The Strategist

IEA: Growing demand for gas will result in inevitable global catastrophe

07/07/2021 - 03:52

Growing demand for natural gas could prevent the world from reaching zero emissions by 2050 and avoiding global catastrophe. According to Reuters, a report by the International Energy Agency (IEA) says the world will exceed pre-coronavirus consumption levels by 2024.

Gas demand is expected to grow by 3.6 per cent in 2021 as the world economy recovers from the effects of coronavirus restrictions. The IEA believes that "it will continue to grow unless governments take tough action to achieve zero emissions by mid-century". Demand is projected to rise by 1.7 per cent a year from 2022 to 2024 and become too high to meet the climate plan by 2050.

In May, the IEA unveiled a plan to decarbonise the energy sector and urged investors not to finance new oil, gas and coal ventures. According to the organisation's latest report, projects already approved or developed before the pandemic will suffice to meet increased demand.

Analysts at Refinitiv Eikon believe the surge in demand has been triggered by extreme heat in the Northern Hemisphere and the increased need for electricity for cooling. Consequently, global gas prices have soared to multi-year highs in the past month. For example, the benchmark gas price in Europe in 2021 will be $9.5 (R696) per million British thermal units - the most since 2013, while in Asia it will surpass the 2014 value of $11 per million British thermal units.

A report published by the IEA says the gas industry must cut greenhouse gas emissions more aggressively to meet the Paris Agreement's targets of slowing global warming to 1.5 degrees Celsius. Failure to decarbonise fast enough will put at risk not only compliance with the treaty signed by 190 countries, but also the future of the planet.