Climate laws and declining prices to expand global gas industry post-pandemic

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Global gas use is set to fall by around 4% in 2020, as the COVID-19 pandemic reduces energy consumption across global economies, according to a new report.

However, the Global Gas Report 2020, released by the International Gas Union (IGU), BloombergNEF (BNEF) and Snam, states that the market will rebound post COVID-19.

The decrease in gas use in 2020 will result in low gas prices which, coupled with clean air and climate policies, will promote further switching to gas from other more polluting energy sources, such as oil and coal.

This will help expand the global gas industry post COVID-19 as the application of gas in key sectors including power, industry and transport will intensify in major regions including Europe, North America and Asia.

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A particular growth opportunity exists in liquefied natural gas, as imports reached 482 billion cubic meters in 2019, up 13% from 2018.

LNG imports are expected to fall by around 4.2% in 2020 to rebound quickly to previous levels as soon as 2021.

There is a need to support greater gas infrastructure development in the medium term, according to the study.

India is planning to almost double the length of its gas transmission grid, while China will grow its gas network by around 60% by 2025.

Scaling up the use of low-carbon gas technologies will depend on substantial policy action and infrastructure investment in the coming years.

The report also calls for the adoption of a range of meaningful steps, including emissions pricing linked to clear, Paris-aligned long-term climate targets; harmonised standards governing hydrogen use; coordinated strategies regarding regional and global infrastructure roll-out, and the deployment of hydrogen-ready equipment, such as pipelines, gas turbines and end-use appliances to accelerate the adoption of clean hydrogen.

The development of an international hydrogen market could also accelerate adoption.

Ashish Sethia, global head of commodities at BNEF, said: “We have already seen unprecedented coal-to-gas switching in Europe, and clean air policies in major growth markets such as India and China, will drive more gas adoption in the next few years.”

Joe Kang, President of IGU, said: “This pandemic crisis comes at great cost to the industry, the economy and society at large. It also reminded the world about the value of clean air and healthy environment for wellbeing, providing a unique opportunity to rebuild better. Gas is an abundant, clean, accessible and flexible substitute to more polluting energy sources, and supporting greater fuel switching from coal and oil to gas in the immediate term, while ensuring infrastructure is ready to accommodate progressively greater scale of clean gas technologies in the coming decade, is the way to secure a sustainable and prosperous future.”

Jon Moore, CEO of BNEF, said: “It is increasingly clear that the goals of the Paris Agreement cannot be met without a substantial scale-up of clean gas technologies ” such as hydrogen. While the economics are challenging today, a joined-up policy approach could unleash the investment needed to bring costs down, develop scalable business models and drive adoption across the hard-to-abate sectors.”

Read more about the report.

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