Natural Gas To Outpace All Other Energy Sources Until 2035
Web Posted on : Sun, 16 Mar 2014
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Natural gas is expected to be the fastest growing energy source until 2035, according to the latest BP Energy Outlook 2035. Between 2012 and 2035, natural gas demand is expected to grow by an average 1.9% per year, outpacing all other energy sources. This is likely to lead to higher natural gas prices, including for LNG. Qatar is the world’s largest exporter of LNG.
Energy Consumption by Region (1990-2035)
(share of total at each period, %)
The BP report forecasts that global energy consumption will grow by 41% from 2012 to 2035. Over 95% of this demand growth is projected to come from emerging markets, including China and India, with the share of total of these countries accounting for about a quarter by 2035. Meanwhile energy use in the members of the Organization of Economic Cooperation and Development (OECD) grouping all advanced economies is expected to grow slowly and begin to decline in the later years of the forecast period. Indeed, the OECD countries are becoming more fuel efficient, by generating more income out of each unit of energy, thus resulting in a slowdown in their energy demand. The transition from industrial to service economies, increased global integration, the tradability of fuels across border and continued technological improvement, as well as the removal of fuel subsidies and policies geared toward fuel efficiency, all suggest that energy intensity will continue to decline.
Energy Consumption by Source (1990-2035)
(share of total at each period, %)
To respond to higher global energy demand, the supply mix is evolving in favor of natural gas. Fossil fuels will continue to be dominant according to the report. Oil, gas and coal are expected to converge on market shares of about 26-27% each by 2035, and non-fossil fuels, namely, nuclear, hydroelectricity and renewable, on a share of around 5-7% each. Among fossil fuels, natural gas is growing fastest as it is increasingly being used as a cleaner alternative to coal for power generation as well as in other sectors. At the same time, the share of coal is forecast to diminish rapidly. It is currently the largest source of volume growth, but by 2025 coal is expected to add less volume than oil and only just ahead of hydroelectricity. This will primarily reflect the shift away from coal-intensive electricity production in China in favor of natural gas powered electricity generation.
There are still ample energy reserves available to the world economy. Owing to advanced engineering, large oil and gas reserves in Gulf Cooperation Council (GCC) countries as well as the oil shale revolution in North America are all contributing to these energy reserves. However, this raises the question of sustainability. Increasing demand for energy in the developing world will lead to a significant rise in carbon emissions. Indeed, according to the BP report, global carbon dioxide emissions are projected to increase by 29%, with all the growth coming from emerging markets. However, there are grounds for optimism. Carbon emissions fell in 2012 to 1995 levels in the US thanks to increasing energy efficiency and a switch in power-generation fuel from coal to natural gas.
Overall, natural gas is expected to be the fastest growing of the fossil fuels according to the report. Non-OECD countries, led by China and India, are expected to generate 78% of natural gas demand growth with industry and power generation accounting for the largest increments to demand by sector. LNG exports are expected to grow more than twice as fast as gas consumption, at an average of 3.9% per year, and accounting for 26% of growth in global gas supply to 2035. Furthermore, shale gas supplies are projected to meet 46% of the growth in gas demand and account for 21% of world gas and 68% of US gas production by 2035. Such large demand is likely to put upward pressure on natural gas prices, including LNG. Qatar is likely to benefit significantly from these developments.