Page 5 - AfrElec Week 42

AfrElec COMMENTARY AfrElec

demand contracts greatly to 92.5mn bpd in 2025, funding is available to major gas consumers.
86.5mn bpd in 2030 and 66.2mn bpd in 2040. What is more, this is the IEA’s first outlook to
predict a decline by 2040 in gas demand in
Gas advanced economies under STEPs. Gas will face
Gas demand will decline by only 3% this year, stiff competition in these markets from renew-
according to the IEA, though this still represents ables. In the EU, demand will not return to the
its biggest contraction since emerging as a major 2019 level, even though gas will benefit from the
fuel in the 1930s. Gas has proved more resilient retiring of coal and nuclear plants in countries
than oil and gas, as less gas use in commercial such as Germany.
and public buildings has been countered by In DRS, demand will take until 2024 to
increased residential consumption. A decline in rebound to the level in 2019, as weaker power
industrial demand was meanwhile offset by oil/ consumption and subdued industrial activity
coal-to-gas switching. drag on growth rates. Gas exporters will also
Its outlook is also far stronger than for oil. struggle from low prices and “a delayed recov-
Under STEPS, consumption will surge by 15% ery also casts a long shadow over the economics
by 2030 and 30% by 2040, reaching 5.221 trillion of already sanctioned gas projects expected to
cubic metres. This growth will mostly be driven come online in the next few years,” the IEA said.
by gains in south and east Asian countries look- Revenue constraints will also mean less is
ing to improve their air quality and support an spent on infrastructure developments in coun-
expansion in manufacturing. Gas will have a tries with the most growth potential. In the DRS
25% share of the global primary energy mix in demand, consumption will grow by only 24%
2040, versus 23% last year. by 2040.
Still, rates of growth will depend greatly on In SDS, gas demand rises by only 3.5% to
policy, the IEA notes. 4.166 tcm by 2025 and will then begin declining
“Gas faces significant uncertainty as these in the late 2020s, sliding back to 3.998 tcm in
economies emerge from the COVID-19 crisis,” 2030 and 3.554 tcm in 2040. Even in this sce-
the agency said. “Despite a lower price outlook, nario, however, gas will retain the same share in
growth prospects for gas continue to rely heavily primary energy consumption in two decades’
on policy support in the form of air quality reg- time that it had last year.
ulations or other restrictions on the use of more “There is a robust long-term case for gases
polluting fuels, and on significant investment in in the energy system. In the SDS, there are ser-
new gas infrastructure.” vices that gases provide that it would be difficult
Some $70bn per year will be needed to to provide cost effectively using other sources,”
expand infrastructure to enable greater gas the IEA said, citing “high-temperature heat for
use under STEPS, the IEA said. But economic industry, winter heat for buildings and seasonal
fallout from the pandemic will limit how much flexibility for power systems.” ™

Week 42 22•October•2020 www. NEWSBASE .com P5