We summarize four main project results that should dominate strategic thinking about the next three decades' shift to increasing reliance on natural gas:

• An integrated global gas market will emerge, in which events in any individual region or country will affect all regions.
• The role of governments in natural gas market development will change dramatically in the coming decades.
• The rising geopolitical importance of natural gas implies growing attention to supply security.
• The rapid shift to a global gas market is not a certainty. It depends enormously on creating the context in which investors will have confidence to deploy vast sums of financial and intellectual capital; it requires finding solutions to the adverse social and political consequences of developing natural resources in countries where governance is weak; and it assumes a continued pull from the growing world electricity sector.

The state-owned Indian natural gas sector has been slowly moving towards deregulation for close to a decade. However, rather than wholly introducing free market forces into the existing state-managed sector, India has developed a separate, almost entirely decontrolled gas market alongside the existing sector.

The major challenge to complete gas sector reform that remains is how to transition gas users from the state-managed sector to the free market. This paper explains the origins of this hybrid market and its likely evolution.

The fertilizer and electricity sectors, which account for most gas consumption in India, are reviewed in detail. In both, while interlocking political forces have prevented full transition of the sector to the free gas market, some users have already made the transition. In electricity, parts of the sector, such as private power plants, are already shifting private gas supplies on their own because private gas, while more costly, is much more reliable. The ultimate viability of private gas in electricity and fertilizer production will depend on reforms within the offtaking industries.

The South African government is introducing a poverty-reduction policy that will supply households with a monthly 50kWh "Free Basic Electricity (FBE)" subsidy. We show that FBE distorts the energy choices of poor households by encouraging them to cook with electricity, whereas alternatives such as liquefied petroleum gas (LPG) can deliver a similar cooking service at a much lower cost to society. An alternative energy scheme, such as providing households with clean energy credits equivalent in value to the FBE's cost, could deliver additional energy services worth at least 6% of total household welfare (and probably much more) at no additional public cost; those benefits are so large that they would cover the entire cost of LPG fuel needed to implement the scheme.

The analysis is extremely sensitive to the coincidence of electric cooking with peak power demand on the South African grid and to assumptions regarding how South Africa will meet its looming shortfall in peak power capacity. One danger of FBE is that actual peak coincidence and the costs of supplying peak power could be much less favorable than we assume, and such uncertainties expose the South African power system to potentially very high costs of service.

Uncertainty can hamper the stringency of commitments under cap and trade schemes. We assess how well intensity targets, where countries' permit allocations are indexed to future realised GDP, can cope with uncertainties in a post-Kyoto international greenhouse emissions trading scheme. We present some empirical foundations for intensity targets and derive a simple rule for the optimal degree of indexation to GDP. Using an 18-region simulation model of a 2020 global capand-trade treaty under multiple uncertainties and endogenous commitments, we estimate that optimal intensity targets could achieve global abatement as much as 20 per cent higher than under absolute targets, and even greater increases in welfare measures.

The optimal degree of indexation to GDP would vary greatly between countries, including super-indexation in some advanced countries, and partial indexation for most developing countries. Standard intensity targets (with one-to-one indexation) would also improve the overall outcome, but to a lesser degree and not in all cases. Although target indexation is no magic wand for a future global climate treaty, gains from reduced cost uncertainty might justify increased complexity, framing issues and other potential downsides of intensity targets.

The Industrial Revolution accompanied a dramatic change in energy systems, away from locally gathered, traditional fuels such as biomass to commercially traded fossil fuels. For nearly 2 billion people in the world today, this commercial energy transition is yet to occur. We review the literature on the causes and consequences of this transition and the effectiveness of policy instruments aimed at accelerating or directing the transition. Income is the main driving force, but other factors-such as population density and the availability of rival fuels-affect energy choices. Although correlations between the energy transition and economic growth are high, cause and effect relationships have proved difficult to establish.

This paper presents interim findings of "The Experience with Independent Power Producers in Developing Countries," a research project being conducted by the Program on Energy and Sustainable Development at Stanford University ("PESD").