Robust demand from emerging economies such as China and India could drive global natural gas production and use to unprecedented levels, says the International Energy Agency (IEA).
The Paris-based organisation believes that China's ambitious policies for natural gas use, coupled with demand from India and the Middle East as well as plentiful supplies could lead to natural gas use rising by more than 50 per cent from 2010 levels.
Uncertainty over nuclear energy policy in the wake of the Fukushima nuclear energy incident is also a factor, says the IEA, which has reduced its outlook for nuclear power capacity additions since it published its World Energy Outlook last year. The power generation sector will be a key driver of natural gas demand.
“On a global scale, energy policy favours natural gas, and there is uncertainty from the renewed debate on nuclear energy,” commented IEA Executive Director Nobuo Tanaka, who also said that he expects to see investment delays and early plant retirements in the nuclear sector.
In its analysis of a new 'Golden Age of Gas' scenario, the IEA shows that natural gas could emerge as the second-largest fuel source after oil in world energy demand by 2035. Gas would largely be the fuel of choice because it is seen as being a clean energy source as well as low prices.
Natural gas supplies would be able to keep pace with demand because of the widespread development of unconventional gas resources such as shale gas, says the IEA. Natural gas would gain market share by displacing coal as well as nuclear power and renewable energy in the overall energy mix.
Renewable energy support scheme could “fall on tough times” if natural gas prices remain low for a prolonged period, said IEA Chief Economist Fatih Birol.
Coal demand would see the biggest change in China, where the government's desire to increase the use of natural gas is driven by a need to overcome air pollution. China currently uses around 100 billion cubic metres (bcm) per year of natural gas, and this would rise to just over 500 bcm/year in 2035 under the IEA's Golden Age scenario.
In its analysis the IEA warns that while natural gas is a relatively clean fuel, a significant increase in its use may have a harmful impact on efforts to overcome global warming. “An expansion of gas use is no panacea for climate change,” said Tanaka.
The IEA says that under its Golden Age scenario, a quarter of gas production in 2035 will be from unconventional sources, and it has expressed concerns over the environmental impacts of shale gas extraction methods such as fracking.
“Fracking is creating problems,” commented Birol. “You need large volumes of water to fracture the rocks. You also need chemicals … and this creates problems. The evidence is there.”
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