The world’s thirst for natural gas is set to rebound sharply this year and continue rising into 2024, in part as U.S. export capacity grows, the International Energy Agency (IEA) said Monday.

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Global Demand is forecast to rise by 3.6% in 2021 before easing to an annual growth rate of around 1.7% from 2022-2024, researchers said in IEA’s latest quarterly Gas Market Report. 

“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 IEA’s Keisuke Sadamori, 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.”

Sadamori said 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.”

The growth in the world’s gas supply is forecast to come in part because of investments in U.S. production, which is used to supplement liquefied natural gas (LNG) export capacity.

The “contribution of LNG to ensuring flexible and secure supplies, especially from the United States…accounts for the large majority of additional LNG capacity to be commissioned in the coming three years,” the IEA team said.

“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.”

By 2024, gas demand is forecast to climb by 7% from 2019’s pre-Covid levels. 

Consumption growth this year “mostly reflects the economic recovery from the pandemic.  Beyond 2021, demand is forecast to rise “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.”

Nearly half of the increase in gas demand between 2020 and 2024 is predicted to be from the Asia Pacific region. The industrial sector also is playing a “pivotal role in medium-term gas demand growth,” researchers said.

Industrial natural gas demand accounts for “about 40% of the total increase between 2020 and 2024 in our forecast. This includes the use of gas for industrial processes and as a feedstock for chemicals and fertilizers.”
Overall, gas demand is set to increase by 350 billion cubic meters (bcm) between 2020 and 2024. 

“This would have been 80 bcm higher were it not for energy efficiency improvements and measures to replace gas with other fuels,” researchers noted. “Of the 430 bcm increase that can be considered as ‘gross gas demand additions’ over the period, growth driven by higher economic activity can explain almost two-thirds (270 bcm), while the substitution of coal (and oil to a lesser extent) explains the rest (160 bcm).”

Global gas demand has slowed overall, but consumption by 2024 “is trending 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,” researchers said. 

To reach net-zero emissions by midcentury, the Paris-based experts said measures are needed to ensure more fossil fuel substitution and efficiency gains. In the “more mature markets,” most of the potential for switching to gas from coal or oil to gas already has been realized. 

Researchers also examined how the gas industry may be able to reduce its emissions footprint and align with net-zero emissions objectives. The push should continue, they said, to reduce the intensity of the industry’s greenhouse gas emissions all along the value chain. 

Low-carbon gas development also should be supported, according to the IEA. In addition, the industry needs to step up work on “carbon management solutions” to minimize 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,” researchers said.

Increased demand also could be met “by conventional assets that were already approved or under development before the pandemic, mainly in Russia and the Middle East.”

Meanwhile, underground storage capacity, “another pivotal source of flexibility, is set to increase by 7% over the forecast period,” according to the IEA team. 

“However, without strong policy measures to curb gas demand in the long term, market volatility and concerns over security of supply may arise toward the end of the report’s forecast period.”