The International Gas Union’s Global Gas Report 2024 shines a spotlight on a critical issue: a significant lack of investment in natural gas production and infrastructure, all while global demand for gas is expected to rise steadily over the next decade.
According to IGU’s report, global gas demand in 2023 increased by 59 billion cubic meters (Bcm) (1.5 percent relative to 2022 levels), driven by demand growth in Asia, North America, and the Middle East. According to IGU’s report, global gas demand in 2023 increased by 59 billion cubic meters (Bcm; 1.5 percent relative to 2022 levels), driven by demand growth in Asia, North America, and the Middle East. This growth is driven primarily by increased power demand for both residential and industrial sectors, as well as emerging technologies like artificial intelligence (AI), which require massive amounts of energy.
However, the report underscores a troubling trend: without sufficient investment in gas infrastructure, the security of supply will be at risk, exacerbating the energy market’s fragility and raising concerns about price volatility. This gap, paired with growing demand, could lead to a severe supply shortfall in the near future. IGU points out:
“Should gas demand continue to rise at the same rate at which it has in the last 4 years without additional gas production developments, a 22 percent global supply shortfall is projected by 2030. If demand continues to strengthen, the shortfall will be more pronounced.”
The potential for a supply church looms large. As countries increasingly rely on natural gas for power generation, alongside new energy-demanding technologies like artificial intelligence and electric vehicles (EVs), the strain on an already volatile energy system is set to intensify.
Natural Gas Supply Growth Faces Uncertainty, Despite Rising Demand
While the IGU report highlights global uncertainty around the effect of the energy transition on natural gas supply growth, the United States stands as a rare bright spot. Among the top three natural gas exporters – Russia (139 Bcm), Qatar (128 Bcm) and the United States (127 Bcm), America has seen the most rapid growth in its natural gas sector.
In 2023, the United States increased its natural gas production by 4 percent from 2022, while also being the top exporter of liquefied natural gas (LNG) in the world with 0.337 Bcm per day. In 2023, the United States increased its natural gas production by 4 percent from 2022, while also being the top exporter of liquefied natural gas (LNG) in the world with 0.337 Bcm per day. The U.S. LNG industry grew at an astounding rate – 12 percent – in 2023, and the country has doubled its natural gas production from 2005 to 2002, setting new records in natural gas production in 2022.
Despite this record-breaking increase, current policies threaten to curtail U.S. natural gas growth. Restrictions like the temporary LNG export pause are creating uncertainty and discouraging long-term investments in this industry. These measures cast doubt over a reliable energy source that has effectively reduced emissions globally.
IGU’s report stresses that the wide variety of “net-zero” scenarios reveals the level of uncertainty around the energy transition. With projections diverging widely, it’s critical that the world prepares for all potential outcomes.
SOURCE: IGU Global Gas Report 2024
Rising Global Demand: Emerging Drivers at Home and Abroad
While IGU’s report may raise questions about what the energy transition will look like, one thing is clear: demand for natural gas is on the rise. This is true both globally and within the United States, where the Energy Information Administration found that natural gas demand rose to 2.524 Bcm/d, an all-time high. The United States accounted for over 80 percent of the gas demand in North America, driven by the power, industrial, and residential sectors.
SOURCE: IGU Global Gas Report 2024
A new and unexpected driver of this sharp increase in natural gas demand has been artificial intelligence (AI). As AI data centers proliferate, their electricity consumption has skyrocketed. In fact, Goldman Sachs projects that AI’s share of total U.S. power demand could reach 8 percent by 2030. IGU further highlights that this AI-driven demand spike underscores the critical need for reliable, scalable energy sources like natural gas, which is well-positioned to support this growth.
SOURCE: IGU Global Gas Report 2024
However, these new sources of power demand are not limited to the United States. IGU’s report highlighted that there have been even sharper increases in energy demand in developing countries due to factors like electric vehicle use in China, increased air conditioning ownership in populous countries like India, and broader personal vehicle ownership across the developing world. Natural gas and coal have been competing to meet the growing demand in these countries.
Bottom Line: IGU’s report delivers one message loud and clear: the world needs more natural gas investment. The United States, while a leader in natural gas production and exports, faces a big complication if misguided policies continue threatening progress. Without sufficient investment in natural gas infrastructure, the world risks a supply shortfall that could derail the energy transition and push more countries toward higher-emission sources.
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