The report, released by Snam, International Gas Union (IGU) and Boston Consulting Group, has assessed the role played by natural gas in the global energy mix to drive economic development while limiting the impact on the environment. Consumption of gas 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. The majority of forecasters expect gas to grow from the current 22% to over 24% of the global energy mix by 2035.
Preliminary data suggest that in 2017, global gas consumption experienced its strongest growth in over a decade at 3.7% YoY – more than double the average growth rate of the prior five years. 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 according to the report.
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. It will provide clean, reliable and affordable energy to millions of people in the developing world. Moreover, 90% of global gas growth is set to come from urban areas. That means that, as penetration grows in power generation, heating and transport, gas will help cities to become cleaner.
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”.
David Carroll, President of the IGU, noted: “This report showcases the excellent prospects for natural gas over the next few decades, particularly within urban environments. Natural gas combines high heating intensity and efficiency with low emissions and virtually no pollution, all while delivering energy for almost any use. These qualities make it unique as an abundant, flexible and cost-effective fuel, which can also address the environmental challenges in urban environments. Combined with growing urbanisation trends, this presents a significant opportunity for continued gas demand growth.”
Ivan Marten, Vice Chairman of BCG’s Energy Practice, commented: “The 2018 Global Gas Report showcases the valuable role of natural gas as an energy source in the global energy mix and for ensuring energy security around the world. The report also points out the need for concerted actions from a variety of stakeholders. These include the development of new business models and technologies from gas industry participants, effective policies from governments, and sustained capital commitments from financial institutions.”