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MEOG COMMENTARY MEOG

86.5mnbpd in 2030 and 66.2mn bpd in 2040. funding is available to major gas consumers. IEA, Key estimated
What is more, this is the IEA’s first outlook to energy demand,
Gas predict a decline by 2040 in gas demand in CO2 emissions and
Gas demand will decline by only 3% this year, advanced economies under STEPs. Gas will face investment indicators,
according to the IEA, though this still repre- stiff competition in these markets from renew- 2020 relative to 2019,
sents its biggest contraction since emerging as ables. In the EU, demand will not return to the IEA
a major fuel in the 1930s. Gas has proven more 2019 level, even though gas will benefit from the
resilient to oil and gas, as less gas use in commer- retiring of coal and nuclear plants in countries
cial and public buildings has been countered by like Germany.
increased residential consumption. A decline in In DRS, demand will take until 2024 to
industrial demand was meanwhile offset by oil/ rebound to the level in 2019, as weaker power
coal-to-gas switching. consumption and subdued industrial activity
Its outlook is also far stronger than for oil. drag on growth rates. Gas exporters will also
Under STEPS, consumption will surge by 15% struggle from low prices and “a delayed recov-
by 2030 and 30% by 2040, reaching 5.221 trillion ery also casts a long shadow over the economics
cubic metres (tcm). of already sanctioned gas projects expected to
This growth will mostly be driven by gains come online in the next few years,” the IEA said.
in south and east Asian countries looking to Revenue constraints will also mean less is
improve their air quality and support an expan- spent on infrastructure developments in coun-
sion in manufacturing. Gas will have a 25% share tries with the most growth potential. In the DRS
of the global primary energy mix in 2040, versus demand, consumption will grow by only 24% by
23% last year. 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 declin-
“Gas faces significant uncertainty as these ing in the late 2020s, sliding back to 3.998 tcm
economies emerge from the COVID-19 crisis,” in 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 use the IEA said, citing high-temperature heat for
under STEPS, the IEA said. But economic fall- industry, winter heat for buildings and seasonal
out from the pandemic will limit how much flexibility for power systems.”™

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