Natural gas is set to become the second-largest fuel in the global energy mix, by overtaking coal in 2030. Industrial consumers make the largest contribution to a 45 percent increase in worldwide gas use.
Trade in liquefied natural gas (LNG) is expected to more than double in response to rising demand from developing economies, led by China.
The “World Energy Outlook 2018” released by International Energy Agency (IEA) noted the movement towards a more interconnected global gas market, as a result of growing trade in LNG, will intensify competition among suppliers while changing the way that countries need to think about managing potential shortfalls in supply.
In the new policies scenario, rising incomes and an extra 1.7 billion people, mostly added to urban areas in developing economies, push up global energy demand by more than a quarter to 2040. The increase would be around twice as large if it were not for continued improvements in energy efficiency, a powerful policy tool to address energy security and sustainability concerns. All the growth comes from developing economies, led by India.
As recently as 2000, Europe and North America accounted for more than 40 percent of global energy demand and developing economies in Asia for around 20 percent. By 2040, this situation will be completely reversed, the IEA report said.
The profound shift in energy consumption to Asia is felt across all fuels and technologies, as well as in energy investment. Asia makes up half of global growth in natural gas, 60 percent of the rise in wind and solar PV, more than 80 percent of the increase in oil, and more than 100 percent of the growth in coal and nuclear, given declines elsewhere.
“Fifteen years ago, European companies dominated the list of the world’s top power companies, measured by installed capacity; now six of the top-ten are Chinese utilities. The shale revolution continues to shake up oil and gas supply, enabling the United States to pull away from the rest of the field as the world’s largest oil and gas producer,” the report noted.
Oil use for cars will peak in the mid-2020s, but petrochemicals, trucks, planes and ships still keep overall oil demand on a rising trend. Improvements in fuel efficiency in the conventional car fleet avoid three-times more in potential demand than the 3 million barrels per day (mb/d) displaced by 300 million electric cars on the road in 2040. But the rapid pace of change in the passenger vehicle segment (a quarter of total oil demand) is not matched elsewhere.
Petrochemicals are the largest source of growth in oil use. Even if global recycling rates for plastics were to double, this would cut only around 1.5 mb/d from the projected increase of more than 5 mb/d. Overall growth in oil demand to 106 mb/d in the New Policies Scenario comes entirely from developing economies.
In the new policies scenario, a rising tide of electricity, renewables and efficiency improvements stems growth in coal consumption. Coal use rebounded in 2017 after two years of decline, but final investment decisions in new coal-fired power plants were well below the level seen in recent years.
Once the current wave of coal plant projects under construction is over, the flow of new coal projects starting operation slows sharply post2020. But it is too soon to count coal out of the global power mix: the average age of a coal-fired plant in Asia is less than 15 years, compared with around 40 years in advanced economies.
With industrial coal use showing a slight increase to 2040, overall global consumption is flat in the new scenario, with declines in China, Europe and North America offset by rises in India and Southeast Asia.
The IEA examines the full spectrum of energy issues including oil, gas and coal supply and demand, renewable energy technologies, electricity markets, energy efficiency, access to energy and demand side management in its ‘world energy outlook’.
