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Use of natural gas and oil as a source of feedstocks

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  • Kapsalyamova, Zhanna
  • Paltsev, Sergey

Abstract

Greenhouse gas (GHG) implication of natural gas and oil differ when they are used for combustion or as a feedstock. In addition to the growing demand for feedstocks that are converted into products (such as plastics and fertilizers), climate policies that penalize GHG emissions may incentivize a switch from burning natural gas and oil to their feedstock use. Using an enhanced version of the MIT Economic Projection and Policy Analysis (EPPA) model, we examine several scenarios to assess natural gas and oil use as feedstock and find that global feedstock use grows 2–3 times by 2050 relative to 2015 levels. In a scenario consistent with reaching 2 °C goal set by the Paris Agreement, the share of natural gas used as a feedstock grows from about 5% in 2015 to about 15% in 2050 and the share of oil used as a feedstock grows from about 10% in 2015 to about 17% in 2050. In this scenario, the share of natural gas used as a feedstock in 2050 is 86% larger than in the no-policy Reference. The corresponding increase in a share of oil used as a feedstock is 40%. USA, Europe, and the Middle East remain as the major regions for feedstock use, but China, India, and Africa grow fast to become major feedstock use centers.

Suggested Citation

  • Kapsalyamova, Zhanna & Paltsev, Sergey, 2020. "Use of natural gas and oil as a source of feedstocks," Energy Economics, Elsevier, vol. 92(C).
    • Handle: RePEc:eee:eneeco:v:92:y:2020:i:c:s0140988320303248
    DOI: 10.1016/j.eneco.2020.104984
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    References listed on IDEAS

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    Cited by:

    1. Wei, Zhaohao & Chai, Jian & Dong, Jichang & Lu, Quanying, 2022. "Understanding the linkage-dependence structure between oil and gas markets: A new perspective," Energy, Elsevier, vol. 257(C).
    2. Paltsev, Sergey & Gurgel, Angelo & Morris, Jennifer & Chen, Henry & Dey, Subhrajit & Marwah, Sumita, 2022. "Economic analysis of the hard-to-abate sectors in India," Energy Economics, Elsevier, vol. 112(C).
    3. Y.-H. Henry Chen & Erik Ens & Olivier Gervais & Hossein Hosseini & Craig Johnston & Serdar Kabaca & Miguel Molico & Sergey Paltsev & Alex Proulx & Argyn Toktamyssov, 2022. "Transition Scenarios for Analyzing Climate-Related Financial Risk," Discussion Papers 2022-1, Bank of Canada.
    4. Paltsev, Sergey & Morris, Jennifer & Kheshgi, Haroon & Herzog, Howard, 2021. "Hard-to-Abate Sectors: The role of industrial carbon capture and storage (CCS) in emission mitigation," Applied Energy, Elsevier, vol. 300(C).
    5. Hongmin Chen & Yingmei Xu, 2024. "Industry Energy Dependence Characteristics Under Different Energy Consumption Accounting Scopes: A Comparison Between China and the U.S," Sustainability, MDPI, vol. 16(22), pages 1-25, November.
    6. Jennifer Morris & David Hone & Martin Haigh & Andrei Sokolov & Sergey Paltsev, 2023. "Future energy: in search of a scenario reflecting current and future pressures and trends," Environmental Economics and Policy Studies, Springer;Society for Environmental Economics and Policy Studies - SEEPS, vol. 25(1), pages 31-61, January.

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    More about this item

    Keywords

    Feedstock; Natural gas; Oil; Economy-wide modeling;
    All these keywords.

    JEL classification:

    • Q47 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Energy - - - Energy Forecasting
    • Q41 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Energy - - - Demand and Supply; Prices
    • Q37 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Nonrenewable Resources and Conservation - - - Issues in International Trade
    • Q31 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Nonrenewable Resources and Conservation - - - Demand and Supply; Prices
    • F17 - International Economics - - Trade - - - Trade Forecasting and Simulation
    • C68 - Mathematical and Quantitative Methods - - Mathematical Methods; Programming Models; Mathematical and Simulation Modeling - - - Computable General Equilibrium Models

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