IEA Sees Gas Demand Growing 50% by 2040
Worldwide demand for natural gas will grow faster than for all other fossil fuels between now and 2040, forecasts the International Energy Agency’s World Energy Outlook 2016 (WEO 2016) released November 16.
It will grow by 1.5%/yr on average, and by almost 50% between now and 2040, the report forecasts, as the gas market becomes "truly global" thanks to LNG's share of long-distance gas trade rising from 42% in 2014 to 53% in 2040 and the emergence of "footloose US cargoes" with no destination clauses. Overall world energy demand would rise by 30% between now and 2040.
Gas will increase its share of energy markets in almost all countries, and in almost sectors like power generation, industrial, home heating and shipping, said one of the key authors, Laura Cozzi, head of the IEA’s energy demand outlook division at a pre-release briefing November 14.
Coal supply growth will level off globally over the next few years, co-author and IEA energy supply outlook chief Tim Gould told the same embargoed briefing.
Chinese coal growth had already stalled in 2014 and declined by 3% in 2015, he added, and by 2040 coal use will 15% lower than in 2014 in China, and 60% lower in the EU. Asia will remain a big coal user. But globally by 2040, if not sooner, coal will have been overtaken by gas.
Cozzi and Gould declined to speculate on how far their WEO 2016 energy forecast might be skewed, were President-elect Donald Trump to pull the US out of the Paris climate change agreement. Their report though warns that "not nearly enough is being done to limit global warming to less than 2°C."
For Cozzi, the 2°C target “is not out of reach” but would need a tougher push to 60% renewable electricity in 2040, and the objective of a fully CO2-neutral energy sector by 2100.
The Paris Agreement goals are not just a slowdown, but an early peak and decline in emissions; in WEO 2016’s main scenario, the entire carbon budget for a 2°C future is used up by the early 2040s.
Cozzi adds that a roadmap to cap global warning at 1.5°C is thus “uncharted territory” as it would require a CO2-neutral energy sector by 2040 and thus a 64% cut in global energy emissions by then.
The existing tilt towards renewable energy investment, away from fossil fuel production, will involve spending in oil/gas/coal extraction and supply falling from 70% of the global energy capex in 2000-15 to 60% from now out to 2040 of the required $44 trillion global capex cake, while 20% goes to renewable energy. “An increasing share of the [60%] goes to natural gas,” the report adds; a further $23 trillion would be required for energy efficiency.
WEO 2016 finds that subsidies to fossil fuels fell sharply in 2015 to $325bn (from almost $500bn in 2014) but that this is still more than double the $150bn of subsidies to renewable energy.
The International Gas Union (IGU) welcomed the positive outlook for the gas sector outlined in WEO-2016 and "urged policymakers to set clear strategies and policies that support the expanded role of natural gas in the energy mix as they look to achieve a sustainable energy future."
Mark Smedley