India, China, and the future of Energy
In my last article I explored the future use of Liquefied Natural Gas (LNG) as it applies to the future of vehicles, especially electric cars. After the second big U.S. winter event of 2017/2018, natural gas is on my mind again. Energy demands during these winter months have been exceptionally high, and natural gas pricing has reflected this. But this is expected; energy pricing follows seasonal patterns. Coal and Oil are the traditional sources of energy, but a shift towards natural gas is occurring.
At a glance, one would decry that coal does indeed play a pivotal role in domestic energy production, à la Trump campaign fodder. However, two massive consumers in this space are India and China. These two countries are the first and third biggest importers of coal, with Japan sandwiched between them. One can argue that these two countries are still in the developing stage, with relaxed policies that focus mostly on growth across all sectors with little to no regulation, especially environmentally. These two countries are also poised to be two of the biggest economic superpowers in the next decade.
A big driver in the shift from coal and liquid based energy/electric production is an economic one. The infrastructure to import natural gas via traditional pipeline methods and LNG is rapidly expanding, especially as energy demand in Asia increases across the board.
Demand side pressure looks indicative of a strong future for natural gas. The United States could potentially be one of the largest exporters of LNG, especially to their Latin American neighbors and Caribbean nations.
With the territory of being an economic superpower also comes a certain expectation from not only the citizens of the country, but global political pressure from other similar countries. India and China are already planning to implement new strategies towards more responsible environmental policies, which includes limiting coal’s role in energy production. An excerpt from an article published by the U.S. Energy Information Administration in 2014 reads:
The closing of higher polluting and higher energy use companies in addition to the shut-down of hundreds of smaller, less efficient coal mines has improved air quality in some regions while increasing natural gas demand. In March 2013, Beijing authorities released a plan to replace all coal‐fired equipment with cleaner burning natural gas in its core areas by 2015. The plan includes replacement of four major coal power plants with natural gas power plants, a ban of coal‐fired winter heating, and more use of clean energy. Other major cities in China are expected to implement similar plans. Implementation of these policies will further increase growing demand for natural gas in China.
A combination of economic and environmental incentives will continue to drive demand for natural gas, and new markets like LNG transport will continue to explode to mimic the shifts in the global energy market.
Please share any thoughts you have in the comment section and be sure to share!
