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Global Gas Report 2023

Foreword

Global Gas Report 2023 3

We are pleased to present the 2023 edition of the

Global Gas Report, which oers a signicant perspective on

the evolution of the global gas markets amidst a historical

global energy crisis. This crisis has been unfolding in parallel

with the energy transition towards a more sustainable future, as

the world has struggled to align with the decarbonisation goals

outlined in the Paris Agreement. Global emissions grew in 2022

with coal related emissions reaching an all-time high, due to gas

to coal switching amidst the gas price and supply crunch.

In 2022, the global gas markets experienced shifts demonstrating

remarkable exibility and exceptional resilience, in the face of

unprecedented shocks from supply and demand sides. These

shocks included the conict between Russia and Ukraine, which

exacerbated to the extreme the already tight global supply

situation and drove gas prices to the highest ever recorded, as

the supply of Russian pipeline gas to Europe dropped,

causing a pressing search for additional imports to the

continent. The unaordable prices were detrimental to many

developing countries, especially in South Asia, who suered

painful energy supply shortages and prolonged blackouts.

Nevertheless, by September 2023, European storage levels

exceeded required capacity, thanks to expanded import

infrastructure, massive additional LNG inows, and increased

production of domestic natural gas. While Europe’s

commendable rapid development of new infrastructure and

ecient utilisation of existing gas networks has been critical in

rebalancing the regional situation, we should not forget that it

does not eliminate the lingering supply risk, as global gas supply

remains just as constrained.

Undoubtedly, we saw greater focus on energy security by

governments, energy companies, and nancial institutions,

with investments in infrastructure for source diversication

and alternative energy sources. This helped to establish a new

equilibrium in the gas market, although it remains unstable and

seems already challenged by the new conict in the Middle East

between Israel and Hamas.

We are also continuing to witness a high level of uncertainty in

energy supply planning for 2030 and beyond. The substantial

discrepancies in major energy and gas demand and supply

outlook scenarios have introduced a signicant level of risk into

the gas markets going forward, raising questions about the

necessary investments to achieve a more stable equilibrium. We

delve into this issue in-depth in the report, exploring the ranges of

variability across dierent scenario assumptions and their

implications for supply security in the future.

