Natural gas demand grew by 3% in 2017 due to relatively low-cost supplies as well as fuel switching in key economies, significantly above the average growth of 1.5% of the last five years.
According to the International Energy Agency’s Global Energy & CO2 Status Report, China alone accounted for nearly 30% of global growth with more than 30 bcm out of a total of nearly 120 bcm.
This signals a structural shift in the Chinese economy away from energy-intensive industrial sectors as well as a move towards cleaner energy sources, with both trends benefiting natural gas.
As part of the official policy drive to ‘make China’s skies blue again,’ there has been a strong push to phase out the practice of burning coal in industrial boilers (especially those in and around major cities) as well as reduce coal use for residential heating.
The composition of gas demand growth is changing. In the past decade, half of global gas demand growth came from the power sector. Read more: Tanzania: Use of natural gas can boost economic growth
However, in 2017, over 80% of the growth came instead from industry and buildings. The power sector remains the largest single component of global demand, but this share is likely to decline gradually.
Gas consumption increase amid drought
The European Union also saw strong growth in gas demand (continuing the trend from 2016), with consumption up around 16 bcm in 2017.
The report noted that some of this increase was weather-related, for instance due to a poor year for hydropower.
Demand from industry also reportedly picked up on the back of stronger economic activity.
“Gas consumption in the European Union is still more than 10% below the peak seen in 2010,” the IEA report highlighted.
Gas imports were near historical highs as domestic production tapered off, notably in The Netherlands.
Meanwhile, in the United States, gas-fired generation in 2017 fell by 8%, or 110 TWh, offsetting half of the increase in gas demand for electricity generation elsewhere.
The case of the United States last year highlights the importance of relative prices in determining emissions intensity trends in the power sector: a slight rise in the natural gas price in 2017 saw gas-fired generation squeezed by both renewables and coal.
The full report can be found here