IEA Predicts Decline in Natural Gas Demand Signals End of the 'Golden Age of Gas'

In its recent World Energy Outlook 2023, the International Energy Agency (IEA) anticipates a gradual decline in natural gas consumption, signifying the conclusion of the era known as the "Golden Age of Gas" after 2030. The report highlights that global annual growth in natural gas usage has dwindled from nearly 2% since 2011 to less than 0.4% by the decade's end. The study reveals that the power and building sectors have already reached their peak natural gas utilization, with reduced demand projected for new power plants and space-heating boilers. Approximately 39% and 21% of total demand is attributed to these areas, and their efforts to curtail natural gas usage are poised to lead to a demand peak around 2030.

The IEA underscores a significant shift in natural gas power capacity additions, which surged to over 100 gigawatts (GW) in 2002, constituting around 65% of annual capacity additions. However, in 2022, this figure plummeted to less than 30 GW, marking an all-time low. Despite this slowdown, the global installed capacity of natural gas power has continued to expand, in contrast to the declining trend in coal.

The report predicts a consistent decline in natural gas demand in the power sector through 2050, with a substantial drop in the 2030s attributed to the increased use of co-firing in gas-fired power plants. The IEA further notes that the brief surge in natural gas demand observed in advanced economies in 2021 was short-lived, and by the following year, demand had fallen below pre-pandemic levels.

Overall, the study foresees a continued downward trajectory in natural gas demand, with the cumulative effect negating any growth observed in emerging markets and developing economies by 2030.