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IEA and natural gas projections

From a press release issued by the IEA (emphasis added):

Contact: IEA Press Office,

IEA sees growth of natural gas in power generation slowing over next 5 years
But ‘Golden Age’ still in full swing as gas emerges as a significant transportation fuel, new report says

SAINT PETERSBURG, 20 June – Natural gas will continue to increase its share of the global energy mix, growing at 2.4% per year between now and 2018, the IEA said in its Medium-Term Gas Market Report (MTGMR) issued today. However, this projected growth rate is lower than the IEA’s forecast last year of 2.7%, due to persistent demand weakness in Europe as well as difficulties in upstream production growth in the Middle East and Africa.

At the same time, the report sees gas emerging as a significant transportation fuel: Thanks to abundant shale gas in the United States and amid more stringent environmental policies in China, gas is expected to do more to slow oil demand growth than electric vehicles and biofuels combined.

“Even though we have revised our growth estimates downwards, the ‘Golden Age’ of gas remains in full swing,” said IEA Executive Director Maria van der Hoeven as she presented the report in Saint Petersburg. “Gas is already a major fuel in power generation, but the next five years will also see it emerging as a significant transportation fuel, driven by abundant supplies as well as concerns about oil dependency and air pollution. Once the infrastructure barriers are tackled, natural gas has significant potential for clean-energy use in heavy-duty transport where electrification is not possible.”

While the report foresees the share of gas in the global primary energy mix rising and while total gas demand is expected to rise to nearly 4,000 billion cubic metres (bcm) in 2018 from 3,427 bcm in 2012, gas faces challenges in all the major geographic regions. In the United States, in the absence of policy constraints on coal-fired plants, recovering gas prices will prompt coal to regain some of its share of the power market, putting US greenhouse-gas emissions from the power sector back on a growing track. Europe sees only a weak and partial recovery due to the Eurozone crisis and low carbon prices. Gas exports from the Middle East decline amid runaway domestic demand growth – especially in the power sector.

“The persistent tightness of LNG markets is a major concern as it limits the contribution of gas to sustainable energy security,” Ms. Van der Hoeven said. “‘It also highlights the need to tackle energy subsidies and improve energy efficiency in major producing countries as well as to adopt supportive policies for LNG investment.”

Other key findings of the report include:

  • Non-conventional production will remain a North American phenomenon in the medium term. The United States alone represents over one-fifth of the global increase in gas production, benefiting from technological developments and cost-efficient field services. Exploration in other regions continues, but is hindered by geology, infrastructure and environmental constraints as well as lack of social acceptance.
  • Natural gas plays a major role in addressing air quality concerns in China. China will account for 30% of the growth of global gas demand. Despite the country’s impressive progress on domestic production, this still puts China on a path of increasing import dependency: In the next five years, China absorbs the entire production increase from Central Asia as well as one-third of the global increase in LNG supply.
  • The tightness of LNG supply enables some recovery of Russian exports to Europe. Nevertheless, in the longer term, Russia will be able to maintain its premier position in the world of gas only by developing the resources and infrastructure for large-scale Asian exports.

The MTGMR is part of a series of medium-term forecasts that the IEA devotes to each of the main primary energy sources – oil, gas, coal and renewable energy – and, starting this year, energy efficiency.

MTGMR is on sale at the IEA bookshop []. Accredited journalists who would like more information or who wish to receive a complimentary copy should contact

To read the Executive Summary, please click here [].

To read Executive Director Maria van der Hoeven’s comments at the report’s launch, please click here [].

To see the slides from the report’s launch, please click here [].

To watch the webcast for the report’s launch, please click here [].

A few notes…

  • Note the emphasis on the use of natural gas reducing “air pollution”. In policy discussions and reports like this one from the IEA, “air pollution” is almost universally used in the old school way, meaning a heavy emphasis on visible pollution and smog with no accounting for CO2 and climate change.
  • Yes, cleaning up “air pollution” is a good thing. Anyone who’s seen photos of the horrific air quality conditions in some cities in China would readily agree that they need to remedy that situation as soon as possible. But please keep in mind that when stricter “air pollution” controls are put in place and/or a fuel shift happens and we see the air quality in those cities improve dramatically in less than a year, it’s not representative of how quickly we can bring down the atmospheric level of CO2. Further, a full embrace of natural gas, particularly as a transportation fuel, does much less to address CO2 emissions than most people assume; a natural gas-fueled vehicle emits only 20% less CO2 per mile than an equivalent gasoline powered vehicle, for example.
  • Notice the projected bounce back of coal usage in the US. No one should find this surprising in the least. If we leave such macro-level decisions up to the whims of the “free market” and without putting a price on carbon, then we’ll see swings in the fuels used to generate electricity as their relative prices fluctuate. The fracked natural gas boom in the US simply caused a much bigger than normal shift in those relative prices, which caused many dual-fueled electricity plants to use natural gas. At least for now.
  • The growth of natural gas consumption in China should not surprise anyone. As that country (and India) continues to climb the development ladder, it will increasingly take on the historical consumption patterns of the US, the EU, etc. In the short run, that means a big increase in the consumption of some energy sources.

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