Aaditya Energy Foundation, Chennai, India

`Econometric Analysis on Environmental Sustainability of Gas Based Carbon Economy in 21st Century - - Strategies for Managing Environmental Risks for Sustainable Development of Gas Markets”


On account of growing economies world over and population explosions among Asian / South East Asian Nations, global energy consumptions are expected to increase by 59 - 63 per cent, over a period of 30 years, growing from 382 quadrillion British thermal units (Btu) in 2000 to 607 quadrillion Btu – 620 quadrillion Btu in 2030, representing an average annual growth rate of 2.2 per cent. Major economic growth and improvements in Human Developmental Indices are expected in developing countries, in contrary to Kyoto Limitations and ongoing debates on Critical Environmental Issues and Climate Changes, primarily due to rapid economic growth on Carbon Based Economy of 20th century, in terms of dominant uses of fossil fuels. Energy demands in developing Asia – specifically India and China, and Central and South America are projected to more than double between 2000 and 2030, accounting for more than half of the total growth on world energy consumption. By 2030, energy consumptions in developing nations are expected to nearly equal the industrialized nations. At the same time, energy consumption in East European / Former Soviet Union is expected to recover from the decline experienced through 1990s but remain below 1990 levels in 2030 as well, as these nations recover from economic downturn of a decade ago. In low and high economic growth cases, total energy consumption is expected to range from 513 to 713 quadrillion Btu by 2030 and beyond. Natural Gas has been estimated as the major economic driver among fossil fuels for 21st century on account of its abundant resource base across the globe, especially its two-third accumulations in and around Middle East or Gulf Regions and moreover its environmental friendly energy applications. Such a critical scenario on hydrocarbon prospecting and environmental sustainability on enhanced energy use stimulates energy economists to derive an econometric analysis and formulate economic modeling on environmental sustainability of gas based carbon economy of 21st century – as the strategies for managing environmental risks for sustainable development of gas markets on emerging Energy Scorecard.

The paper objectively derives projections of global energy demand and supply from natural gas perspectives in 21st century, under the treatise of Carbon Economy – economy which derives its growth by the dominant uses of Hydrocarbons as energy base, releasing Green House Gas emissions, impacting natural environment, resulting in global warming & climate change for the extended transition period till 2050 or little beyond from Carbon Economy to Hydrogen Economy. It also estimates related CO2 emissions on dominant uses of natural gas among fossil fuels, including Hydrogen produced from them, other than nuclear generated, in the growing sustainable energy portfolios of current century and underlines some key issues for carbon - energy production, on its wider consumption - profiles up to 2030 for a projected Economic & Human Developmental Indices in the developing and sustainable gas markets across the globe, while integrating Green House Gas Emissions’ Trading within evolving regulatory frameworks and economic instruments under UN and Kyoto Conventions. Critical analysis on macro-anatomy of carbon economy is a derivation of three basic spectrums on world’s energy trends: (1) Availability of fossil resource base and emergence of natural gas as major fuel on environmental sustainability, (2) Development of sustainable energy portfolios and (3) Greenhouse Gas Abatement Program for an outlook period up to 2030. Greenhouse Gas Abatement Program (GGAP) is a global commitment of Nations in meeting Kyoto Protocol targets, particularly in its first commitment period (2008-2012) and beyond. In emerging energy markets, specifically gas based carbon economy of 21st century, environmental initiatives in economic terms, in association with Governmental taxation reforms for Carbon energy producers, are the key parameters to measure, the Acceptance, Implementation and Networking of International Emissions’ Trading-systems within the framework of regulatory and financial subsidies, leading to evolve Greenhouse Friendly Certification Program for improving sustainable market conditions of Carbon Energy Business.

The paper emphatically describes energy - market directions in general and dominating gas market in particular, on a long-term emissions’ signature by Establishing Trading-Boundaries, Issuing permits, Crediting carbon, Designing Gas Market Orientations, and Accounting for GGAP and emissions’ sequestrations for improvements of market conditions and reduction in environmental risks. Hydrocarbon Industry's determination to develop a long term global greenhouse strategy for environmental sustainability of 21st century gas based carbon economy by incorporating elements of Global Climate Change and views of its stakeholders will have a significant bearing on design of future scorecards of growing gas market on the matrices of emissions’ trading, through Capacity-Building on low carbon-technology, and creating Carbon-Trust to support developers and investors in low carbon-economy on evolving parameters of Carbon Accounting.

The paper further explores menu of economic instruments in the framework of state regulations, regional and international agreements and global environmental standards that can be applied to a wider energy market spectrum from carbon to hydrogen fuels and in particular with the perspectives of natural gas. Strategies for managing environmental risks of carbon economy are focused to derive pathways and policies for developing emissions’ trading scorecards, funding for substantial Greenhouse Gas Abatement Program, and developing voluntary ‘credits’ arrangements that could assist petroleum industry to manage the risks associated with possible future greenhouse constraints on wider use of natural gas.

The paper concludes in deriving, the ‘Roadmaps’ in an ‘Economic Modeling’ for implementing the mechanisms of Kyoto Plus to manage climate change and environmental risks for the whole gamut of carbon energy production and consumption profiles in collaboration and integration of natural gas and renewable energies. Exploitation of Coal bedded Methane as alterative Hydrocarbon deposits as well as exploration and production of Frontier Petroleum Deepwater Provinces with huge accumulation of Gas Hydrates & Natural Gas, releasing Methane to atmosphere, are also incorporated in this modeling, to take into account of ‘Environmental Modeling Aspects of Gas Hydrates & Natural Gas in context of Climate Change’, for future sustainable exploration, production and consumption of carbon energy on long term demand. Future energy mix will be determined by: availability of fossil fuels, economic growth, regulations and subsidies, global trade alignments on emerging energy, environment and economic orders, as well as on technological advances. Development of new resources requires large investments in exploration, production, and infrastructure and market development. In near term relatively high or low energy prices may exist, due to imbalances in either supply or demand, probably that cannot be sustained. Higher prices stimulate new exploration, production, and substitution of energy portfolios, whereas lower prices drive marginal production from the market. Natural gas will certainly bring down the fuel cost in terms of socio, economic and environmental dimensions.

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