Page 7 - GLNG Week 26 2021

GLNG COMMENTARY GLNG

Long-term projections
of reduced demand
from the market’s
biggest buyer will not
be welcome news
for the world’s LNG
exporters.

gas sales unit, Hou Chuangye, predicted in April grid supplies. The commission pointed to
that gas demand would grow by 9-10% this year industrial breakthroughs and plummeting
to around 350-356 bcm. development costs as having allowed solar and
Hou said demand from gas-fired power gen- wind power installations to achieve fundamen-
erators was anticipated to grow in the future as tal conditions of grid price parity.
they served as back-up to growing base-load The National Energy Administration (NEA)
renewables capacity. The executive added that has set a target for solar and wind power output
his company would work more closely with the to account for 11% of total power consumption
country’s state-owned power majors to boost this year, up from 9.5% in 2020.
gas-fired power production.
China Electricity Council (CEC) has esti- What next?
mated that installed gas-fired power capacity The central government has pushed coal-to-gas
will reach 150 GW by 2025, from 105.8 GW in conversion for years, first by striving to improve
May. urban air quality and then as part of Beijing’s The risk of
wider carbon emission goals.
Green ambitions That push has seen the conversion millions such a political
China has had to rethink its demand forecasts in of coal boilers often outpace the development shift will likely
the wake of Chinese President Xi Jinping’s pledge of the country’s gas storage and transportation
in September 2020 that the country aimed to hit capacity. This has led to shortfalls in supply, with come to weigh
peak emissions in 2030 before achieving carbon industrial consumption sacrificed in colder
neutrality by 2060. weather to ensure homes do not freeze. on investment
The country’s energy planners had widely While gas demand is expected to continue
expected gas demand to climb to 700 bcm by growing until 2035, the country’s longer-term decisions in new
2050, Hou said in April, noting that Xi’s pledge energy outlook will more heavily depend on regional LNG
had prompted this figure to be revised down to renewable energy solutions. Moreover, it is pos-
around 535-605 bcm by 2030. sible that as this transition gains steam – and capacity.
Renewable energy supplies are expected to the energy security advantages of greater green
fill the gap going forward, with the government energy consumption become readily apparent
having unveiled plans last month that pave to both government and industry – that Beijing
the way for solar and wind power to compete may set even more ambitions targets in its quest
against coal without government subsidies. to reduce its fossil fuel consumption.
The National Development Reform Commis- The risk of such a political shift will likely
sion (NDRC), the country’s top economy plan- come to weigh on investment decisions in new
ner, announced on June 11 that solar and wind regional LNG capacity, given expansion plans in
power would enjoy price parity with coal-based the Middle East, North America and Africa.™

Week 26 02•July•2021 www. NEWSBASE .com P7