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EIA sees global natural gas consumption 40% higher by 2050

Highlights

Most demand growth in non-OECD countries

Renewables seen overtaking other energy sources

Washington — Global natural gas consumption will jump 40% to nearly 200 quadrillion Btu by 2050, the US Energy Information Administration said Tuesday.

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The increase will be driven by demand growth in non-Organization for Economic Cooperation and Development countries' industrial and generation sectors, EIA said in its 2019 International Energy Outlook, released Tuesday.

That increase comes under a reference case that estimates a 50% rise in global energy consumption overall from 2018 to 2050, and suggests fast-growing renewable energy sources will beat out petroleum as the leading source of primary energy in the late 2040s.

The reference case assumes Brent oil prices at $100/b in 2050, in 2018 dollars, and annual global economic growth of 3%. It is intended as a baseline rather than a prediction and excludes regulatory changes, such as policies to reduce carbon intensity.

Annual growth in natural gas demand is seen at 1.1% under the scenario, while coal is at 0.4%, with both outpaced by renewable energy demand rising 3%/year. EIA officials said the renewables increase 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 at an event where the outlook was released. After initial declines, coal is seen increasing in the 2040s to meet generation demands in non-OECD Asia, excluding China, she added.

Natural gas use outside of the OECD would rise 70% to 120 quads in 2050 from about 70 quads in 2018. More modest growth is seen in OECD countries -- 17% between 2018 and 2050 to reach 78 quads.

According to the outlook, the US will remain the top gas producer throughout the period, rising 50% to produce 43 Tcf in 2050, while the Middle East grows 15 Tcf, or about 70%, reaching 37 Tcf.

GAS TRADE

Amid a "geographic mismatch" between gas demand and supply, EIA foresees significant growth in trade, with net imports of gas to Asia tripling by 2050. China's gas use rises nearly 190% to reach 21.7 Tcf, and India's swells 250% to hit 7 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 surpass the Americas in gas exports in the 2040s.

Overall, global gas exports by pipeline and LNG by tanker are seen more than doubling by 2050. The report sees pipeline flows continuing to account for most interregional gas trade as pipeline infrastructure develop.

Speaking on a panel following the EIA presentation, Leslie Palti Guzman of GasVista said it was possible there would be a shift toward intraregional natural gas trade, as price sensitive buyers in Asia prefer sources that are close geographically. That could mean more US LNG remains in the Atlantic Basin while Pacific suppliers remain in the Pacific, she said.

UNCERTAINTIES

Several speakers at the event for the outlook's release acknowledged large uncertainties about how policies could ultimately affect energy outcomes amid tensions between needs to lower greenhouse gas emissions and promote development.

Capuano also highlighted uncertainty surrounding the nature of growth in India, China, Africa and other non-OECD nations that factored heavily in the EIA outlook results.

World Bank economist Grzegorz Peszko said, looking out to 2050, there may be uncertainties of about 100% of global demand because of climatic models that suggest net-zero GHG emissions are needed by 2050 to stabilize the climate.

Kevin Book of ClearView Energy Partners called it a "safe bet" that there could be a price on carbon in the US 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, maya.weber@spglobal.com

-- Edited by Valarie Jackson, newsdesk@spglobal.com