Published on April 1, 2014

Natural gas, according to experts, will be the fastest growing energy source until 2035. Demand for natural between 2012-2035 is likely to increase by an average 1.9 per cent per annum, thereby surpassing all other energy sources. This event in turn is expected to result in higher natural gas prices, including for LNG.

Global energy use is estimated to increase by 41 per cent from 2012 to 2035, 95 per cent of this rising demand is expected to come from emerging markets like India and China. Whereas, energy demand in the members of the Organization of Economic Cooperation and Development (OECD), the group of developed economies, is projected to increase at a slow pace and then decline in the later years of the forecast period. These countries are developing fuel efficiency and thereby earning more revenue out of each unit of energy, which will eventually lead to a decline in their energy consumption.

Other factors like rising global integration, move to service from industrial economies, technological advances, tradability of fuels across countries, development of policies in favour of achieving greater fuel efficiency and removal of fuel subsidies, all point to a gradual decline in energy intensity.

In order to meet the increasing demand for energy, countries are likely to turn to natural gas. Fossil fuels will continue to be the principal source of energy. Oil, gas and coal are likely to have a market share of about 26-27 per cent each by 2035, while non-fossil fuels like renewable and hydroelectricity will have a share of around 5-7 per cent each.

Natural gas has developed as a cleaner alternative to coal for generating power as well as in other sectors. As a result the share of coal is estimated to decline rapidly. Coal, which is the largest source of volume growth, is expected to add less volume than oil by 2025.

This increased reliance on natural gas is likely to bring a transition from coal-intensive electricity production in China to natural gas based electricity generation.

The global economy continues to have abundant energy resources to rely on. The shale gas revolution in North America and the large oil and gas reserves in GCC countries are making significant contributions to these energy reserves.

However, the increasing demand for energy has raised questions of environmental degradation and sustainability. Growing use of energy will lead to astronomical rise in carbon emissions. Experts have estimated that global carbon dioxide emissions will increase by 29 per cent.

Reports, however, suggest grounds for optimism. For instance, in 2012, carbon emissions in the US fell to 1995 levels on the back of increased energy efficiency and a shift to natural gas for power generation.

Natural gas is, thus, projected to be the fastest growing of the fossil fuels. Countries like India and China are likely to create 78 per cent of natural gas demand growth.