Li Yalan

President,

IGU

Martin Opdal

Partner Consulting,

Rystad Energy

Stefano Venier

Chief Executive Ocer,

Snam

/94

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GlobalGasReport2023ForewordStefanoVenierWearepleasedtopresentthe2023editionoftheChiefExecutiveOfficer,GlobalGasReport,whichoffersasignificantperspectiveontheevolutionoftheglobalgasmarketsamidstahistoricalSnamglobalenergycrisis.Thiscrisishasbeenunfoldinginparallelwiththeenergytransitiontowardsamoresustainablefuture,asLiYalantheworldhasstruggledtoalignwiththedecarbonisationgoalsPresident,outlinedintheParisAgreement.Globalemissionsgrewin2022withcoalrelatedemissionsreachinganall-timehigh,duetogasIGUtocoalswitchingamidstthegaspriceandsupplycrunch.MartinOpdalIn2022,theglobalgasmarketsexperiencedshiftsdemonstratingPartnerConsulting,remarkableflexibilityandexceptionalresilience,inthefaceofunprecedentedshocksfromsupplyanddemandsides.TheseRystadEnergyshocksincludedtheconflictbetweenRussiaandUkraine,whichexacerbatedtotheextremethealreadytightglobalsupplysituationanddrovegaspricestothehighesteverrecorded,asthesupplyofRussianpipelinegastoEuropedropped,causingapressingsearchforadditionalimportstothecontinent.Theunaffordablepricesweredetrimentaltomanydevelopingcountries,especiallyinSouthAsia,whosufferedpainfulenergysupplyshortagesandprolongedblackouts.Nevertheless,bySeptember2023,Europeanstoragelevelsexceededrequiredcapacity,thankstoexpandedimportinfrastructure,massiveadditionalLNGinflows,andincreasedproductionofdomesticnaturalgas.WhileEurope’scommendablerapiddevelopmentofnewinfrastructureandefficientutilisationofexistinggasnetworkshasbeencriticalinrebalancingtheregionalsituation,weshouldnotforgetthatitdoesnoteliminatethelingeringsupplyrisk,asglobalgassupplyremainsjustasconstrained.Undoubtedly,wesawgreaterfocusonenergysecuritybygovernments,energycompanies,andfinancialinstitutions,withinvestmentsininfrastructureforsourcediversificationandalternativeenergysources.Thishelpedtoestablishanewequilibriuminthegasmarket,althoughitremainsunstableandseemsalreadychallengedbythenewconflictintheMiddleEastbetweenIsraelandHamas.Wearealsocontinuingtowitnessahighlevelofuncertaintyinenergysupplyplanningfor2030andbeyond.Thesubstantialdiscrepanciesinmajorenergyandgasdemandandsupplyoutlookscenarioshaveintroducedasignificantlevelofriskintothegasmarketsgoingforward,raisingquestionsaboutthenecessaryinvestmentstoachieveamorestableequilibrium.Wedelveintothisissuein-depthinthereport,exploringtherangesofvariabilityacrossdifferentscenarioassumptionsandtheirimplicationsforsupplysecurityinthefuture.GlobalGasReport20233ForewordWeemphasizethattheprolongedperiodoflowinvestmentinthedevelopmentofnaturalgasresourcesoverthepastdecadehasbeenamajorfactorcontributingtothecurrentsupplyshortage.Toachievebalanceinthemarketandtoensureaffordability,sustainability,andsecurityofsupply,newinvestmentsinnaturalgasarerequired,alongsideinvestmentsinlowcarbongaseousenergy,includingrenewablenaturalgas,hydrogenandcarboncaptureandstorage.Aswethinkabouthowmuchgaswewillneedinthecomingdecades,wemustn’tforgetabouttheemergingregionsoftheworldwherepopulationandenergyneedsarequicklygrowing.Thehugeeconomicenginesofthemostpopulouscountriesintheworld,China,andIndia,stillrelyheavilyoncoal,andthegascrisiscontributedtoanupwardtrajectoryofitsuse.Africaisthefastestgrowingregionoftheworldwiththeyoungestpopulation,600millionofwhichlacksaccesstopowerwhilemanyothersarefacedwithunstableenergysystemsandweakinfrastructurethatrequirereinforcementforanyenergytransitiontohappen.Importantly,whilenaturalgaswillcontinuetoplayapivotalroleintheenergytransitionfacilitatingthedecarbonisationoftheglobaleconomy,thegassectoritselfwillalsoundergoaprocessofdecarbonisation.Thisisimperative,andwecallforanaccelerationinthedeploymentofcarboncapture,low-carbon,andrenewablegases.Wealsostressthatdoublingdownontheeliminationofmethaneemissionsisrequiredtomakethistransitionpossible.Realisingtheseambitionswillrequirecollaborationwithinthegasindustryand,importantly,theimplementationofappropriatepolicytoolsandframeworks,includingemissionpricing,theremovalofbarrierstodeployment,andaccesstofinance.Tothisend,thisyear'sreportexploresfuturepathwaysfornaturalgas,low-carbon,andrenewablegasestodrivetheenergytransition,inconjunctionwiththeincreasingshareofrenewableenergyandstoragetechnologies.Amongstthepathways,weunderscorethecriticalimportanceofenergyconservationandefficiencytominimisedemand,withnumerousreadilyavailableopportunitiestopragmaticallyreducegasconsumptionwithouthurtingtheeconomy.Finally,aswehaveseeninaclearcaseexamplelastyearwhenitsavedEurope,LNGisacriticalenergysourcethatisflexible,abundant,andefficient.ThereportincludesahighlightsectionontheroleofLNGindeliveringessentialenergytransitionflexibilitynowandinthefuture,asitwillbecomeincreasinglynecessaryinadecarbonisedworld,whilealsoprogressingtodecarbonisingthefuel.So,weemphasizethatonlygasinvestmentscapableofdemonstratingtheirfuture-proofingandexcellenceinreducingmethaneemissionsarelikelytosucceed.Todaymorethanever,theworldrequirescomprehensiveenergyplanningtoachieveabetterbalancebetweensecurity,sustainability,andaffordability,becausewhensecurityandaffordabilityarecompromised,sustainabilityfadesoutoffocus.Hence,balancingthistrilemmaisessentialfortheglobalenergytransitiontotakeplaceandtoachievethedeepemissionsreductionnecessaryinthefightagainstclimatechange.Weinviteyoutodelveintothisreportandexplorethefuturepathwaysforthegasindustry,learninghowgaswillcontinuetoprovidetheassuranceofsustainable,secure,andaffordableenergyfortheworld.GlobalGasReport20234ContentsExecutivesummary61/Reviewofthemostturbulentyearinthehistoryofgas12•Highlights13•Developmentsingasdemand15•Supplyandgasinvestments19•Tradeflows21•Pricing30•Emissions34•Developmenttrendsoflowcarbongases38•Thehistoricalevolutionofenergypolicyprioritiesthroughtheenergytrilemmalens412/Lookingto2030andbeyond-assessingtheassumptionsaboutfuturegasdemandandoutlook45•Highlights46•Uncertaintyinfuturegasdemandscenarios47•Naturalgasinvestmentsstillcrucialinthelongterm50•Mostscenarioscallforhighernaturalgasproduction51•Futurebalancesoftradeflow53•Addressinguncertaintiesinfuturegaspolicies55•Casestudy:RoleofgasinChina'senergytransition583/Naturalgasandlowcarbongasesintheenergytransition61•Highlights62•Gasdecarbonisationframework63•Energyandgasdemandconservationconsiderations64•Gasasflexibleanddispatchablesourceofpower65•Casestudy:Futureroleofdispatchablesourcesinrenewablegrids67•Casestudy:TheusecasesforBESSsystems68•Capacityassurancemechanismsdemandedforenergystabilityandreliablepowergrids70•Possibilitieswithrenewableandlowcarbongases71•Reutilisingnaturalgas-firedpowergenerationinfrastructureforlowcarbongases76•Criticalroleofgasinheavyindustries76•Transiationofthebuildingsector78•Methaneemissionreductioninitiative804/LNGasacriticalconduitforanorderlyenergytransition82•Highlights83•TheroleofLNGinfutureenergysystems84•Small-scaleLNGforincreasedenergyaccessibiity84•FlexibleLNGtobalanceouttroughs86•RepurposingexisitingLNGinfrastructureforcleanandlowcarbonalternatives88GlobalGasReport20235ExecutiveSummary2022becamethemostturbulentyearinthehistoryofthegasindustry,markedbyunprecedentedsupplyandpriceshocks.In2023,assupplyremainstightanddemandoutlookuncertain,themarketenteredan“unstable”equilibrium,remaininghighlysensitivetoanymovementsoneithersupplyordemandside.TheenergytrilemmahascomeintosharpfocusandAsiaoffsetbystronggrowthinNorthAmerica.whentheworldwasremindedthatenergyFallingdemandintheregionshithardestbythesecurityandaffordabilityarenecessarytostayenergycrisispersistedduringH12023andwasonthecourseoftheenergytransition.Priortoprimarilydrivenbyindustrialslowdownandthecrisis,thepolicyfocuswaspositivelyondecreasedheatingdemandcausedbyamildsustainability;however,itwasalsodeprioritisingwinterinthenorthernhemisphere.Althoughsecurityandaffordability,asthosetwoseemedtobeglobaldemanddroppedby1.5%in2022,regionalassuredatthetime,untiltheyreturnedtobecomedemanddestructionwasalotmorepronounced.thepriorityin2022.AsevidencedbygrowingcoalEurope’sgasdemanddecreasedbyalmost12%useandemissions,sustainabilitycannotbefullyin2022year-on-year,inresponsetothesupplyrealisedwithoutthepillarsofsecurityandandpriceshockscomingontheheelsoftheaffordability,andthereforeallthreeneedtobeinRussia-Ukrainewar.Thegoodluckofaverymildbalance.Naturalgas,lowcarbon,andrenewable2022-23winterwasamajorcontributortoEurope’sgasesarecrucialcontributorsinthissense,astheyreducedgasdemand,togetherwithsignificantenabledevelopmentandindustrialisationinlossesinindustrialdemand,gastocoalswitch,anddevelopingregions,enhancesustainabilitybyrenewablesuptake.Spikesininternationalspotaddressingairqualityproblemsfromcoaluse,LNGpricescausedthedemandinAsiatofallbymakethegridsmoreresilienttosupportmassive18Bcm(1.9%)in2022comparedto2021.Significantscale-upofrenewables,andfostercompetitivedemanddestructionalsohappenedinSouthAsia,industrydecarbonisation.ForregionslookingtowherethepriceofLNGbecameunaffordable,transitiontorenewablesintheshortterm,gasanditscausingswitchingtocoalwhereverpossibleandinfrastructureserveaskeyflexibleanddispatchableleadingtoshortagesandblackouts.Forinstance,sourcestacklinglong-termintermittency,enhancingPakistanandBangladeshsawa12%and15%thereliabilityofgrids.reductioningasdemand,respectively.Onthecontrary,NorthAmericangasdemandgrewby4.8%Globalgasdemanddecreasedby1.5%in2022or49Bcmyear-on-yearin2022,anotableincreasecomparedto2021,withlargedeclinesinEuropedrivenprimarilybyincreasedgas-firedpowerFigure1:Globalgasdemand,splitbyregionFigure2:Globalgasdemandsectoryear-on-yearchange,splitbyregion(2021–2022)BcmBcm4,5003,9313,8364,0553,99560494,0001%4%1%4%1%4%1%4%403,5004%3,00011%4%4%4%20532,50011%12%11%2,00014%14%14%12%215%15%14%15%024%24%-20-10-1926%28%-40-23202120221,50023%23%MiddleEastEurope-60SouthAmericaAustralia1,000-80-6650027%28%NorthAfricaaliaericaAsiaAmMiddleRussiaericaAustruthAmEuropeEast020192020SoNorthAmericaAsiaPowerIndustrialResidentialOthersRussiaAfricaCommercialHeatTransportationFuelGasSource:RystadEnergySource:RystadEnergyGlobalGasReport20236ExecutivesummarygenerationaswellasresidentialandcommercialThecommencementofthewarinUkraineinapplications.TheNorthAmericanmarketprices2022createdaperfectstormcausinggasremainedlargelyisolatedandaffordable,duetoitspricestorisetothehighestrecordever,asthepredominantlyregionalnaturewithdomesticworldstruggledtoallocatethescarcegasproduction.Lookingat2023,fromJanuarytosupply.GaspricesexperiencedmultiplerecordAugust,theEuropeanUnion(EU)sawacumulativespikesaftertheonsetofthewarandtriggeredagasconsumptiondecreaseofroughly10%year-on-cascadeofgeopoliticalandenergysectoryear(bothaneffectfromindustrialslowdownandresponses.ThesituationwasfurtherimpairedtheEU’sintentionalswitchfromgastootherenergywiththeexplosionoftheNordStreampipelineinsources),whileChinasawgasdemandgrowbySeptember2022.Thepeakgaspricewasseenin5.4%year-on-yearduringH12023.lateAugust2022,whenpricesreachedanall-timehighastheNetherlands-basedTitleTransferFacilityGlobalgasproductionin2022stayedflatin(TTF)closedataround90USD/MMBtuandAsiancomparisonto2021withamarginal8.3Bcmuptick,spotLNGpricessurgedpast60USD/MMBtu.whichislessthana0.5%increaseyear-on-year.AsianpricesconsistentlytradedbelowtheTTF,Thefirsthalfof2023sawamildrevivalinglobalthankstoacombinationoffactorsthatincludesgassupply,yetthefinalannualresultremainsfluctuatingdemandduetoCovid-19-relateduncertain.Lookingbackat2022,curtailmentoflockdownsinChina,price-induceddemandGazprom’soutputinRussiawasoffsetbysupplycontractioninthesouth,southeastregions,andgrowthinNorthAmerica,whichgrewfrom1,160fuel-switching.Bcmto1,213Bcm,andintheMiddleEast,whichgrewfrom670Bcmin2021to687Bcmin2022.InGaspriceshavecooledin2023,largelyduetoEurope,incrementalproductionin2022largelycamedemand-sideadjustmentsinEuropeandAsia,yetfromNorway,whichhasbeenmaximisingoutputtheyremainabovepre-covidandpre-energycrisis(7%growthyear-on-year)toincreaseexportstothelevels.Theshortageofglobalsupply,whichwasrestofthecontinent.InAsia,gasproductionrosethekeyreasonbehindlastyear’sshocks,isstillmodestlyfrom696Bcmin2021to712Bcmin2022,there:themarketisinastateofafragileanddrivenmainlybyhigherproductioninChinaandunstableequilibrium.ThiscoolinghasbeendrivenCentralAsia.Bycontrast,Africaexperiencedfallingbydemandcontraction,marginalsupplygrowthgasproductionof1%(2.9Bcm)between2021andandinfrastructuredebottlenecking.Nonetheless,2022.Europe'sgrowingdependenceonLNGhasrenderedglobalgaspricesincreasinglyvulnerabletoglobal2022witnessedunparalleledturmoilingasLNGsupplyrisk,asshownduringrecentpriceprices.Sincelate2021gaspriceshadbeenmovementsduetothestrikesinAustralia.Attheelevatedandvolatile,andtradebalancestight.timeofwriting,thenewdevelopment,andtheFigure3:InternationalgaspricesReportsofsabotageontheNordStreampipelinesandthreatstoenergyUSD(real)perMMBtuinfrastructureasEuroperoiledunder120100concurrentheatwaves80OnsetofRussia-Ukrainewar60heightensconcernsover40Russianpipelinesupply2020220JMan-19ar-19May-19Jul-1S9ep-19Nov-19JMan-20ar-20May-20Jul-2S0ep-20Nov-20JMan-21ar-21May-21Jul-2S1ep-21Nov-21JMan-22ar-22May-22Jul-2S2ep-22Nov-22JMan-23ar-23May-23Jul-2S3ep-23HenryHubLNGNortheastAsiaTTFSource:RystadEnergy;Argus(LNGNortheastAsia)GlobalGasReport20237ExecutivesummaryongoingescalationoftheconflictintheMiddleEastFigure4:Globalenergyemissions,splitbyenergyissparkingfurtherpricevolatilityandtensioninthesourcemarket,highlightingonceagainhowinageneralcontextoftightmarkets,gashubpricesarehighlyMegatonnesCO2eq.sensitivetogeopoliticalturmoilandsupplydynamics.50,00040,00440,84541,81541,98239,92541,56242,029LNGhasbeencrucialinnavigatingthroughthe45,0008%8%8%8%9%9%9%gasmarketcrisis,playingakeyroleinoffsetting40,00016%theshortageinEurope,withtradegrowingby35,00017%17%17%18%18%17%4%.OverH12023,globalLNGexportssawa4.1%30,00036%year-on-yearincrease,despitevolatilitiesdueto25,00036%35%35%34%34%34%facilitymaintenanceandoutagesduringthe20,00040%Northernhemispheresummermonths.Inthe15,00039%39%39%39%40%40%contextofthegloballytightLNGsupply,whileitwas10,0002016instrumentalinkeepingthelightsoninEurope,theCoalunaffordablepricesleftsomecountriesinAsiainthe5,000dark.In2022,Europe’snaturalgasimports0shiftedfromRussianpipelinestowardsLNGleadingtoa69%increaseinitsLNGimports,201720182019202020212022reaching124milliontonnes(169Bcm)andmakingLiquidsGasOthersEuropethebiggestimportingmarket,absorbingasignificantshareoftheglobalLNGvolumebySource:RystadEnergyoutbiddingothercustomers.Roughlytwothirdsoftheadditionalvolumes(~30milliontonnes)cameTotalglobalenergyCO2emissionsin2022fromtheUnitedStates.InAsia,ChinareducedLNGcontinuedanupwardtrajectorywitha1.1%yearlyimportsfromAustraliaandtheUnitedStatesbyagrowth,reachinganotherrecord.Emissionsfromtotalof21milliontonnes,whileitincreasedcombustionofnaturalgassawaminordeclineinimportsfromQatarbyapproximately7.4million2022,totallingabout7.2giga-tonnesCO2-e,partlytonnes.InSeptember2023,therewasdisruptioninattributedtopricespikeswhichincentivisedgassupplyfromAustraliaduetorollingstrikes,gas-to-coalandgas-to-oilswitching.Anall-timeworkbansandstoppagesattheGorgonandhighinemissionsfromcoalwasreachedataboutWheatstoneLNGfacilities,potentiallyaffecting16.8giga-tonnesofCO2-e,despiteworldwidearound5%ofglobalLNGproduction,impactinginitiativestodiminishdependency.2022and2023volatilityandlevelofinternationalgaspricecontinuedthedecade-longtrendwithcoalhavingaindexes.40%shareofglobalpowersectoremissions,whileFigure5:GlobalcarbonpricingmapCanada’sCarbonEUETS:ETSandcarbontaximplementedTax:60USD/tCO2eETSorcarbontaxunderconsideration/development48USD/tCO2eArgentina’sCarbonTax:Australia(SafeguardMechanism):ETSimplementedotherpricingunder3USD/tCO2e11USD/tCO2econsideration/development~125USD/tCO2eETSimplementedby2030CarbontaximplementedCarbontaximplemented,ETSunderUSA’sCarbonconsideration/developmentTax:Source:RystadEnergy;WorldBank12–30USD/tCO2eNofederalcarbontaxbutsomestatesimposetheirowntaxesChile’sCarbonTax:5USD/tCO2eGlobalGasReport20238ExecutivesummarytheglobaleconomicenginesandmajorenergygasproductionlevelisexpectedtoreachaboutconsumerslikeChinaandIndiaincreasedtheircoal4,100Bcmin2023.Theseoutputvolumesareusageandapprovednewcoalplantstomitigateprojectedtodeclinetoabout3,100Bcmin2030energysecurityrisks.Coalusagegrowthshowsduetoassetmaturationandnaturaldecline.Thetheimportanceofstabilityinglobalgasmarketsinprojectionindicatesafurtherdeclineto1,850Bcminminimisingemissions.InH12023,lowergasprices,2040,followedbyadecreasetojustunder1,000Bcmnuclearrecovery,andpowerproductionfromin2050.renewableenergysourceshavereducedcoalconsumptionandemissions,especiallyinEurope.Amidsttheenergytransitiontargetsandshiftingsupplydynamics,decarbonisationpolicieshaveAnalysisoffuturepotentialtrajectoriesofglobalbeendisproportionatelyfocusedonthesupplygasdemandfromawiderangeofexistingside,whileenergyconservationanddemand-energytransitionoutlookstowards2030andresponsehavebeenoverlookedaspowerfulbeyondrevealsunprecedenteduncertaintyandtoolsforemissionsreductionthroughreducingillustratesthatcontinuedinvestmentsintheoverallenergyusage.Proactivedemandmanagementnaturalgasvaluechainareneededtocopeplanningwillpromoteamoreefficientuseofenergywithnaturalsupplydecline,globaldemandandsimultaneouslyreducetightnessoftheglobalgasdynamics,andlikelygrowthinseveralregions.marketbyreducinggasdemandinaneconomicallyandGasdemandscenarioshaveimportantimplicationsindustriallysustainableway,whileeffortstobolsterforpolicydecisions,asthesupplywillneedtobesupplythroughoptimisationmustoccurinparallel.developedaheadofdemand.Forthisreason,Theseactionscanimproveresourceavailability,comprehensiveandbalancedenergyplanningisshoreupenergysecurity,andstabilisetheenergyneededtoavoidfurthersupplycrises.Otherwise,thelandscape.Measuresfallinto“preventive”andrequirednaturalgassupplymaynotbedevelopedto“reactive”categories,respectivelymanagingmeetdemandresultinginheightenedemissionlevelsconsumptionproactivelyandrespondingswiftlytoandincreasingfrequenciesofblackouts.Restoringaperiodsofresourceconstraintsorgridstress.sustainablebalanceintheglobalgasmarketisimperativeandrequiresaddressingtheexistingTheaccelerationoflowcarbongaseousenergysupplyshortfall,anoutcomeofaprolongedisanessentialbuildingblockoftheenergyunder-investmentperiod.Investmentlevelsingastransition.AbatednaturalgaswithCCUS,greensupplydevelopmenthavebeenreducedby58%inandbluehydrogen(includingderivativeslikecleantheperiodbetween2014and2020,andonlystartedammonia),biomethaneande-methane,willplayantomarginallyrecoverin2021.Withoutadditionalincreasinglysignificantroleinanachievableandjustinjections,thecurrenttotalexistingandapprovedtransition,offeringaviabledecarbonisationoptioninFigure6:Globalgasdemandscenariosfromvariousinstitutionsversusoperational,approvedanddiscoveredassets(2010–2050)1Bcm6,00020152020202520302035204020452050IEEJ5,000AbandonedProducingDiscoveryReferenceCase4,0003,000RystadEnergy2,0002.2-degrees1,000StatedPolicies0(2022)2010RystadEnergy1.9-degreesAnnouncedPledges(2022)RystadEnergy1.6-degreesNetZero(2022)RystadEnergy1.5-degreesUnderdevelopmentSource:IEA;IEEJapan;RystadEnergy1Allhistoricalandforecastedvaluesarescaledtobeidenticalin2022toaccountfordifferentheatingandcaloricassumptions.GlobalGasReport20239Executivesummarymanyapplicationssuchaspowergeneration,Figure7:Cleanhydrogencumulativecapacitybyreactant/feedstockneed,heating,andheavystatus,includingpre-FIDprojects(2010–2030)2transport,providedtheyareaccessibleinsufficientquantitiesandarecost-effective.DuringtheMilliontonnesofBlue/GreenH2transition,blendingcanbeperformedbetweenmethaneandlowcarbonandrenewablegases,to502015202020252030reduceemissions.Althoughthereismomentumin45Operationallowcarbonandrenewablegassupplygrowth,40reinforcedsignificantlybytheenergycrisisand35ambitiousnewenergytransitionpolicies,thescaleof30currentsupplyprojectsremainsminimalincontrast25tothepressingneedtoaccelerateproductionand20infrastructureavailability.Attheendof2022,the15globalsupplycapacityoflowcarbonhydrogenstood10at3.2milliontonnesperannum(MTPA),withmostofthecapacitycomingfrombluehydrogen,and5biomethanestoodcloseto7Bcm.However,recent0policyintroductions,suchastheInflationReductionAct(IRA)intheUnitedStatesandtheEuropean2010hydrogenbank,haveimprovedtheeconomicviabilityofallhydrogentypes,supportingtheaccelerationofFID/UnderConstructionPre-FIDdesiredhydrogensupplies.EuropeandtheUnitedStatesmaintaintheirleadingpositionsinbiomethaneSource:RystadEnergyproduction,producingabout6.1BcmcombinedasofSeptember2023–Europehasambitionstoincreaseintermittentrenewableenergysources,theirbiomethaneproductionto35Bcmby2030,gridscanalsobebalancedwithdispatchablegascomparedto2021levelofaround3.5Bcm.generation.InAfrica,evenregionswithhighlevelsMeanwhile,China’sbiomethanecapacitybuildoutofaccesshaveweakandunstablegrids,frequentlyhasfallenshortofprojections.CCUSisexpectedtosufferingfromoutages.Theseelectricitygridsgrowsevenfold,fromaround50MTPAin2023towouldrequireadditionalreinforcementandflexible370MTPAby2033.capacitytointegratelarge-scalerenewableswithoutriskingacollapse.ThegrowthofrenewableenergysourceswithinthepowermixisdirectlycorrelatedwithagrowingChinaisthelargestenergyconsumerintheworldneedforreliable,dispatchable,andflexibleandisexpectedtoremainanaturalgasdemandcapacityresourcestobalancegridsduringperiodspowerhouse,asgasrepresentsakeypillarofofrenewableenergysourcesintermittency.itsdecarbonisationpolicy-forecastingthatgasGas-firedgenerationisacriticalsourceoflong-importswillmakeupasignificantshareofitsdurationflexibility,asopposedtoshort-termfuturegasneeds.In2022,naturalgasrepresentedbalancingwhichcanbeeffectivelydeliveredthrough8%ofChina’senergymixwhilecoalsupplied56%ofbatteries.Gasisthemostcost-effectivegridthecountry’senergyconsumption.Chinaplanstoresilienceresource,andhighrenewableenergyincreasenaturalgas’shareinitsenergymixsourcescapacityadditionswilllikelyrequirepairingsignificantly