Use of natural gas and oil as a source of feedstocks

Zhanna Kapsalyamova and Sergey Paltsev

Energy Economics, 2020, vol. 92, issue C

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.

Keywords: Feedstock; Natural gas; Oil; Economy-wide modeling (search for similar items in EconPapers)
JEL-codes: C68 F17 Q31 Q37 Q41 Q47 (search for similar items in EconPapers)
Date: 2020
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (7)

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Persistent link: https://EconPapers.repec.org/RePEc:eee:eneeco:v:92:y:2020:i:c:s0140988320303248

DOI: 10.1016/j.eneco.2020.104984

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