IEA sees growth of natural gas in power generation slowing over next 5 years


(SAINT PETERSBURG) — 20 June 2013

Natural gas will continue to increase its share of the global energy mix, growing at 2.4% per year between now and 2018, the IEA said in its Medium-Term Gas Market Report issued today. However, this projected growth rate is lower than the IEA’s forecast last year of 2.7%, due to persistent demand weakness in Europe as well as difficulties in upstream production growth in the Middle East and Africa.

At the same time, the report sees gas emerging as a significant transportation fuel: Thanks to abundant shale gas in the United States and amid more stringent environmental policies in China, gas is expected to do more to slow oil demand growth than electric vehicles and biofuels combined.

“Even though we have revised our growth estimates downwards, the ‘Golden Age’ of gas remains in full swing,” said IEA Executive Director Maria van der Hoeven as she presented the report in Saint Petersburg. “Gas is already a major fuel in power generation, but the next five years will also see it emerging as a significant transportation fuel, driven by abundant supplies as well as concerns about oil dependency and air pollution. Once the infrastructure barriers are tackled, natural gas has significant potential for clean-energy use in heavy-duty transport where electrification is not possible.”

While the report foresees the share of gas in the global primary energy mix rising and while total gas demand is expected to rise to nearly 4,000 billion cubic metres (bcm) in 2018 from 3,427 bcm in 2012, gas faces challenges in all the major geographic regions. In the United States, in the absence of policy constraints on coal-fired plants, recovering gas prices will prompt coal to regain some of its share of the power market, putting US greenhouse-gas emissions from the power sector back on a growing track. Europe sees only a weak and partial recovery due to the Eurozone crisis and low carbon prices. Gas exports from the Middle East decline amid runaway domestic demand growth – especially in the power sector.

“The persistent tightness of LNG markets is a major concern as it limits the contribution of gas to sustainable energy security,” Ms. Van der Hoeven said. “’It also highlights the need to tackle energy subsidies and improve energy efficiency in major producing countries as well as to adopt supportive policies for LNG investment.”

Other key findings of the report include:

The Medium-Term Gas Market Report 2013, available for free download, is part of a series of medium-term forecasts that the IEA devotes to each of the main primary energy sources – oil, gas, coal and renewable energy – and, starting this year, energy efficiency. To read the Executive Summary, please click here

To watch the webcast for the report's launch, please click here.

 

About the IEA

The International Energy Agency is an autonomous organisation which works to ensure reliable, affordable and clean energy for its 28 member countries and beyond. Founded in response to the 1973/4 oil crisis, the IEA’s initial role was to help countries co-ordinate a collective response to major disruptions in oil supply through the release of emergency oil stocks to the markets. While this continues to be a key aspect of its work, the IEA has evolved and expanded. It is at the heart of global dialogue on energy, providing reliable and unbiased research, statistics, analysis and recommendations.

 

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