energy markets | Shale gas
expected to grow by around 1.6% in 2014 and 1.8% in 2015 and annual growth is expected to remain below 2% until at least 2020. As for the US, its economy is expected to grow by 2.7% this year and almost 3% next year. Some would argue that Europe is still struggling with the effects of the economic crisis and that ‘economic normalcy’ is bound to return sometime in the future. But if that ‘normalcy’ fails to materialise while other regions are enjoying economic growth then it could be concluded that something more fundamental is wrong – something that may cause the ‘crisis’ to become the ‘new normalcy’.
Figure 1: World’s consumption of primary energy, by source. Values in billion tonnes of oil equivalent.
Source: BP
grounds for new ideas. But the attempts at large-scale roll-out at this stage of technological development seem premature and a huge waste of our money. From a climate change/CO2
emissions perspective, more
would be gained if that money was spent replacing the highly polluting coal that produces 18% of our energy requirements with clean-burning natural gas. However, it is not just about wasting money. For
Europe, there is the bigger potential risk of squandering an even more precious and future-related resource: Europe’s economic competitiveness. In the modern world, that all-important parameter depends on three factors: Cost of technology; Cost of energy; Cost of access to markets. There is, in fact, a fourth factor – cost of labour – but
this is rapidly losing its importance in Europe. Very little labour is represented in the cost of producing a new car, or the cost of providing a minute of mobile phone conversation. Statistics show that much of the European Union economy is mired in semi-stagnation, while the US economy is beginning to grow once again. According to the latest predictions by the International Monetary Fund, the economy of the 28 European Union countries is
Figure 2: Assessment of regional economic competitiveness
Japan provides an interesting case study in this respect. Like the European Union and US, it has good access to both technology and markets. But like the EU (and unlike the US), it has experienced poor access to affordable energy. The fact is that Japan has seen its competitiveness evaporate, causing the country to transition from the economic boom of the 1960s, 70s and 80s to a virtual stagnation that started in the 1990s and shows little signs of ending. Of course, the causes are complex, but Japan’s disadvantage in terms of energy costs has been – in the opinion of this analyst – a major factor (Figure 2).
On the other hand, availability of cheap energy has been a major factor in the current recovery of the US economy – a recovery driven by strong growth in the manufacturing sector. In the US, low cost energy is a result of growing production of shale gas and tight oil, itself made possible by a combination of technology progress and sensible economic management.
It could be argued that, if it is to maintain or recover
its competitiveness, Europe also needs affordable energy. If the continent is also to reduce CO2
emissions,
then rather than engaging in expensive renewables, it needs to replace coal with natural gas. Where is that gas going to come from? The North Sea hydrocarbon reserves are gradually dwindling. There may be many years of ‘scraping the barrel’ left, but this is not a solution for growing demand. The Middle East and Africa can produce cheap gas but transporting it to Europe bites deeply into any competi-
12 PIPELINE COATING | May 2014
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