* Stresses gas' climate merits as opposed to coal, oil
* Shows possible carbon avoidance in heating, power
* Backed by gas industry interests
FRANKFURT, Nov 7 (Reuters) - Germany must focus on more gas use in heating and power production to meet its climate protection goals, a study supported by a local utility and a gas trading firm said on Wednesday.
Germany, the EU's number one carbon emitter, favours deeper emission goals for 2020 and 2030 and in its national policy seeks a rapid expansion of renewable energy.
Its gas industry has suffered declining demand due to this preference for green energy, which added to a contraction of industrial gas demand because of the EU economic crisis, but gas importers and traders are at pains to stress the merits of gas as a low carbon-emitting fuel.
"If Germany wants to cut carbon dioxide emissions at low cost, it cannot ignore gas in the coming years," said the study, drawn up by the University of Cologne's energy institute (EWI).
It was commissioned by gas trader Wingas and the utility of German-Dutch border town Aachen, called Stawag.
Gas deliveries were down two percent year-on-year in the nine months to September 2012 after falling 13 percent throughout 2011 to 841 billion kilowatt hours.
The study said that modernising home heating with condensing gas boilers could save 28 million of carbon equivalent tonnes annually by 2015.
The heat market currently accounts for 30 percent of gas use while industry and commerce use 55 percent.
In the power sector, which absorbs 15 percent of gas, replacing retiring coal-to-power plants with those run on gas could cut emissions up to 2015 by nearly 40 percent, compared with levels in 1990, the study said.
Burning gas to produce electricity roughly emits half the CO2 released by coal-fired generation.
Carbon capture plans to enable the long-term operation of heavily polluting coal-to-power plants have struggled to gain political backing in Germany and lack public acceptance.
Relevant technology, called CCS, which entails trapping and burying greenhouse gas emissions, may therefore only become available at reasonable cost after 2030.
The study said if this was the case, then gas-based power generation needed to rise to 106 terawatt hours (TWh) a year in the medium term, representing a rise by 40 percent over 2008.
The requirement would arise from the need to back up volatile renewable power generation with stable thermal output. (Editing by Jon Hemming)