Four large-scale shifts in the global energy system set the scene for the World Energy Outlook 2017 (WEO 2017). These are the rapid deployment and falling costs of clean energy technologies; the growing electrification of energy; the shift to a more services-oriented economy and a cleaner energy mix in China; and the resilience of shale gas and tight oil in the United States. These changes come at a time when traditional distinctions between energy producers and consumers are being blurred and a new group of major developing countries, led by India, moves towards centre stage. How these developments play out and interact is the story of this WEO. (The first part of this extensive summary of the WEO 2017 was published in our November issue).
LNG ushers in a new order for global gas markets
Natural gas grows to represent one quarter of global energy demand in the New Policies Scenario by 2040, becoming the second-largest fuel in the global mix after oil. In resource-rich regions, such as the Middle East, the case for expanding gas use is relatively straightforward, especially when it can substitute oil. In the US, plentiful supplies maintain a strong share of gas-fired power in electricity generation through to 2040, even without national policies limiting the use of coal. But 80% of the projected growth in gas demand takes place in developing economies, led by China, India and other Asian countries, where much of the gas needs to be imported and infrastructure is often lacking.
But the landscape is extraordinarily competitive, not just due to coal but also to renewables, which in some countries become a cheaper form of new power generation than gas by the mid-2020s, pushing gas-fired plants towards a balancing rather than a baseload role. Efficiency policies also play a part in constraining gas use. While the electricity generated from gas grows by more than half to 2040, the use of gas for power generation rises by only one-third, due to a higher proportion of highly efficient plants. Read more…
Article published in: FuturENERGY December 2017 – January 2018