Gas consumption set to contract due to Russia: IEA
PARIS, July 5, 2022 (BSS/AFP) - Gas consumption will contract slightly this
year due to high prices and Russian cuts to Europe, with only slow growth
over coming years as consumers switch to alternatives, the IEA said Tuesday.
The International Energy Agency chopped its forecast for global gas demand by
more than half in its latest quarterly report on gas markets.
It now expects growth of just 3.4 percent by 2025, an increase of 140 billion
cubic metres (bcm) from 2021 levels, which is less than the 175 bcm jump in
demand registered in 2021 alone.
"The consequences of Russia's invasion of Ukraine on global gas prices and
supply tensions, as well as its repercussions on the longer-term economic
outlook, are reshaping the outlook for natural gas," said the IEA.
"Today's record prices and supply disruptions are damaging the reputation of
natural gas as a reliable and affordable energy source, casting uncertainty
on its prospects, particularly in developing countries where it had been
expected to play a growing role in meeting rising energy demand and energy
transition goals," it added.
While Russia has cut supplies to Europe and European nations have pledged to
wean themselves off Russian gas, the impact quickly rippled throughout the
European nations are trying to make up the shortfall by importing more
liquefied natural gas (LNG) shipped by tanker, which the IEA said is creating
supply tensions and leading to demand destruction in other markets.
It warned that the scramble for LNG risked not only causing economic harm to
other more price sensitive importers, but pushing up prices and thus
contributing to additional revenues for Russia.
"In this context, an accelerated phase-out of Russian gas should primarily
focus on reducing gas demand and scaling up domestically produced low-carbon
gases" such as biogas, biomethane, and green hydrogen, said the IEA.
The IEA, which advises energy importing nations on policy, said in its new
forecast for lower gas demand growth that only a fifth of the reduction came
from expected efficiency gains and substituting renewables for gas.
"Our forecast's lower gas demand growth compared to last year does not
guarantee an accelerated transition to net zero emissions, as the bulk of the
revision comes from lower GDP and fuel switching rather than by faster gas-
to-electricity conversion and efficiency gains," said the report.
The IEA said additional green energy transition measures would, in additional
to their long-term impact in reducing emissions, ease pressure on gas prices
globally by reducing supply tensions while also delivering short-term
improvements in air quality by quickening the move away from coal.
"The most sustainable response to today's global energy crisis is stronger
efforts and policies to use energy more efficiently and to accelerate clean
energy transitions," IEA director for energy markets and security Keisuke
Sadamori said in a statement.