe). The study explores gas demand to the year 2025 in nitrogenous fertilizer production under a range of different policy and economic scenarios.

For the fertilizer sector, significant opportunities exist to import cheap fertilizer, thereby reducing domestic gas demand, but political constraints will likely buoy gas demand. Industrial consumers will benefit from increased supplies from LNG to displace expensive liquid fuels, but cheap coal remains the dominant fuel for many industrial applications.

PESD has concluded a two year collaborative study on the Indian natural gas market with the Indian Institute of Management - Ahmedabad. The study explores gas demand to the year 2025 in the electricity sector under a range of different policy and economic scenarios.

The study concludes that coal is likely to remain the dominant fuel in the power sector, but opportunities exist for gas in reducing regional air pollution and providing peaking power.

Regional air pollution constraints in the power sector - already underway in certain parts of India could reduce carbon dioxide emissions by over 100 million tonnes per year. Reforms underway in the Indian coal sector, however, could bring a surge in new supplies, which would undermine the opportunities for gas in the power sector.

PESD has concluded a two year collaborative study on the Indian natural gas market with three India research groups- A.T. Kearney, Indian Institute of Management - Ahmedabad, and Integrated Research and Action for Development (IRADe). The study explores gas demand to the year 2025 in the three main gas consuming sectors within India - electricity generation, nitrogenous fertilizer production, and industrial applications - under a range of different policy and economic scenarios.

The study concludes that coal is likely to remain the dominant fuel in the power sector, but opportunities exist for gas in reducing regional air pollution and providing peaking power. For the fertilizer sector, significant opportunities exist to import cheap fertilizer, thereby reducing domestic gas demand, but political constraints will likely buoy gas demand. Industrial consumers will benefit from increased supplies from LNG to displace expensive liquid fuels, but cheap coal remains the dominant fuel for many industrial applications.

Regional air pollution constraints in the power sector - already underway in certain parts of India could reduce carbon dioxide emissions by over 100 million tonnes per year. Reforms underway in the Indian coal sector, however, could bring a surge in new supplies, which would undermine the opportunities for gas in the power sector.

From an international supply standpoint, India doesn't appear able to guarantee the offtake of a proposed large natural gas pipeline from Iran within the next 10-15 years, making the project very difficult to justify from a financial risk standpoint.

Talk delivered at dinner during CISAC's conference, "The Security Implications of Increased Global Reliance on Nuclear Power," Wednesday, 19 September 2007, Stanford University.

Introduction: "Since you're dealing with the transition ongoing in the world to nuclear energy, I thought it might be comforting to hear a little about the problems of earlier energy transitions--from wood to coal and from coal to oil as well as natural gas and nuclear power. Energy transitions take time, writes Arnulf Grübler. 'Hardly any innovation diffuses into a vacuum,' he says. 'Along its growth trajectory, an innovation interacts with existing techniques...and changes its technological, economic, and social characteristics....Decades are required for the diffusion of significant innovations, and even longer time spans are needed to develop infrastructures....' The diffusion process is a process of learning, and humans learn slowly."

PESD has been studying the emerging global market for natural gas through a series of closely integrated research projects. The topics of these studies range from focusing on the geopolitical implications of a shift to a global gas market, the factors that affect gas pricing and flows as LNG links the U.S. and European markets across the Atlantic basin, and how gas projects fare in privately-owned independent power projects (IPPs) in emerging markets.

One of the open questions in all these studies concerned China--the country uses relatively small amounts of gas now but could use much more in the future. The role of natural gas in the Chinese economy is of critical import both domestically and for global energy and environmental issues. The competition between coal and natural gas in this market has tremendous implications for local air pollution and for climate change. Rising demand for imported gas in China will also shape the LNG market in the Pacific Basin and could lead to the construction of major international pipeline projects to monetize gas supplies in Russia and the Middle East. The present paper is one in a series that looks at the Chinese market in detail.