IEA: Global gas demand forecast to rise 3.6% in 2021

According to a new report the International Energy Agency (IEA), gas demand will rebound strongly in 2021, with global demand expected to grow by 3.6% before slowing to an average growth rate of 1.7% over the next three years.

The IEA's more recent quarterly gas market report adds that demand will rise further if governments implement strong policies to put the world on a net-zero emissions path by the middle of the century. By 2024, demand is expected to increase by 7 per cent pre-epidemic levels in 2019.

The growth in gas demand in 2021 mainly reflects the economic recovery the COVID-19 crisis, but in the coming years, economic activity the replacement of other dirtier fuels, such as coal oil, will drive gas demand growth, especially in the power generation, industrial transportation sectors. Nearly half of the growth in gas demand between 2020 2024 will come the Asia-Pacific region.

Despite slower growth in the coming years, the trend in gas demand to 2024 is higher than the trajectory in the IEA's climate-driven scenarios, particularly the recently developed path. In order to achieve net zero emissions by 2050, new measures are needed to promote further fuel substitution efficiency improvements, the report said, noting that this is particularly true in more mature markets.

Keisuke Sadamori, director of energy markets security at the IEA, said: "The rebound in gas demand shows that the global economy is recovering the shock of the pandemic that gas is continuing to displace higher emission fuels."

"But stronger policies are needed to bring global gas demand in line with the goal of achieving net zero emissions by 2050, while still fostering economic prosperity. These include measures to ensure more efficient use of natural gas. At the same time, the natural gas industry needs to step up its efforts to shift to cleaner, low-carbon gases address unnecessary methane emissions quickly effectively."

The new IEA report looks at how the gas industry can reduce its emissions footprint align with the net zero target. Key action areas include continuing to reduce the intensity of the industry's greenhouse gas emissions across the value chain, supporting the development of low carbon gases, developing carbon management solutions to substantially reduce emissions combustion.

The increased demand forecast in the report can be met through conventional assets that were approved under development prior to the pandemic, primarily in Russia the Middle East. New investments in US shale gas production could also supplement supplies to support the export capacity of liquefied natural gas (LNG) currently under development.

The report points to LNG's contribution to ensuring flexible secure supplies, particularly the United States, which accounts for the vast majority of new LNG capacity in the next three years.

Strong growth in the LNG fleet will also make supply more adjustable, with current orders pointing to a 25% increase in vessel numbers over the next two to three years. Underground storage capacity, another key source of flexibility, is expected to increase by 7% over the forecast period.

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Source: International Gas Network