Natural Gas Consumption: Global Outlook 2024-2034
by Bob Shively, Enerdynamics President and Lead Facilitator
Natural gas continues its pivotal role in the global energy transition, providing energy supply security and balancing out intermittent renewable energy sources. Many Asian countries believe that replacing coal generation with gas generation is a good step toward reducing the environmental impact of electricity production. As we look toward the next decade, the dynamics of
natural gas consumption are being shaped by technological advancements, environmental policies, and geopolitical shifts. But in the short term, it appears that natural gas consumption will continue significant growth.
Current landscape and regional patterns
Global natural gas consumption reached approximately 4,239 billion cubic meters (bcm) in 2023, according to the International Energy Agency (IEA). The demand patterns show significant regional variations, with emerging markets driving much of the growth. Asia-Pacific remains the fastest-growing region, with China leading consumption growth as it continues its coal-to-gas transition in pursuit of cleaner air quality and the ability to integrate renewables. Also rapidly growing is natural gas consumption in the Middle East.
In developed markets, particularly Europe, the landscape has dramatically shifted following the disruption of Russian gas supplies. European nations have rapidly diversified their supply sources, with LNG imports reaching record levels but overall gas demand dropping due to higher prices. The United States has emerged as a major LNG supplier, with export capacity expected to reach 169 million tonnes per annum (mtpa) by 2027 while gas demand in the U.S. has grown only slightly in recent years.
Growth drivers and market dynamics
Power generation remains the largest consumer of natural gas globally. Its role as a reliable yet flexible match for renewable energy has become increasingly important as countries pursue aggressive decarbonization targets. The IEA projects that gas-fired power generation will grow by approximately 2.5% annually through 2030, primarily driven by emerging markets.
Industrial applications represent another significant growth sector. The petrochemical industry, particularly in the Middle East and North America, continues to expand its natural gas consumption. Manufacturing sectors in developing economies are increasingly switching to gas from more carbon-intensive fuels, supporting environmental goals while maintaining economic growth.
Another key factor in natural gas consumption is price. Global prices spiked significantly in 2022 but then declined in 2023. Still, prices remained at higher than historic levels in Asia and Europe which has dampened some demand growth. As LNG supplies grow and the U.S. continues to see robust gas production, it is possible that prices will continue to drop boosting the role of gas relative to other fossil fuels.
Pictured above: LNG terminal
Pictured below: Gas pipeline under construction
Challenges and market constraints
Despite positive growth indicators, the industry faces several challenges. Infrastructure development and the need for capital investment remains a critical constraint, particularly in emerging markets. The world will spend $720 billion on pipelines and $190 billion on LNG terminals planned or under construction according to Global Energy Monitor.
Environmental considerations are increasingly impacting market dynamics. Methane emissions from natural gas operations have come under intense scrutiny, with the Global Methane Pledge targeting a 30% reduction in methane emissions by 2030. The industry is responding with improved monitoring and mitigation technologies, though this adds to operational costs. Many environmentalists argue that large-scale construction of natural gas infrastructure risks locking in fossil fuel consumption for many years, thus impeding the transition to carbon-free energy.
The price of renewable energy and batteries continues to drop, creating the possibility that natural gas generation may no longer be able to compete economically, especially if more cost-effective long-duration storage is developed. Many markets are again considering the value of nuclear energy which may also eat into the demand for gas-fired generation. In some regions, space heating and other gas uses are challenged by the electrification of loads such as heat pumps and induction stoves. Looking further out, natural gas may compete with clean hydrogen as an industrial fuel, although in today’s markets, hydrogen is much more expensive.
Future outlook and strategic implications
The next decade presents a complex picture of natural gas consumption. Short-term growth appears robust, with global demand expected to increase. However, the medium-term outlook becomes more nuanced as renewable energy costs continue to decline and strategies to reduce greenhouse gas emissions continue to expand. Regional variations with be significant as Asia and the Middle East are expected to demonstrate strong demand growth, North America is expected to grow but more slowly, and European demand is expected to decline slightly.
Energy security will continue to be a key driver for natural gas markets. Europe appears likely to continue its push away from Russian supplies and Asian countries are willing to invest to ensure long-term supplies.
The IEA projects that global natural gas demand will peak in 2030, with the rate of drop-off afterward depending on the scenario.
Key takeaways for industry stakeholders
Natural gas will maintain its crucial role in the global energy mix well into the future, though its growth patterns will vary significantly by region and sector. Industry participants should focus on:
1. Developing flexible supply chains to address regional demand shifts
2. Ensuring security of supply
3. Investing in emissions monitoring and reduction technologies
4. Understanding the interplay between gas and renewable energy in their markets
5. Preparing for increased environmental regulation and carbon pricing in markets except the United States
Success in the evolving natural gas market will require careful attention to both infrastructure development and environmental considerations. While growth opportunities remain substantial, stakeholders must navigate an increasingly complex regulatory, financial, and competitive landscape.
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