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NATURAL GAS – A GUARANTOR FOR SUSTAINABLE DEVELOPMENT

NATURAL GAS – A GUARANTOR FOR SUSTAINABLE DEVELOPMENT. Sofia , 26 March 2014. Natural Gas CARES for the World. C lean. A ffordable. R eliable. E fficient. S ecure. Natural gas is clean.

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NATURAL GAS – A GUARANTOR FOR SUSTAINABLE DEVELOPMENT

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  1. NATURAL GAS – A GUARANTOR FOR SUSTAINABLE DEVELOPMENT Sofia, 26 March 2014

  2. Natural Gas CARES for the World Clean Affordable Reliable Efficient Secure Natural gas is clean. Natural gas produces less nitrogen oxide than coal, and more than 50% less CO2. Gas produces no sulphur and no solid waste. Natural gas is the affordable choice. Modern gas-fired plants have a capital cost that is half that of coal, one-third the cost of nuclear and one-fifth the cost of onshore wind. Natural gas is available now. Gas is readily available from a variety of sources, both pipeline and LNG. The environmental benefits of gas can be realized immediately. Natural gas is efficient. Modern gas-fired power plants are 40% more efficient than coal plants. Natural gas is abundant. Natural gas promotes sustainable transport. Natural gas vehicles can improve air quality and energy efficiency in large cities. Natural gas does not require subsidies. Unlike heavily subsidized renewable technologies, natural gas use allows countries to affordably reduce their emissions. Natural gas is flexible. Gas can serve as a flexible partner in power generation for intermittent energy sources like wind and solar, facilitating the phase-in of renewables. Natural gas saves time. Gas-fired plants require less construction time than nuclear or coal plants. Natural gas is safe. Natural gas is a clean, affordable, reliable, efficient, and secure energy source. It has a vital role to play in a sustainable energy future. Global production will increase over the next 20 years, with growing supplies from both conventional and unconventional resources. The natural gas sector has the best safety record in the industry. 2

  3. Natural gas is the most environmentally friendly fossil fuel with the lowest CO2 emissions CO2 emissions (in kg CO2/MWh) 1,200 (340%) Lignite-fired plants 850 (230%) Anthracite-fired plants 350 (100%) Gas-fired plants Source:MMD 3

  4. Natural gas is the most environmentally friendly fossil fuel withlower SOXand NOX emissions Kg/MWh -6 Source: DOE 2010 (NETL) 4

  5. Particulate matter emissions from heating systems mg/kWh State institute for environment, measurement and protection of nature, Baden Württemberg; Average emission factors for small and medium-sized combustion plants with zero exhaust gases after treatment. Status: 2006, BGW; Source: www.asue.de 5

  6. 5 4 3 2 1 Energy production from gas involves the lowest capital costs million $/MW Source: MMD 6

  7. Short terms for construction reduce risks Years Plus the shortest terms for obtaining preliminary permits Source: ETP, IEA 2010 7

  8. Lower costs of gas energy transmission as opposed to electricity transmission Gas pipelines offer higher energy transport capacity Natural gas transmission facilities have less noticeable environmental impact, compared to electricity transmission facilities Gas storage is cheaper and more cost-efficient than electricity storage Natural gas or electricity transmission Example: Transmission of 40 TWh of electricity produced from 6 Bcm/year natural gas, transported by pipeline. The environmental impact is very different and illustrates the advantages of natural gas transmission over electricity transmission. Source: IGU: ”Natural Gas Unlocking the Low-Carbon Future”, September 2010 8

  9. Efficient energy transmission – no losses Basis: 50 millionm3/day natural gas equivalent (48”or 56” pipeline) (diesel) Source: EDI 9

  10. By 1980 the proven global reserves have grown more than twice and in the beginning of 2010 have reached 190 tcm, and nowadays they already consist of 210 tcm Proven global reserves Growth of proven reserves 200 Europe tcm Latin America 160 North America 120 Africa Pacific Asia 80 East Europe - Euroasia Middle East 40 0 1980 1990 2000 2010 Source: IEA 2011 10

  11. GDP energy intensity in EU27 GDP energy intensity– significantly higher than EU-27 11

  12. Low conversion and transmission efficiency Low-efficiency of PEC to FEC conversion • FEP/PEP inEU-27 - 65; • FEP/PEP inBulgaria - 48; Major losses in electric power transmission and distribution Low efficiency at end-user and building levels 12

