Franziska Holz, Christian von Hirschhausen
In this paper, we discuss potential developments of the world natural gas industry through 2030 with its infrastructure needs and policy implications. We use the World Gas Model (WGM), a multi-period strategic representation of the global natural gas sector, including production, trade, and consumption, between 2005 and 2030. We specify a "base case" as reference for our scenario analysis. We then analyze the sensitivity of the world natural gas system with scenarios: i) the emergence of large volumes of unconventional North American natural gas reserves, such as shale gas; ii) the impact of CO2-constraints and the emergence of a competing environmental friendly "backstop technology". Scenarios that are regional but have a global impact are: iii) the full halt of Russian and Caspian natural gas exports to Western Europe; and, finally, iv) heavily increasing demand for natural gas in China and India. We analyze our results with respect to the infrastructure expansions that areobtained by the model-endogenous NPV mechanism. We then discuss the operational aspects of natural gas infrastructure expansion in the European context. Issues such as the planning of natural gas market development, the market design and expansion regulation are calling for an improvement beyond the provisions of the 3rd Package.