Natural gas in the Sustainable Development Scenario

bcm

100

Advanced

economies

China

India

Other developing economies

International bunkers

Net change

bcm

100

Power

Industry

Transport

Buildings

Other

Net change

Share of coal in primary energy

70%

60%

50%

40%

30%

20%

10%

Share of coal and natural gas in primary energy demand in selected regions in the SDS

2025

2040

India

Japan and Korea

Share of gas in primary energy

The oil market looks broadly the same from anywhere in the world; the same is not true for natural gas. Even as the market becomes more liquid and interconnected, relatively high costs of transportation mean that price levels can vary substantially between resource-rich, exporting regions and those that need to import gas.

The environmental credentials of gas also differ depending on the sector, country and time frame being considered.

In places where energy transitions are already quite advanced, or where gas already plays a large role in the energy mix, gas naturally becomes a target of decarbonisation policies.

The perspective is often different in some parts of the world that do not use much natural gas today. This includes, for example, the coaldominated energy systems in many developing countries in Asia, and in countries with rapidly growing energy and infrastructure needs, as in many parts of Africa. For these countries, if gas is affordable and reliable, then it looks – together with renewables – like part of the solution over the period to 2040.

These varied perspectives come through clearly in the projections for the SDS, in which overall gas use rises until around 2030 before falling back to today’s levels by 2040.

The window of opportunity in this Scenario for natural gas to play a role in the decarbonisation of advanced economies is narrow; by 2025, increased electrification of heat demand, greater penetration of renewables in the power sector and significant efficiency improvements begin to reduce natural gas consumption. By 2040, demand in advanced economies is one-third lower than today.

The decline in advanced economies is partially offset by continuing growth in developing markets in Asia, particularly China and India, where gas has a more prolonged role. New gas infrastructure is built to help displace more polluting fuels such as coal and oil in hard-to-abate sectors such as heavy industry (e.g. steel and petrochemicals). Nonetheless, to be compatible with a fully net-zero emissions global energy system, gas infrastructure will ultimately need to deliver truly low-carbon energy sources (as discussed below).

Increased gas use also plays a role in many country strategies to improve air quality, a consideration that brings it into play also for some parts of the transport sector where electrification is a less viable option, such as road freight.

The role of gas in the power sector in the SDS varies by country, depending on prevailing prices and policies, but there is a general shift towards the provision of balancing and flexibility functions for both seasonal and short-term variations in demand, rather than the provision of baseload or mid-merit power. As variable renewables scale up rapidly, gas infrastructure plays a crucial role in ensuring security of electricity supply. In countries with large, young gas-fired fleets – notably the United States – plants are also retrofitted in some cases with CCUS.

In the SDS, gas-related CO emissions in 2040 drop 15% below today’s levels, but make up a much larger share of total emissions, reaching almost 40% (up from 21% today), as coal use falls back.