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EIA sees global natural gas consumption 40% higher by 2050

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EIA sees global natural gas consumption 40% higher by 2050

Global natural gas consumption could rise 40% by 2050 to nearly 200 quadrillion Btu, driven by demand growth in the industrial sectors of developing economies around the world, the U.S. Energy Information Administration said in its 2019 International Energy Outlook released Sept. 24.

That was the picture under a reference case that used a 50% rise in global energy consumption overall from 2018 to 2050 and suggested fast-growing renewable energy sources would beat out petroleum as the leading source of primary energy in the late 2040s. The reference case assumed Brent oil prices at $100/barrel in 2050, in 2018 dollars, and annual global economic growth of­ 3%. The EIA designed the case as a baseline rather than a prediction, and it excluded regulatory changes, such as policies to reduce carbon intensity.

Annual growth in natural gas demand was 1.1% under the scenario. Coal was at 0.4%. Both fossil fuels were outpaced by renewable energy, which had demand rising 3% per year. EIA officials said the renewables rise reflects policy changes, lowered renewable costs and a change in EIA's model for electricity.

"Global energy consumption continues to outpace renewable growth, and while their shares decline, fossil fuel consumption, including coal, is projected to increase to meet demand," EIA Administrator Linda Capuano said. After initial declines, coal is seen increasing in the 2040s to meet power generation demands in Asian countries that are not one of the generally wealthy and democratic nations in the Organization for Economic Cooperation and Development, or OECD, excluding China, she added.

Natural gas use outside of the OECD rose 70%, from about 70 quadrillion Btu in 2018 to 120 quadrillion in 2050. More modest growth is seen in OECD countries: 17% between 2018 and 2050 to reach 78 quadrillion Btu.

According to the outlook, the U.S. remained the top gas producer throughout the period, as production increased 50% to 43 Tcf in 2050. Production in the Middle East grew 15 Tcf, or about 70%, reaching 37 Tcf.

Gas trade

Amid a "geographic mismatch" between natural gas demand and supply, the EIA foresaw significant growth in trade, with net imports of gas to Asia tripling by 2050. China's gas use rose nearly 190% to reach 21.7 Tcf, and India's swelled 250% to hit 7.0 Tcf.

"During the projection period, both countries expand industrial sectors as a growing middle class, growing GDPs, increasing natural gas generation and growing populations all-cause increasing demand for consumer goods," the report said.

Middle Eastern countries surpassed the Americas in gas exports in the 2040s.

Overall, global gas exports by pipeline and LNG by tanker more than doubled by 2050. The report expected pipeline flows to continue to account for most interregional gas trade as pipeline infrastructure develops.

Speaking on a panel following the EIA presentation, Leslie Palti Guzman, president and founder of gas consulting company GasVista, said it was possible there would be a shift toward intraregional gas trade, as price-sensitive buyers in Asia prefer nearby sources. That could mean more U.S. LNG will remain in the Atlantic Basin, while Pacific supplies remain in the Pacific, she said.

Market uncertainty

Several speakers acknowledged unknowns in how policies could ultimately affect energy outcomes, with tension between the need to lower greenhouse gas emissions and the need to promote development.

Capuano highlighted uncertainty surrounding the nature of economic growth in India, China, Africa and other non-OECD nations that were a big part of the EIA outlook.

Kevin Book, head of the research team at ClearView Energy Partners, called it a "safe bet" that there could be a price on carbon in the U.S. within a decade, even if Republicans are in power, because of trade. "As other countries that are reducing emissions under the Paris agreement or otherwise take economic costs, they're going to want to protect their domestic markets with border adjustments," he said.

Maya Weber is a reporter for S&P Global Platts, which, like S&P Global Market Intelligence, is owned by S&P Global Inc.