10 Oct 2023
Gas
Natural gas now accounts for about a quarter of global electricity generation. While in the medium term it is seen playing a major role supporting a transition to net zero energy systems, its longer-term use is uncertain in a world dominated by non-emitting renewable energies.
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While burning natural gas does emit greenhouse gases, it contributes far less CO2 and air pollutants than many of the fuels it is increasingly replacing, especially coal. Natural gas use grew rapidly this past decade, accounting for almost one-third of total energy demand growth, more than any other fossil fuel. Its use in coming years is expected to keep growing strongly in all the scenarios studied by the IEA, with sharp divergences afterwards.
Its storability, its ability to be delivered through pipelines or liquefied and sent by ship, as well as the ability of gas-fired power plants to turn on and off quickly, allows natural gas to respond to both seasonal and short-term demand fluctuations and to provide back-up to the growing use of variable renewables such as wind and power. Still, as part of global efforts to reach net zero emissions, natural gas use is expected to come under pressure in some countries.
The natural gas market is increasingly globalised, driven by the availability of shale gas and rising supplies of tradeable liquefied natural gas. The growth of the gas trade, as well as a shift away from long-term contracts towards spot pricing in many markets, has created greater interconnectivity between markets with demand or supply shocks in one region now having global implications, on both gas and electricity prices.
Its storability, its ability to be delivered through pipelines or liquefied and sent by ship, as well as the ability of gas-fired power plants to turn on and off quickly, allows natural gas to respond to both seasonal and short-term demand fluctuations and to provide back-up to the growing use of variable renewables such as wind and power. Still, as part of global efforts to reach net zero emissions, natural gas use is expected to come under pressure in some countries.
The natural gas market is increasingly globalised, driven by the availability of shale gas and rising supplies of tradeable liquefied natural gas. The growth of the gas trade, as well as a shift away from long-term contracts towards spot pricing in many markets, has created greater interconnectivity between markets with demand or supply shocks in one region now having global implications, on both gas and electricity prices.
Last updated May 17, 2023
Key findings
Global gas markets moved towards a gradual rebalancing over the 2022/23 heating season, following the supply shock sparked by Russia’s invasion of Ukraine in February 2022
Spot gas prices across the key northeast Asian, North American and European markets dropped by close to 70% between mid-December and the end of the first quarter of 2023, while storage sites ended the heating season well above their five-year averages. The reduced market strains and relatively well stocked storage sites ahead of the summer are reasons for cautious optimism for supply security. However, this confluence of factors should not distract from the further measures needed to mitigate potential risks that could quickly renew market tensions and price volatility.
Evolution of key regional key gas markets since 15 December 2022
OpenNatural gas-fired power generation is expected to increase 1% in 2021
Natural gas-fired power generation contracted 2% in 2020 but is expected to increase 1% in 2021. At about 6 300 TWh, gas fuelled 24% of total global power generation in 2020. In the Net Zero Emissions by 2050 Scenario, unabated gas-fired generation continues its growth in the short term, displacing coal-fired generation, but starts falling by 2030 and is 90% lower by 2040 compared to 2020. Increasingly, existing gas-fired power plants will need to be retrofitted with CCUS or co-fired with low-carbon fuels such as hydrogen to be consistent with Net Zero Scenario levels.
Gas-fired generation in the Net Zero Scenario, 2010-2040
OpenFlaring emissions must drop rapidly to get on track with the IEA's Net Zero Emissions by 2050 Scenario
Globally, 142 bcm of natural gas was flared in 2020 – roughly equivalent to the natural gas demand of Central and South America. This resulted in around 265 Mt CO2, nearly 8 Mt of methane (240 Mt CO2-eq) and black soot and other GHGs being directly emitted into the atmosphere. Five countries (Russia, Iraq, Iran, the United States and Algeria) accounted for more than half of all volumes flared globally in 2020.
Many options are available to reduce flaring, but they will likely require new gas monetisation strategies, business models, and more stringent (and enforced) regulations. An increasing number of companies is committing to eliminate flaring by 2030. The Net-Zero Emissions by 2050 Scenario requires all non-emergency flaring to be eliminated globally by 2030, resulting in a 90% reduction in flared volumes by 2030.
Many options are available to reduce flaring, but they will likely require new gas monetisation strategies, business models, and more stringent (and enforced) regulations. An increasing number of companies is committing to eliminate flaring by 2030. The Net-Zero Emissions by 2050 Scenario requires all non-emergency flaring to be eliminated globally by 2030, resulting in a 90% reduction in flared volumes by 2030.
Upstream flaring CO2 emissions by region in the Net Zero Scenario, 1985-2030
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Analysis
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Gas 2020
Analysing the impact of the Covid-19 pandemic on global natural gas markets
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National Reliance on Russian Fossil Fuel Imports
How do countries rely on and consume Russian energy?
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Transitioning India’s Road Transport Sector
Realising climate and air quality benefits
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Gas Market Report, Q2-2023
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Emissions from Oil and Gas Operations in Net Zero Transitions
A World Energy Outlook Special Report on the Oil and Gas Industry and COP28
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Outlooks for gas markets and investment
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Europe’s energy crisis: What factors drove the record fall in natural gas demand in 2022?
Commentary — 14 March 2023
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Korea Natural Gas Security Policy
Part of Natural Gas Security Policy
Our work
Gas and Oil (GOTCP)
Created in 2013, the GOTCP brings together representatives from governments, industry and academia in a global dialogue to explore the role of oil and gas technology in the energy transition. GOTCP aims to catalyse innovation across oil and gas technologies and to provide collaborative opportunities for enhancing national capabilities within both onshore and offshore activities.
Related sectoral Technology Collaboration Programmes (TCP)
Events
17 Jul 2023
Global Gas Security Review 2023 & Q3 Gas Market Report
4 May 2023
Gas Market Report, Q2-2023
Apr 2023
