April 1, 2024

Natural gas use in power generation is expected to continue to grow, albeit at a much slower pace than the 4% annual average seen from 2000 through 2022. While the need to address climate change has put pressure on all fossil fuel generation, coal in particular, natural gas is expected to play a crucial role in the energy transition through 2030, at least.

Worldwide, natural gas-fired power generation has more than doubled since the turn of the century increasing from about 2700 TWh to 6200 TWh at its previous peak in 2019.  It did regress in 2020 due to the economic fallout resulting from the Covid-19 pandemic before reaching a new peak over 6300 TWh in 2021. Global natural gas power generation held relatively flat into 2022, a very turbulent year for the natural gas market in general with decreased Russian pipeline gas exports to Europe following sanctions attributable to Russia’s invasion of the Ukraine. As a result, prices in Europe and Asia skyrocketed to unprecedented levels, propelled by a substantial increase in European LNG demand. Wholesale natural gas prices reached historic highs across all regions except North America and Russia. The world leader in natural gas-fired power generation in 2022 is the US accounting for almost ¼ of the total (24%). They were followed by Russia at 8%, Japan and IR Iran at 5%, China at 4% and Saudi Arabia at 3%.

In accordance with the IEA Net Zero Emissions scenario, there is a global imperative to reduce natural gas generation down to just under 5000 TWh by 2030 in order to cap the global temperature increase in at 1.5C. Under this scenario, gas-fired power generation will need to decrease 3% annually from 2021 to 2030 and would account for 13% of the global power mix. Incorrys does not view this scenario as realistic as the ongoing energy crisis is expected to defer the goal of meeting these ecological objectives, with energy security concerns taking precedence as the foremost priority.

Clean electricity is expected to gain momentum by 2030, after which the share of natural gas power generation is expected to begin declining. Incorrys expects gas-fired power generation to continue to grow through 2030 at an average annual rate of about 1%, considerably lower than historical rates, from about 6300 TWh in 2022 to almost 7000 TWh in 2030 – 2000 TWh over the IEA Net Zero Emissions scenario.

The US continues to increase natural gas power generation and actually met more than half its electricity demand with natural gas for the very first time in mid-2023. By 2030, the US is expected to account for about 30% of the world total, up from 24% in 2022. Of the remaining 5 largest countries by gas generation, Russia and Iran decline 1% from 2022, China and Saudi Arabia increase 1% while Japan remains flat.

Post-2030, as primary capacity in clean energy commence operations, diverse regions across the globe are poised to embark on distinct trajectories in their energy transition endeavors. The Asia Pacific region, in particular, is slated to continue its progression towards a more sustainable energy mix while delicately balancing economic and environmental considerations. The region’s expanding reliance on natural gas imports presents both a far-reaching opportunity and a formidable challenge, underscoring the need for strategic planning and adaptive energy policies.


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