.Naturalgaspowergenerationiswithgas-firedgenerationcapacitytomaintaingridexpectedtoincreasealongsiderenewableenergysecurity.Thelevelofgas-firedgenerationwouldvary,generation,from0.3PWhhoursin2022to0.6PWhbasedonthepaceoftheenergytransitioninin2030and0.8PWhin2040.Theadditionalgas-fireddifferentcountriesandregions.Emergingcapacityactsasabackupanddispatchableenergyeconomies,suchasthoseinAfricawheregeneralsourceintheeventofashortageofrenewablepowerenergypovertyisstillhigh,andinAsiawherecoalgeneration,enablingChinatocallonastablesourceplantsstilldominate,gaspresentsastableandofenergywithquickramp-upcapability.China’ssustainablealternativetoenergiseeconomieswhileexistinggas-firedpowergenerationcapacityofloweringthecarbonintensityofthegrids.When115GWisprimedtonearlytripleby2040to330thesecountriesmovetowardsadoptionofGW,whichwillequaltoaround380Bcmofgasperannum.2MostblueandgreenhydrogencapacitiesarelocatedinChina,SaudiArabia,andtheUnitedStatesofwhichapproximately96%involvegreenhydrogen.One-thirdofthepre-FIDpipelineisbluehydrogen,whichsignalsacallforfurthernaturalgasdemand.Giventhesubstantialsizeofthepre-FIDpipelineandthegradualpaceofFIDdecisions,theprogressoflowcarbonhydrogenprojectshasbeenrelativelyslow.GlobalGasReport202310ExecutivesummaryEffectivecapacityassurancemechanismswillbeaccessibility.ThedynamicdistributionmodesofimperativetosustainarapidandorderlyenergyLNG,centringprimarilyaroundshipping,butalsotransition,requiringplanningandmarketincreasinglytrucksinsmaller-scales,functionasattributestopromotethestabilityofelectrical"virtualpipelines",supplyingdevelopingregionsandgriddevelopment.Capacitymechanisms,akintoremoteareaswherepipedgasisnotaviableoption.insuranceforgridstability,aredesignedtoensureThisoftenreducesemissionsandimprovesairadequatesupplybeingavailabletomeetdemandqualityduetothereplacementofhigher-emittingpeaks.Short-termcapacitymechanismscompensatesourceslikecoalandgasoil.TheflexibilityofLNGelectricitygeneratorsforbeingavailableinreservehasbeendisplayedonnumerousoccasions-andon-call,evenifnotalwaysoperational.Long-termparticularlyduringthewarinUkraine,whenthemechanismscaninvolvecentralplanningandUnitedStatesincreaseditsexportstoEuropebyprocurements,ormarket-basedcapacityauctionsto159%from2021to2022.LNGiseffectiveatsecureinvestmentforfuturesupplyinanticipationofdemocratisingenergyindevelopingregionsanddemandgrowthneeds.Thelatterisparticularlyinremoteareaswithscarcenaturalresources.Theimportantbecauseofthelongleadtimerequiredforadoptionofsmall-scaleLNG(ssLNG)bearslowerbuildingnewelectricitygenerationandnetworkcapitalinvestmentsandshorterleadtimes,offeringinfrastructurethatcannotreactquicklyenoughtonewopportunitiesforthegasproducingareasofthereal-timemarketsignals.world.LNGhasunmatchedscalabilityandflexibility,Newinfrastructureinvestmentsshouldbewhichmakesitfundamentalasacriticalglobaldesignedtoensurecompatibilitywithlowcarbonenablerofresiliencythroughtheenergyandrenewablesgases.Futureproofinginvestmentstransition.ThesurgingshareofrenewableenergyingasandLNGinfrastructurewillensureprojectcomingthroughtheenergytransitionwilllongevity,guaranteeinglong-termassetuseinintensifytheneedforresponsiveanddispatchableparallelwiththegrowingadoptionoflowcarbonandbalancingsources,withnaturalgas,andlowcarbonrenewablegases.Forinstance,biomethaneandandrenewablegasesplayingakeyroleforlongsyntheticmethanecanbeliquifiedandcanleverageintermittencyandpeakperiods(whilebatteriesareexistingnaturalgasinfrastructure.ThepotentialofexpectedtofulfilmostofthebalancingneedsforutilisingexistingLNGinfrastructureforliquidshorterdurationperiods).Inadditiontothehydrogencarrierslikeammoniaorliquidhydrogendispatchablecharacteristicsofnaturalgas,itsisgainingtractionwithrisinginvestmentsandR&DconversiontoLNGintroducesscalabilityandefforts.GlobalGasReport2023111/Reviewofthemostturbulentyearinthehistoryofgas1/Reviewofthemostturbulentyearinthehistoryofgas2022broughtaboutaseismicshiftintheglobalcontinuingintoSeptember2023.Theglobalgasgasmarket,predominantlyduetothedramaticmarkethassustainedthroughthe2022emergencyreductionofRussianpipelinegasexportstoEurope.andisnowinthesecondhalfof2023enteringintoGaspricesinEuropeandAsiasoaredtohistoricaphaseofunstableequilibrium–pricesremainhighs,withasignificantsurgeinEuropeanLNGelevatedandhighlyfragile,butmuchlowerthandemandpushingpricesabovethoseofAsianwhatwasobservedin2022.benchmarks,therebyestablishingthemasthehighesteverrecordedworldwide.Domestically,Inthischapter,wedelveintothedevelopmentsthatatthewholesalelevel,naturalgaspriceswereatunfoldedfromthesecondquarterof2022untilhistorichighsinallregionsexceptNorthAmericaSeptember2023,offeringacomprehensiveoverviewandRussia.2022provedtobeayearthatwouldandanalysisoftheforcesatplayandtheirimpactonleavealastingmarkonthegassector,withtrendstheglobalgasmarket.Highlights•Globalgasdemandwas3,995Bcmin2022,havingdecreasedbyabout60Bcmor1.5%year-on-year,mainlyduetopricesspiking.Thefirsthalfof2023sawmixeddemandsignalswithgrowthmainlydrivenbytheUnitedStatesandChina,offsettingmajordeclinesinEuropeandotherpartsofEastAsia.In2022,reducedRussiansupply,amidstanalreadytightmarketwhichwassetin2021,ledtorecordpricehikescausingincreasingfuelswitchingandindustrialshutdowns,therebyreducingdemand.Growthinrenewableenergyandadipingasuseforheatingandcoolingthankstomilderweatherconditionsin2022furtherreducedoverallgasdemand.