IEA sees growth of natural gas in power
generation slowing over next 5 years
But 'Golden Age' still in full swing as gas emerges as a significant
transportation fuel, new report says
20 June 2013 - Natural gas will continue to increase its share of
the global energy mix, growing at 2.4% per year between now and
2018, the IEA said in its Medium-Term Gas Market Report (MTGMR)
However, this projected growth rate is
lower than the IEA’s forecast last year of 2.7%, due to persistent demand
weakness in Europe as well as difficulties in upstream production growth in the
Middle East and Africa.
At the same time, the report sees gas emerging as a significant transportation
Thanks to abundant shale gas in the
United States and amid more stringent
environmental policies in China, gas is expected to do more to slow oil demand
growth than electric vehicles and biofuels combined.
“Even though we have revised our growth estimates downwards, the ‘Golden Age’ of
gas remains in full swing,” said IEA Executive Director Maria van der Hoeven as
she presented the report in Saint Petersburg.
“Gas is already a major fuel in power
generation, but the next five years will also see it emerging as a significant
transportation fuel, driven by abundant supplies as well as concerns about oil
dependency and air pollution.
Once the infrastructure barriers are
tackled, natural gas has significant potential for clean-energy use in
heavy-duty transport where electrification is not possible.”
While the report foresees the share of gas in the global primary energy mix
rising and while total gas demand is expected to rise to nearly 4,000 billion
cubic metres (bcm) in 2018 from 3,427 bcm in 2012, gas faces challenges in all
the major geographic regions.
In the United States, in the absence of
policy constraints on coal-fired plants, recovering gas prices will prompt coal
to regain some of its share of the power market, putting US greenhouse-gas
emissions from the power sector back on a growing track.
Europe sees only a weak and partial
recovery due to the Eurozone crisis and low carbon prices.
Gas exports from the
Middle East decline amid runaway domestic demand growth – especially in the
“The persistent tightness of LNG markets is a major concern as it limits the
contribution of gas to sustainable energy security,” Ms. Van der Hoeven said.
“’It also highlights the need to tackle
energy subsidies and improve energy efficiency in major producing countries as
well as to adopt supportive policies for LNG investment.”
Other key findings of the report include:
Non-conventional production will remain a North American phenomenon in the
The United States alone represents over
one-fifth of the global increase in gas production, benefiting from
technological developments and cost-efficient field services.
Exploration in other regions continues, but
is hindered by geology, infrastructure and environmental constraints as well as
lack of social acceptance.
Natural gas plays a major role in
addressing air quality concerns in China. China will account for 30% of the
growth of global gas demand.
Despite the country’s impressive progress
on domestic production, this still puts China on a path of increasing import
dependency: In the next five years, China absorbs the entire production increase
from Central Asia as well as one-third of the global increase in LNG supply.
The tightness of LNG supply enables some
recovery of Russian exports to Europe.
Nevertheless, in the longer term, Russia
will be able to maintain its premier position in the world of gas only by
developing the resources and infrastructure for large-scale Asian exports.
About the IEA
The International Energy Agency is an autonomous organisation which works to
ensure reliable, affordable and clean energy for its 28 member countries and
Founded in response to the 1973/4 oil
crisis, the IEA’s initial role was to help countries co-ordinate a collective
response to major disruptions in oil supply through the release of emergency oil
stocks to the markets.
While this continues to be a key aspect of
its work, the IEA has evolved and expanded. It is at the heart of global
dialogue on energy, providing reliable and unbiased research, statistics,
analysis and recommendations.