Key Takeaways
The International Gas Union is forecasting a natural gas shortage by the decade’s end.
“Net-zero carbon emission scenarios” are failing to anticipate the rapid rise in energy consumption, which the International Gas Union reports could result in a 22 percent shortfall in natural gas supply by 2030.
The Biden-Harris LNG export facility infrastructure pause is exasperating the natural gas shortage problem.
While the United States became the largest LNG exporter in 2023, others such as Qatar are expanding capacity during the Biden-Harris LNG pause, hoping to gain market share.
Coal consumption rose faster than ever in 2023, breaking a record, to meet rising demand.
According to the International Gas Union’s Global Gas Report 2024, a Switzerland-based industry organization, the world will face a 20% shortfall in natural gas supply by the end of the decade if significant increases in supply and infrastructure are not achieved. If global demand for natural gas continues to rise over the past four years, and production does not expand accordingly, a 22% global supply deficit is anticipated by 2030. This shortfall is attributed to the underestimation of rising global energy consumption in various net-zero carbon scenarios. It appears that recent increases in energy use, particularly from data centers and cooling, may not have been fully considered in these decarbonization models used by policymakers. Despite this outlook, the Biden-Harris administration remains committed to pausing domestic LNG infrastructure development, a stance supported by anti-fossil fuel energy groups.
Global gas demand rose by 1.5 percent last year compared to 2022, and demand is set to rise by another 2.1 percent this year due to Asia’s strong demand growth. Natural gas plays a key role in addressing the “energy trilemma” — sustainability, security, and affordability. According to the report, “the 2030 energy targets of even the relatively less ambitious climate and energy consumption scenarios are unlikely to be achieved. … It is essential to cross-check scenario pathways with actual forecasts to avoid misalignment and ensure that the energy supply keeps pace with evolving demand.” The “significant gap between actual consumption patterns and scenario assumptions” highlights the need for a realistic approach in planning to account for the scalability, reliability, and affordability requirements of changing consumption patterns.
The “significant gap between actual consumption patterns and scenario assumptions” underscores the necessity for a realistic approach to planning, one that considers the scalability, reliability, and affordability of evolving consumption patterns.
Report Highlights
According to the report, energy demand continues to rise in both developed and developing regions, with coal consumption hitting a new record in 2023, making it the largest source of global energy emissions. If current trends in energy demand and supply continue, 2030 targets set by decarbonization policies are likely to be missed. Despite efforts to boost efficiency amid industrial decline and rising energy prices, Europe’s energy demand has increased. In North America, energy demand has exceeded 2019 levels, driven by the transport sector and AI data centers, despite regulatory measures and policies against fossil fuels. Asia’s demand, especially from China and India—top greenhouse gas emitters—continues to surge. In Africa, energy demand is growing rapidly due to urbanization, though it still lacks sufficient access to electricity. Energy availability and affordability are crucial for reducing poverty.
The report stresses that to curb greenhouse gas emissions and stabilize the global gas market, it is essential to invest more in natural gas supply and advance technologies like biomethane, carbon capture and storage (CCS), and low-carbon hydrogen. Natural gas can reduce emissions from coal by 50 percent and from oil by 30 percent through cost-effective switching. Biomethane, which currently represents about 1 percent of the natural gas market, is mainly produced in North America and Europe, with emerging production hubs in China and India. Although carbon capture capacity is growing, it remains insufficient for a successful energy transition due to cost issues. These technologies are crucial for decarbonizing energy supply and ensuring resilience, particularly in hard-to-abate sectors.
Global gas markets have stabilized from the extreme volatility of 2022, but remain fragile with ongoing energy security concerns. Volatility levels are still higher than pre-pandemic, due to factors like the Israel-Hamas conflict starting in October 2023, the Russia-Ukraine war beginning in February 2022, and implied price volatility being 1.7 times higher in early 2024 compared to 2019. While gas prices, especially in Europe, have decreased, they remain sensitive to tight balances, with no major new supply additions anticipated for 2024. Significant shifts in demand or supply could disrupt the current balance.
Global Natural Gas Trade
In 2023, global LNG trade surged to 537 billion cubic meters (~3.5 billion BOE), underscoring LNG’s crucial role amid global energy security and supply uncertainties. The United States emerged as the world’s largest net LNG exporter, surpassing both Australia and Qatar with 117 billion cubic meters of exports. U.S. LNG primarily flows to Europe, whereas Australia and Qatar focus more on Asia due to long-standing agreements and geographical factors. Algeria also saw a rise in LNG exports, surpassing Indonesia, Oman, and Nigeria with 18 billion cubic meters. The Australia-to-Japan route remained the most popular for LNG trade, accounting for 39 billion cubic meters in 2023, although this was down from the previous year’s 43 billion cubic meters. China overtook Japan as the world’s largest LNG importer with 94 billion cubic meters in net imports, while India and Taiwan also moved up in the importer rankings, surpassing Spain.
Net pipeline trade flows fell by 6.8 percent to 475 billion cubic meters in 2023, primarily due to decreased exports from Russia. Despite this, Russia remained the second-largest pipeline exporter, with significant volumes directed to China (26 billion cubic meters), Turkey (21 billion cubic meters), and Belarus (18 billion cubic meters). Iran’s exports rose by 19 percent, overtaking Qatar, while the rankings of other top 10 exporters remained unchanged.
France reduced its pipeline gas imports to 13 billion cubic meters in 2023 from 25 billion cubic meters in 2022, as it decreased its reliance on Russian gas while boosting nuclear power generation. The UK increased its pipeline imports to 18 billion cubic meters from 12 billion cubic meters due to higher Norwegian supplies. The Turkmenistan-to-China pipeline route was the most active, accounting for 30 billion cubic meters of trade.
The share of LNG in net export volumes grew to 53 percent as Europe turned to LNG to replace Russian pipeline gas. In 2024, global gas export volumes are expected to increase by approximately 48 billion cubic meters (4.7 percent), driven by rising demand in regions such as Asia. Although both LNG and pipeline exports are projected to grow, pipeline exports are expected to see a slightly faster increase due to higher supplies from Norway and Algeria and Russia’s expanding eastward flows. Nevertheless, LNG’s share is anticipated to remain above 50 percent, reflecting a continued shift in global gas markets since 2022.
Conclusion
The International Gas Union found that a natural gas supply shortage of 22 percent is expected globally by the end of the decade due to decarbonization scenarios underestimating demand growth. Volatility is also an issue in natural gas markets due to the geopolitical situation with the Russia-Ukraine and Israel-Hamas wars and climate policies of developed and developing nations making it more difficult to estimate demand and trade flows. While the United States became the largest LNG exporter in 2023, that rank may not continue due to the Biden-Harris pause on LNG infrastructure. DOE continues to honor the pause while ignoring a Louisiana Federal District Judge issuing a preliminary injunction against the Biden-Harris Administration’s temporary moratorium on licenses for LNG export facilities.
The Biden-Harris Administration continues to research the issue, thus essentially continuing the moratorium, even though it is limiting potential exports to the Ukraine and other parts of Europe who wish to end natural gas purchases from Russia. Unanticipated delays mean some projects may miss their window of opportunity, especially in the higher interest rate environment under President Biden and Vice President Harris. And, if the world’s growing energy demands are unmet by LNG, other energy sources could step in the breach, possibly with higher carbon dioxide emissions.
