On the sidelines of the World Gas Conference in Washington, Snam, the International Gas Union (IGU) and The Boston Consulting Group (BCG) launched the 2018 edition of the Global Gas Report, assessing the role of natural gas in the global energy mix amid the energy transition. The majority of forecasters expect gas to grow from the current 22% to over 24% of the global energy mix by 2035.
According to the report, gas consumption is widely projected to grow in the long run under virtually all major scenarios (including the most aggressive low-carbon transition scenarios). Prominent forecasts also project gas to overtake coal as the second leading source of global energy consumption by 2035, behind oil.
Starting from the context of a strong increase in 2017 gas demand (preliminary data suggest that in 2017, global gas consumption experienced its strongest growth in over a decade at 3.7% year-over year – more than double the average growth rate of the prior five years) and increasing market liquidity and availability thanks to the growing LNG market (+48 Bcm; +12% in 2017 vs average 1.6% in 2010- 2016), the report highlights that, in order to continue strong growth, the industry must focus on three core levers:
- Cost Competitiveness – Improving the relative cost of gas to other energy sources through a combination of LNG cost efficiencies, pricing environmental externalities, and promotion of local gas production in markets around the world. This is especially important considering that over three quarters of forecast demand growth by 2040 comes from non-OECD regions.
- Security of Supply – Enabling gas supply security through the development of enhanced networks and infrastructure, more flexible commercial models, and new modular access-enabling technologies. Rapidly developing gas infrastructure in Asia and Africa will be critical given the lack of access to gas in those regions today.
- Sustainability – Promoting the environmental sustainability of gas through measures to reduce urban air pollution, develop low carbon technologies for gas, integrate renewable gas sources into existing infrastructure, and limit methane emissions.
Reducing emissions through the gas supply chain will be critical in OECD markets in particular as more aggressive climate targets are implemented.
This year’s report includes a special feature on the role and opportunities for gas in cities, given it provides specific advantages for air pollution, GHG emissions, heat intensity and scalability. More than 90% of projected global gas consumption growth to 2040 is likely to come from cities. This will require significant infrastructure investment in developing countries, estimated between $35-55 billion per year.
The report calls for collaboration and conversation across the entire gas value chain, policymakers, and other key stakeholders, to properly recognize and address the opportunities – and challenges – facing the industry. Marco Alverà, CEO of Snam, said:
Gas offers significant opportunities for more sustainable development…The flexibility of gas and the ease with which it can be transported and stored make it an ideal partner for the growth of renewables. And gas is well on the way to becoming a renewable energy source itself, thanks to the development of green gas technologies. The challenge of securing growing amounts of energy that’s cleaner and cheaper will only be met by working together across industries and geographies.
See more information in the PDF herebelow