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 mid-century, according to a new report by the International Energy Agency.
Global gas demand is expected to rise by 3.6% in 2021 before easing to an average growth rate of 1.7% over the following three years, according to the IEA’s latest quarterly Gas Market Report, which also provides a new medium-term forecast. By 2024, demand is forecast to be up 7% from 2019’s pre-Covid levels.
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 comes from the Asia Pacific region.
Despite slower growth in the coming years, gas demand 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. To get on track for net-zero emissions by 2050, new measures are needed to promote further fuel substitution and efficiency gains. 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 realized.
However, without strong policy measures to curb gas demand in the long term, market volatility and concerns over security of supply may arise towards the end of the report’s forecast period.
Strong rebound in 2021 from last year’s decline is expected to take demand above pre-Covid levels, followed by more moderate increases through 2024, new IEA report says.