In the Italian energy system, natural gas is the energy source with the highest rate of growth measured in recent years and is expected to remain so in the medium-to-long term.
From 2001 (the year Snam Rete Gas was founded) to 2008 consumption of natural gas grew at a rate of 2.6% annually on average, going from 70.9 to 84.9 billion cubic metres. The share held by natural gas of total primary energy consumption went from 31% in 2001 to 37% in 2008, the gains serving predominantly to replace petroleum products. This growth is mainly due to the electricity production sector: in 2008, natural gas was used to generate around 173 TWh or 68% of the 254 TWh total thermoelectric production from fossil fuels. Today natural gas represents by far the most important fuel in the Italian electricity system. This position has been achieved in a relatively short period of time, considering that in 2001 electricity production from natural gas was only 96 TWh, equivalent to 44% of the 216 TWh deriving from thermoelectric production from fossil fuels.
In the 2001-2008 period, the growing use of natural gas with high-efficiency combined-cycle technology (replacing the traditional technology) in the electricity sector has enabled the electricity generation sector to save over 5 billion cubic metres of natural gas, thus avoiding the emission of over 10 million tonnes of CO2 from natural gas. If we also consider that natural gas has displaced fuels that produce higher emissions, like fuel oil in the electricity generation sector, then the contribution of natural gas to environmental quality is even more noteworthy.
ENERGY NEEDS IN ITALY IN 2008 SUBDIVIDED
BY PRIMARY SOURCE (%) 191.5 Mtoe
The financial crisis of 2008-2009 had a significant negative impact on international and Italian energy consumption. In particular, it is estimated that consumption of natural gas decreased by 7 billion cubic metres, going from 84.9 billion cubic metres in 2008 to 78.1 billion cubic metres in 2009, equivalent to a negative growth rate of 8%. Nevertheless, from 2010 onwards we expect that the national and worldwide economic recovery will lead to a gradual return to growth in the overall energy consumption and also in natural gas.
With regard to Europe, according to the latest World Energy Outlook of the IEA (International Energy Agency), natural gas should be the only traditional energy source expected to have an increase in demand in the coming years (about 1% annually), while demand for oil and coal are expected to decrease.
Beside the quantitative aspects, we believe that important changes will affect the context in which the gas industry will be operating. It will be characterised by an emphasis on sustainability. Indeed, the European Union has made significant commitments to the challenge against climate change and to improving air quality. These commitments have been translated into real-world action trough a series of EU directives, implemented by national legislation in the various member states. The prospective energy scenario will therefore see a growing effort to promote further reductions in emissions, greater energy efficiency in end uses, and wider use of renewable energy sources both in end uses and in the electricity generation sector. The pursuit of these objectives will require the launch of research and development programmes aimed at identifying innovative technological and economic solutions in the efficient use of energy resources and in the production of electricity from renewable sources. In any case, natural gas is destined to play a central role in this scenario, with an ever more important impact in its use to generate electricity with conventional technologies (the IEA forecast an increase on the order of 1.4% annually), in addition to a supporting role in the development of electrical power generation from renewable sources, considering that gas turbines with their flexibility can provide the optimal option in terms of reliability and cost-benefit to ensure reserve capacity.
Another strategic area on which energy policy of European countries will be concentrated is the security of supplies, especially for natural gas: the recent crises linked to the supply of Russian gas have highlighted the strategic necessity for Europe to actively promote the diversification of sources of supplies. This has a twofold objective, i.e. preventing the producer countries from gaining excessive negotiating power and the use of energy supplies as an instrument of political pressure.
The natural gas industry in Europe will thus find itself faced with a threefold challenge: environmental sustainability, cost efficiency, diversification and safety of supplies.
In the Italian energy context, the issues just described will hold special significance. Indeed, Italy is one of the most important natural gas markets in Europe, both in terms of consumption (third place after the United Kingdom and Germany) and in terms of the transportation and distribution network. We expect this trend to strengthen further in the future in terms of the relative share of natural gas in the consumption of primary energy, rather than in the production of electrical power. In Italy, the phenomena of offshoring and restructuring seen in the last few years by industrial sectors have translated to a limited growth in energy consumption, especially in the energy intensive categories. The current crisis will probably further accelerate this phenomenon, tending to limit growth in Italy’s energy consumption: in 2013 we expect a consumption of primary energy of around 183 million TOE, a lower level than the 191.5 million TOE consumed in 2008. The share of natural gas in matching this energy demand is expected to reach 39%, a slight increase over the 37% share recorded in 2008 (data prepared by the Ministry for Economic Development).
The demand for natural gas in Italy in 2009 was 78.13 billion cubic metres, down by 6.75 billion cubic metres, or 8%, compared with 2008 owing to the effects of the economic crisis. The reduction was concentrated mainly in the thermoelectric (-15.5%) and industrial (-14.6%) sectors, although this was partly offset by higher demand from the residential and tertiary sector (+4.9%) owing primarily to weather conditions.
Based on the most recent estimates, domestic natural gas demand is expected to grow by an annual average of more than 2% in the four years from 2010 to 2013. The predicted growth is due to consumption in the thermoelectric sector, which is expected to increase annually by an average of more than 5%. Smaller increases are predicted in residential, tertiary and industrial consumption.
CONSUMPTION OF PRIMARY ENERGY
GAS DEMAND BY SECTOR (% OF TOTAL GAS DEMAND)
| NATURAL GAS DEMAND |
|---|
| (billions of m3) | 2007 | 2008 (*) | 2009 |
|---|
| Residential and tertiary |
28.18 |
30.18 |
31.65 |
|---|
| Thermoelectric |
34.29 |
33.90 |
28.66 |
|---|
| Industrial (**) |
20.89 |
19.31 |
16.49 |
|---|
| Other |
1.54 |
1.49 |
1.33 |
|---|
| |
84.90 |
84.88 |
78.13 |
(*)Gas demand was aligned with the data published by the Ministry of Economic Development.
(**)Includes consumption by the industrial, agricultural and fishery, chemical synthesis and automotive sectors.