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Natgas to take larger share of global energy demand by 2040

Oil&Gas Materials 21 October 2019 13:37 (UTC +04:00)

Baku, Azerbaijan, Oct.21

By Leman Zeynalova – Trend:

Gas is projected to overtake coal as the second largest source of energy supply after oil, Trend reports referring to the Global Gas Report prepared by Snam, International Gas Union (IGU) and the Boston Consulting Group (BCG).

Across leading industry reference case scenarios from the IEA, US EIA, BP, Shell and others, a strong consensus has emerged that global gas demand is expected to grow by around 1.7 percent per year on average to 2040.

“On the basis of that growth, most of these scenarios also project gas to gain a share in the global energy mix from around 22 percent today to 24-25 percent by 2040. As such, gas is projected to overtake coal as the second largest source of energy supply after oil. These growth projections for gas have been largely unchanged for the past five years,” reads the report.

The companies, which have worked out the report believe that long term forecasts for gas demand growth are particularly prone to swings based on changing assumptions about the role of gas in the energy trilemma for two interconnected reasons.

“First, because projected growth is highly concentrated in Asia and China specifically. Nearly half of all global projected natural gas demand growth is forecast to come from the Asia Pacific region through 2040, with China specifically driving one quarter of all global growth. As a result, seemingly small changes in relative cost, access to gas, or government policies can produce significant changes in the modeled outcome for demand.”

Second, gas demand growth across sectors can be highly uncertain because gas is often not the incumbent fuel source, so it must displace other energy sources, according to the report.

“This is particularly true in the Asia Pacific region where gas provides 11 percent of all energy supply. While the share of gas has been modestly growing across sectors in Asia, coal still dominates in power generation (68 percent of primary energy demand) and industry applications (44 percent of primary energy demand), while in the buildings sector, traditional biomass is the incumbent fuel (32 percent of primary energy demand). Therefore, for gas to displace incumbent energy sources, it must overcome higher barriers across the components of the energy trilemma to prompt new or different policies and investment, not just achieve marginal changes in consumption patterns.”

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Follow the author on Twitter: @Lyaman_Zeyn

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