  13. Natural gas consumption per capita in EU Member-States 13

  14. Natural gas consumption in Bulgaria and in the EU

  15. Share of natural gas and electricity in FEC by EU and Bulgarian households 50% Bulgaria EU 45% 40% 35% 30% 20% 11% 10% 2% 0% Electricity Natural gas

  16. Natural gas consumption by sector – EU and Bulgaria 100% 90% 22,10% 80% 47% 70% 60% 39,40% 50% 40% 30% 50% Energy 20% 38,50% Industry 10% Households & services 3% 0% Bulgaria EU

  17. Natural gas in the overall energy use structure 22% 25% 11 12 Natural gas share of FEC, EU Natural gas share of PEC, EU 17

  18. Demand in the past 12 years 18

  19. Expected demand for natural gas in the years to come 19

  20. Solutions are known for quite a while Problem 1: High energy intensity Solutions: - Reduce primary energy input by increasing the share of natural gas in FEC - Increase energy efficiency at FEC level by implementation of advanced gas technologies Expected result: - From 48% up to now, FEP/PEP will rise to 56% 20

  21. Solutions are known for quite a while 2 Problem2: Excessive SOx, NOx and dust concentrations in large cities Solutions: Replace solid fuels used in households Promote the use of natural gas as a motor fuel Expected result: - Cities enjoy cleaner ambient air 21

  22. Gas distribution today Deployment: 3530 km of gas distribution systems built in 40 municipalities, being 15% of all Bulgarian municipalities; Number of users connected to gas systems: 70thousands, of which 64thousands households; Sales by gas distribution utilities: 482 million m3of natural gas, or 17% of the overall consumption of natural gas in Bulgaria 22

  23. Prospects for development Implementation of the Accelerated gasification program as so to meet the following objectives by 2020: Sales by gas distribution utilities – 1 350 million m3, of which 510 million m3to households; Total number of gasified households: 450k or 16% of all households in Bulgaria by 2020 Deployment of 5000 km of pipelines 23

  24. Interim objectives by 2030 Increase the share of natural gas in the gross domestic energy consumption to: 15% in 2015 19% in 2020 26% by 2030 2. Upon the implementation of the gasification program, the share of natural gas in final energy consumption will reach: 17.4% in 2015 23.5% in 2020 28.3% in 2025 34.1% in 2030 In other words, the implementation of the national programme will lead to the attainment of today’s average European values 24

  25. Benefits to the public 462 million m3 of natural gas sold by GD utilities in 2013 means: Financial and energy savings on annual basis: Final energy savings – 1 440 GWh Primary energy savings –1 800 GWh GHG savings – 373 000 MT Financial savings at end-user level > BGN 370 million Environmental effect on annual basis: SOx emission saved – 26 300 MT NOx emission saved – 1 800 MT Social effect Improvement of public health as a result of better ambient air quality, more comfortable living environment, automation of combustion processes for easy and safe operation of gas appliances as well as creation of new and attractive jobs 25

  26. Expected benefits 1 350million m3 of natural gas to be sold by GD utilities in 2020 will mean: Financial and energy savings on annual basis: Final energy savings –2 880GWh Primary energy savings – 3 960GWh GHG savings – 1 300k MT Financial savings at end-user level > BGN 1billion Environmental effect on annual basis: SOx emission saved – 76850MT NOx emission saved – 4130MT Several thousand new jobs

  27. The challenges today ... Slow and inefficient procedure for the construction and protection of gas distribution infrastructure: Inaccurate cadastre ‘Unapplied’ regulation The right of way for utilities – unclear origin Needlessly complicated process for the placing of energy sites into operation

  28. The challenges today ... Burdensome administrative regime imposed by the excise legislation: Waste of investments for reporting of useless data; Filing dozens of thousands useless customs declarations; Duplicate reports sent to Revenue and Customs agencies due to the absence of interface between the two

  29. The challenges today ... Unlicensed operators allowed to distribute gas – this opens the gate to abuse and theft, threatens people’s health and life; Energy legislation changed "in the dark" and without participation of relevant expertise – creates potential for regulatory discretion; Non-market-based approach towards the pricing of competitive energies; Inefficient usage of financial incentives.

  30. Thank you for your attention! www.overgas.bg svetoslav_ivanov@overgas.bg

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