[Public Voices] City Gas Must Lead the National Energy Transition

Jung Hee-yong, Executive Director of the Korea City Gas Association.

The world is currently at the center of an energy transition, but countries are facing difficulties as they take measures to resolve resource reallocation, energy security, and economic constraints amid multiple crises such as the Russia-Ukraine war and the Middle East situation. Notably, South Korea ranked only 31st in the '2023 Energy Transition Index (ETI)' released by the World Economic Forum (WEF), with a very low share of renewable energy among the evaluation indicators. This indicates that expanding renewable energy alone is not the solution for energy transition; it requires securing a nation's economic and social capabilities, infrastructure, systems, readiness for energy transition, and sustainability.

South Korea's city gas sector has already experienced an energy transition. During the peak of the coal industry in the 1980s, the domestic industry pioneered the gas sector, which was like a wasteland, under the banner of 'Gas for National Prosperity,' redefining its business domain by providing the public with a comfortable life through clean fuel, transforming its core business itself, and achieving unprecedented growth worldwide. Now, natural gas is evaluated as the optimal energy source with flexibility to complement renewable energy in the short term and supply stability in the long term. In particular, according to Shell's '2024 Liquefied Natural Gas (LNG) Outlook,' global LNG trade volume is expected to increase by more than 50%, from 400 million tons last year to a maximum of 680 million tons by 2040. In line with this trend, the domestic city gas industry can lead the national energy transition in various aspects.

First is the systemic performance of the city gas industry and its capability to prepare for energy transition. Domestic city gas demand has exceeded 20 million households, and with the completion of a nationwide supply network of 50,000 km, the supply rate reaches a world-class level of 85%. With the establishment of an integrated safety management system (TSM), it has the lowest disaster rate among domestic utility businesses, and city gas facilities preparing for hydrogen blending supply are expected to become the optimal energy supply system that can accelerate the hydrogen economy.

Second is the scalability of natural gas. Unlike renewable energy limited to power generation or oil concentrated on transportation, natural gas can be supplied for almost all uses including power generation, residential, commercial, transportation, and raw materials, making it the most versatile existing energy source. It can contribute to mitigating power peaks by serving both heating and cooling, and also has the advantages of distributed energy sources like fuel cells.

Third is the expectation for technological innovation such as Carbon Capture, Utilization, and Storage (CCUS). If CCUS is commercialized, it will be a game changer for energy transition alongside the shale revolution. The International Energy Agency (IEA) has projected that CCUS will contribute 18% of the total reduction needed to achieve carbon neutrality by 2050, and in the same context, methanation (methane synthesis) technology is also gaining increasing attention.

Finally, there is the potential to overcome the limitations of renewable energy and full electrification. The domestic power sector’s greenhouse gas emission factor is 0.4468 CO2t/MWh, twice that of natural gas (0.2137). If the renewable energy generation ratio, currently only 8%, is increased to around 30% by 2030, the emission factor will become similar to that of natural gas by 2035. Electrification that does not consider this could result in outcomes contrary to carbon neutrality. Therefore, considering the intermittency and limitations of renewable energy and progress in technological innovation, natural gas competitiveness will continue even in 2050.

France announced a draft of the 'Energy Sovereignty Act' last January, expressing its commitment to energy transition without setting renewable energy generation targets, and 25 U.S. states have adopted the 'Natural Gas Priority Act.' If we realistically recognize the importance of natural gas without being trapped in the narrow equation that renewable energy equals energy transition, the domestic city gas industry, which possesses all essential elements of energy security, economic feasibility, and sustainability, will become a vanguard leading the national energy transition in the future.

Jung Hee-yong, Executive Director, Korea City Gas Association