Cedigaz Cuts Growth Forecast for Gas

Gas will be the fastest-growing fossil fuel over 2014-2035 (+1.6%/year) according to the annual forecast by Cedigaz. But following COP21 and the plans to cut energy intensity in the attempt at halting climate change, the French consultancy has cut the extent of the growth compared with Outlook 2015.

Given the vast low-cost coal resources, the growth of gas will be driven energy and environmental policies aiming to shift away from coal and oil as the electricity system gradually decarbonises. In this scenario, the future global natural gas expansion is supported by strong supply growth, particularly of unconventional gas and LNG, in a context of rising prices as energy markets re-balance.

The growth of oil is expected to slow sharply, to 0.2%/yr and coal to 0.1%/yr. Cedigaz sees a major Improvement in the sustainability of supply as wind and solar are the fastest growing fuel sources through 2035 (+ 8%/year), of which a quarter will be in China. The US and Europe are in second and third place in this respect.

Natural gas will increase its relative share in the global primary energy supply from 21.4% in 2013 to 23.9% in 2035 while the share of oil continues to decline as it is backed out from power generation and the manufactured industry. After expanding since 2000, the share of coal gradually declines to reach parity with gas by 2035.

The share of renewables rises substantially but is capped by their intermittency. 

In Europe in particular, the 2030 Climate & Energy Package leaves little room for gas demand growth in volume terms. However, the share of gas in the power generation mix progresses at the expense of coal against the background of the rise of renewables. 

William Powell