Global gas demand is expected to rise by 3.6% this year but is set to ease to an average growth rate of 1.7% over the following three years

Natural gas demand growth IEA

Natural gas demand is set to rebound strongly in 2021 as the market recovers from the Covid-19 crisis (Credit: Shutterstock/OlegRi)

Natural gas demand growth is “set to slow” in the coming years, but the International Energy Agency (IEA) warns strong policy actions are still needed to bring it on track for net-zero emissions.

A report by the energy watchdog shows that natural gas demand is set to rebound strongly in 2021 and will keep rising further if governments do not implement “strong policies” to move the world onto a path towards net-zero emissions by the mid-century.

But while global gas demand is expected to rise by 3.6% this year, it is set to ease to an average growth rate of 1.7% over the following three years, according to the IEA’s latest quarterly Gas Market Report. By 2024, it forecasts demand to be up 7% from 2019’s pre-Covid levels.

“The rebound in gas demand shows that the global economy is recovering from the shock of the pandemic and that gas is continuing to replace more emissions-intensive fuels,” said Keisuke Sadamori, the IEA’s director of energy markets and security.

“But stronger policies need to be implemented to put global gas demand on a path in line with reaching net-zero emissions by 2050 while still fostering economic prosperity. These include measures to ensure gas is used more efficiently.

“At the same time, the gas industry needs to significantly step up efforts to shift to cleaner and low-carbon gases – and to act quickly and effectively to address needless methane emissions.”


Natural gas demand growth in 2021 reflects economic recovery from Covid-19 crisis, says IEA

The IEA said natural gas demand growth in 2021 mostly reflects economic recovery from the Covid-19 crisis, but it’s set to be driven in the following years in equal proportions by economic activity and by gas replacing other more polluting fuels such as coal and oil in sectors such as electricity generation, industry and transport.

Almost half of the increase in gas demand between 2020 and 2024 will come from the Asia Pacific region.

Despite slower growth in the coming years, gas demand by 2024 is set to trend higher than the trajectories in the IEA’s climate-driven scenarios, notably the pathway set out in the recent Roadmap to Net Zero by 2050.

To get on track for net-zero emissions by 2050, the energy watchdog believes new measures are needed to promote further fuel substitution and efficiency gains.

It said this is especially the case in more mature markets, where much of the potential for switching from coal or oil to gas has already been realised.


Strong policy measures required to curb gas demand in the long term, says IEA

The report examines how the gas industry can reduce its emissions footprint and align with net-zero emissions objectives.

The key areas it highlights for action include continuing to reduce the intensity of the industry’s greenhouse gas emissions all along the value chain, supporting the development of low-carbon gases, and developing carbon management solutions to minimise emissions from combustion.

In particular, reducing methane emissions is an efficient way – in terms of both time and cost – of narrowing the industry’s footprint, according to the analysis.

The IEA said the increased demand forecast in the report can be met by conventional assets that were already approved or under development before the pandemic, mainly in Russia and the Middle East.

It added that supply is also likely to be supplemented by new investment in US shale gas production to support export capacity for liquefied natural gas (LNG) that is currently under development.

The report notes the contribution of LNG to ensuring flexible and secure supplies, especially from the US, which accounts for the vast majority of additional LNG capacity to be commissioned in the coming three years.

It expects robust growth of the LNG carrier fleet will also make supplies more adjustable, with current order books representing a 25% increase in the vessel count in the next two to three years.

Underground storage capacity, another pivotal source of flexibility, is set to increase by 7% over the forecast period.

But, the IEA notes that without strong policy measures to curb gas demand in the long term, market volatility and concerns over the security of supply may arise towards the end of the report’s forecast period.