Copenhagen Economics has conducted a study on the economic consequences of phasing out natural gas too quickly from the energy system. The study was done for HMN Naturgas.
The Danish climate strategy involves phasing out fossil fuels from the energy system in 2035. So far, no explicit decision has been taken with respect to the speed of this phase-out. However, several factors make it likely that natural gas will be phased out quickly.
In the report, we argue that there will be positive gains to the economy from allowing natural gas to play a significant role in the transition period towards a fossil free energy sector in 2035. The main arguments are:
- Natural gas-based energy is significantly cheaper than new renewable energy sources both in the short and medium term. By keeping low cost technologies in the market, the total cost to the economy will be reduced.
- Natural gas contains much less CO2 than other fossil fuels such as coal and oil. In terms of reduced CO2, it is thus much more expensive to phase out gas than e.g. coal.
- The well-developed infrastructure for distributing natural gas can also be used to distribute biogas and other green gases. By keeping natural gas in the system until the new green gases are able to play a larger role, the capacity of the infrastructure will be much better utilised.
For further information, please contact Partner Sigurd Næss-Schmidt