The outlook for gas is more durable than for coal or oil, helped by broad-based demand and the increasing availability of global supplies.
In Rapid, the global demand for gas – natural gas plus biomethane – recovers from the near-term dip associated with Covid-19 and grows relatively robustly over the next 15 years or so, driven primarily by economies in developing Asia (China, India, Other Asia) as they switch away from coal towards lower carbon fuels, including gas (this potential supporting role for natural gas is explored below). Global gas consumption declines in the subsequent 15 years as the impetus from developing Asia fades, compounded by increasing falls in the developed world, such that global gas demand by the end of the Outlook falls back close to its 2018 levels at around 4000 Bcm.
The growth of global gas demand in Net Zero is shorter-lived, peaking in the mid-2020s, followed by a far faster decline, such that demand by 2050 is around 35% below 2018 levels.
In contrast, gas demand increases throughout the next 30 years in BAU, increasing by a third to around 5300 Bcm by 2050. This growth in gas consumption is relatively widespread, with particularly strong increases across developing Asia, Africa and the Middle East.
Biomethane increases in all three scenarios, reaching around 250 Bcm in Rapid and Net Zero, and 100 Bcm in BAU, which is around 6-10% and 2% respectively of total gas demand.
The main areas of increasing gas production in Rapid are China and Africa, supported by rising domestic consumption. US and Middle Eastern gas production by 2050 are largely unchanged from their 2018 levels, with marked falls in domestic demand offset by increased exports. Much of the exports are in the form of liquefied natural gas (LNG), which roughly doubles over the Outlook in Rapid, increasing the competitiveness and accessibility of natural gas around the globe (see LNG, below).
The much stronger demand growth in BAU is largely met by increases in output in the US, Middle East and Africa, which together account for around two-thirds of the increase in global supplies in BAU.
The pattern of changes in global gas consumption varies markedly across the three scenarios reflecting differences in the pace and extent of the low carbon transition.
In Rapid, the shift to lower carbon energy sources, combined with significant gains in energy efficiency, means gas used in the industrial and power sectors – the two main sources of growth in gas consumption over the past 20 years – is largely unchanged over the Outlook, and falls materially in buildings. Instead, the main source of strength over the Outlook is the growing use of natural gas to produce blue hydrogen, which accounts for almost 10% of global gas demand by 2050 in Rapid (see the outlook for Hydrogen).
These shifts in the pattern of gas demand are even more pronounced in Net Zero, with the use of gas in the power sector and buildings falling by around 65% and 90% respectively, partially offset by a substantial increase in the use of gas to produce blue hydrogen.
In contrast, growth in global gas demand in BAU is broadly based across all sectors of the economy, led by the industrial and power sectors, which together account for around two-thirds of the increase. The growth in industrial demand stems entirely from emerging economies as they continue to industrialize, supported by significant coal-to-gas switching within China’s industrial sector.
Natural gas can potentially play two important roles in an accelerated transition to a low carbon energy system:
These two roles can be highlighted by contrasting the role of natural gas in the slow transition envisaged in BAU with the more accelerated decarbonization in Rapid.
The role of natural gas supporting a shift away from coal can be seen most clearly in India and Other Asia. The greater fall in the share of coal in Rapid compared with BAU is mainly offset by fast growth in non-fossil fuels, led by renewable energy and supported by a larger increase in the share of gas. This supporting role fades towards the end of the Outlook as the growth of non-fossil energy sources gather pace.
There is less need for this supporting role in developed countries, where the slower growth in energy demand makes it easier for the reduction in coal consumption to be largely matched by the increasing use of non-fossil fuels.
The role of natural gas as a greater source of (near) zero-carbon energy in Rapid relative to BAU is clear, with gas combined with CCUS accounting for around 8% of primary energy by 2050 in Rapid, compared with just 1% in BAU. The majority of natural gas with CCUS in Rapid is used as a direct energy source in industry and power, with the residual used to produce blue hydrogen.
LNG expands significantly in both Rapid and BAU, leading to a more competitive, globally integrated gas market.
LNG trade in Rapid bounces back strongly from the near-term fall associated with Covid-19, more than doubling over the first half of the Outlook, increasing from 425 Bcm in 2018 to around 1100 Bcm by the mid-2030s.
This fast growth is driven by increasing gas demand in developing Asia (China, India and Other Asia) as gas is used to aid the switch away from coal and LNG imports are the main source of incremental supply. This surge in LNG demand is met by increasing supplies from the US, Africa and the Middle East, which emerge as the three main hubs for LNG exports.
Global LNG imports fall back in the second half of Rapid as import demand in developing Asia starts to decline. These falls are most pronounced in China, as overall demand declines and domestic production (including biomethane) increases. LNG trade by 2050 falls to around 970 Bcm. The pace of this decline in LNG exports after the mid-2030s is greater than the speed of depreciation of liquification facilities, implying that towards the end of the Outlook some facilities need to be operated at less than full capacity or shutdown prematurely.
LNG trade in BAU grows more slowly than in Rapid, reaching a little over 1000 Bcm by 2050. However, even in BAU, around 60% of that growth occurs over the next 10 years or so. As in Rapid, US, Africa and the Middle East are the main source of incremental supply, with developing Asia the dominant destination for these increasing exports, along with the EU which remains an important balancing market for LNG in both scenarios.