•Globalgasproductionin2022wasrelativelyflat,increasingbyabout8.3Bcmorlessthan0.5%.Thefirsthalfof2023sawamildrevivalintheglobalgassupply,yetthenetresultoftheyearisstilluncertain.Theflatdevelopmentin2022wasprimarilydrivenbysignificantreductionsofabout87.2BcminRussiangasproduction,offsetbysubstantialincreasesinNorthAmericaofabout53.1Bcm.Table1:Keyyear-on-yearchangesinglobalgasmarketfrom2021-2022ConsumptionProductionGrossimportsGrossexportsRegionsBcm%changeBcm%changeBcm%changeBcm%changeAsia18.92.0%16.42.4%33.27.1%6.73.9%Europe66.111.9%8.63.8%59.011.5%79.838.8%NorthAmerica49.44.6%53.14.6%2.91.7%13.15.0%SouthAmerica10.46.6%4.12.8%14.535.9%1.65.6%Africa5.23.1%2.91.1%1.813.5%6.76.4%MiddleEast2.60.4%16.92.5%8.17.7%5.53.2%86.434.2%Russia23.34.9%87.212.3%7.046.5%0.70.6%Australia0%0.90.1%World1.73.3%0.70.4%0.00.1%59.81.5%8.30.2%0.9Source:RystadEnergyGlobalGasReport2023131/Reviewofthemostturbulentyearinthehistoryofgas•2022sawasteepreductioninavailablepipelinegasinEurope,resultinginanapproximate65%increaseinLNGimportstocompensateforlostvolumes,withthistrendcontinuinginto2023.AbruptchangesofRussianpipelineflowstriggeredfiercecompetitionforsupply,mainlybetweenEuropeandAsia,causingpricestospiketoall-timehighs.InEurope,thesuddenincreaseinLNGimportsledtoregasificationfacilitiesbeingoverutilisedoverextendedperiodsandsignificantinter-regionalpricedifferentialscausedbyinfrastructurelimitations.Ontheexportingside,finalinvestmentdecision(FID)activity,especiallyNorthAmerica,showedstronggrowthinliquefactionfacilitiesforfurtherexports.ConsideringREPowerEU’srequirementtomaintainminimumgasstoragestocks,Europesawrobustgrowthingasstoragebuildup,remainingstronginSeptember2023.Globally,LNGSPAcontractssignedin2022demonstratedasustainedemphasisinthemarketonlong-termcommitments,whileEuropecontinuedtoprefershort-termmechanisms.•In2022,gaspricesreachedunprecedentedlevelsandexhibitedextremevolatility,withtheTTFandLNGNortheastAsianpeakingataround90USD/MMBtuand60USD/MMBturespectively.Althoughvolatilityhastoneddownin2023,theTTFstillregistersroughlythreetimeshigheraveragepricesandfivetimeshigheraveragevolatilitycomparedtopre-covidandpre-energycriseslevelsin2019.Therewasavisibledeviationbetweengaspricesinsomeregionsduetoinfrastructureconstraintsinmovingthegasfromabundantareastothoseindemand.Thesoaringgaspricesseenin2022inflictedseveredamageonnumeroussectors,resultinginindustrialshutdowns,economicdownturns,andpowerblackouts,withtheconsequencesstillbeingfeltinSeptember2023.Gaspricesremainfragilewithlimitedsupplycomingonstreaminthecomingyears.•DuetothehighgaspricesinEuropeandAsia,theeconomicattractivenessofcoalimprovedin2022,resultinginincreasedconsumptionthroughgas-to-coalswitchingandacorrespondinggrowthinemissions.Europe’sandAsia’scoalconsumptionforpowergenerationincreasedby1.3%and2.6%,respectively.ThepricespikesinAsiaandEuropecausedtheAsianspotandTTFtoraiseabovetheirrespectivegas-to-coal-switchingbandsforthemajorityof2022,makingcoalalotmoreattractive.Inthecontextofpower,coalconsumptionincreasedevenasoverallpowerconsumptiondeclined.Subsequently,theemissionintensityofglobalpowerproductionincreasedin2022.Thisoccurreddespiterecordgrowthinrenewablesgeneration,withoutwhichtheincreasewouldhavebeenevenworse.LeadinguptoSeptember2023,theeconomicjustificationforcoalswitchinginAsiaandEuropehasweakenedasgaspriceshavedecreased.•Whilelowcarbongasesarestillsmallinscale,growthhasbeenimproving,albeitstillfallingsignificantlybehindtheneededdecarbonisationtrajectory.Thus,aggressiveactionisrequiredtoscaleupthesupplyoflowcarbongasesifthesaidtargetsaretobemet.Globally,policieshavebeenimprovingtheeconomicviabilityofallhydrogentypes,althoughgreenhydrogenisgenerallythemostfavouredbypolicysupportmeasures.Whilegreenhydrogensawitsnameplatecapacitydouble,bluehydrogensawlimitedgrowthconsideringspikingnaturalgasprices.EuropeandtheUnitedStatesmaintaintheirleadingpositionsintherenewablenaturalgasorbiomethaneproduction,whereasChina’scapacitybuildoutfallsshortofgeneralprojections.InSeptember2023,biomethaneaccountedforapproximately0.2%ofthenaturalgasglobalmarketshare,whichfallssignificantlyshortofthepotential.•ThesupplyshockcomingoutoftheRussia-Ukrainewarremindedtheworldabouttheneedtore-focusonenergysecurityandunderscoredtheneedforreliableanddiversifiedenergysources.Movingforward,amoreintegratedapproachonthethreedimensionsoftheenergytrilemmaisessential.Thedevelopmentsobservedin2022andthefirsthalfof2023demonstratethatwhenenergysecurityandaffordabilityarecompromised,short-termcrisisresponsemeasuresprioritisesecurityoversustainability.Hence,gasemergesasakeyenergysourceneededtobalancetheenergytrilemmatowardsanequilibriumencompassingallthreedimensions:securityofsupply,sustainability,andaffordability.Notonlyisgasabundantandaffordablewhentimelyinvestmentsaremade,butitalsohasalowercarbonfootprintthanotherfossilfuelalternativesevenwhenunabated.Moreover,thegassystemcanbefurtherdecarbonisedwiththeuseofcarboncaptureandwiththescalingofbiomethaneandotherlowcarbongases.GlobalGasReport2023141/ReviewofthemostturbulentyearinthehistoryofgasDevelopmentsingasdemandFigure8:Globalgasdemand,splitbydemandFigure9:Globalgasdemand,splitbyregionsectorBcmBcm4,5003,9313,8364,0553,9954,5003,9313,8364,0553,9954,0003%3%3%3%3%3%4,0001%4%1%4%1%4%1%4%3,5005%3%3%5%3,5004%3,0006%5%6%4%3,00011%4%4%4%2,5008%6%7%6%2,50011%12%11%8%8%2,00014%14%14%12%14%15%15%15%15%15%14%15%27%24%24%2,00027%28%28%34%26%28%1,5001,50023%23%2022202120221,000Others1,000MiddleEastEuropeFuelGasSouthAmericaAustralia34%34%34%50027%28%5002020202102020IndustrialResidential20190HeatTransportationAsia2019NorthAmericaAfricaRussiaPowerCommercialSource:RystadEnergySource:RystadEnergyGlobalgasdemanddecreasedbyrenewableenergyandadipinexportstoEuropeofabout87.2about60Bcm(1.5%)overallingasuseforheatingandcoolingBcmand79.8Bcmrespectively.2022comparedto2021,althoughinmanypartsoftheworldduestillbeingabovethepre-Covidtomildweatherconditions.InDespitearelativelystablegasyear2019.Themaindriversoftermsofprices,theTTFgaspricedemandsectormixonaglobalthedecreasewereincreasedgas-reachedanall-timehighin2022scalein2022,regionalchangesinto-coalswitchingandindustrialofabout90USD/MMBtu,mainlygasconsumptionfrom2021wereshutdownsinresponsetohigherattributabletosignificantreduc-evident.Thedemanddeclineinprices,coupledwithgrowthintionsinRussianproductionand2022wasparticularlypronouncedFigure10:WorldmapcolouredbyregionsRussiaEuropeNorthAmericaAfricaMiddleEastSouthAmericaAsiaAustraliaSource:RystadEnergyGlobalGasReport2023151/ReviewofthemostturbulentyearinthehistoryofgasFigure11:Gasdemandsectormixin2022,splitbyFigure12:Globalgasdemandsectoryear-on-yearregionchange,splitbyregion(2021–2022)PercentoftotaldemandBcm100%604990%4080%70%205360%50%240%30%020%10%-20-10-190%erica-23orthAmN-40PowerCommercial-60-80-66EuropeAfricaEasttraliaericaAsiaussiaEuropeericaAfricaeEaststraliamericaAsiaussiadleAusthAmRiddlRMidSouAmAuthANorthMuSoIndustrialResidentialOthersPowerIndustrialResidentialOthersHeatTransportationFuelGasCommercialHeatTransportationFuelGasSource:RystadEnergySource:RystadEnergyinEurope,causedbymarketmediarygoods.Consequently,bygapwaspartiallymetbyrobustdisruptionsresultingfromthemid-2022,Germany’schemicalgrowthinnon-hydrorenewa-Russia-Ukraineconflict.Further,industryreportedly,accordingbles,coalswitching,andthemildAsia'spreviouslyrobustgrowthtotheEuropeanCentralBank,wintertemperatures,resultingintrajectorysawstagnation,primar-beganimportingammoniainsteadunchangedgasdemandforpowerilycausedbyelevatedgaspricesofproducingitdomestically.in2022.andsubsequentdemanddestruc-Furthermore,Europe’sextensivetion.Bycontrast,NorthAmericagasdistributionnetworksforThesubstantialreductioningassawanotableincreaseinyear-on-residentialandcommercialbuild-demandobservedinEuropeyeargasdemandin2022.ingssawasubstantialdecreaseduring2022raisesthequestion:isingasdemand,accountingforthedeclinefleetingorindicativeEuropesawthesteepestdemandabout55.6%oftheregion’stotalofalastingtrend?reductiongloballyin2022ofdemandcontraction.Accordingtoabout66.1Bcm,equallinga12.0%theIEA,over60%ofthedecreaseAlthoughsomeprice-drivencontractionfrom2021.Themajorinresidentialandcommercialtrendssuchasindustrialshut-driversofthisreductionwerere-buildingscanbemostlyattribut-downsarereversible,2023Sep-ducedindustrialconsumptionandedtomildwintertemperatures,tembershowsnoclearindicationdecreasedresidentialandcom-whiletheadoptionofabout2.8ofrecoveryinthegasdemandbymercialusage.AlthoughindustrialmillionheatpumpscoupledwithEurope’sbiggestconsumingna-consumptionistypicallystable,increaseduseofelectricitytoheattions,eventhoughthecostsitua-elevatedgaspricesin2022causedbuildingsreducedthegasdemandtionhasimproved,andpriceshaveindustryshutdownsinEurope,byanadditionalestimated1.4retreated.However,thepricesaccountingforabout41.5%oftheBcm.Despiteincreasedelectrici-remainabovepre-crisislevelsandregion’stotaldemandcontrac-ty-basedheating,Europe’spowerfearofreturnedvolatilityisstilltion.Forinstance,inSeptembersectorfacedacompoundedpresent.Gasconsumptioninthe2022,YaraInternational,aNor-supplychallengein2022.Inaddi-EUfromJanuarytoAugust2023wegianchemicalcompanyandationtothegassupplyconstraintwasaround215Bcm,areductionmajorglobalfertilizerproducerstemmingfromRussianpipelineofabout25Bcmfromthesameannouncedreductionsinammoniacurtailments,Europeexperiencedperiodin2022.WhencomparedproductioninEuropeduetorisingadropinnuclearpowergener-withEU’spre-crisisgasconsump-gasprices.Additionally,somein-ationduetofacilitydowntime,tioninthefirsteightmonthsindustrialplayersadoptedthestrat-aswellaslimitedhydropower2021,thedecreaseisevenmoreegyofswitchingfromproducinggeneration.Thesefactorstogeth-significant,totallingover53Bcm.themselvestoimportingcheaperercreatedsignificantstressinHowever,itisstilltooearlytofinishedcommoditiesandinter-thepowersector.Regardless,thedefinitivelydeterminewhetherGlobalGasReport2023161/ReviewofthemostturbulentyearinthehistoryofgasFigure13:EU27monthlygasconsumptionBcm706050402022EUgasconsumptioncontinuedtoMin/Maxtrail2022figures2019-21range30202023consumptionhasconsistentlybeenbelowthe2019-21range2023100JanFebMarAprMayJunJulAugSepOctNovDecSource:Eurostat;RystadEnergythereductionrepresentsaRussia'snaturalgasdemandforPakistanfacedissuesrelatedtoitspermanentshiftindemand.powergenerationcanprimarilyolderoil-firedpowerplants,whichThereisahighdegreeofbeattributedtotheexpansionofarelessefficientandmorecostlyuncertaintysurroundingwhethernuclearenergyandthedevelop-tooperatecomparedtonewerthedecreaseddemandissolelymentofvariousrenewableenergygas-firedplants,whileBangladeshdrivenbypricingfactors,orifitsources.facedconstraintsduetoshort-signifiesamoreenduringtrend.agesinalternativefuelsources.Nevertheless,theevidenceInAsia,gasdemandfellbyaboutUltimately,thesechallengesobservedupuntilAugust20232.0%from963.3Bcmin2021toresultedinpowerblackoutsinindicatesthattheremaybelasting944.4Bcmin2022,mainlydrivenbothcountries,dealingaharshchangesingasdemand.byhighLNGprices,prolongedblowtotheireconomiesandlivingpandemic-relatedlockdownsconditions.Russiatoosawademandreduc-inChina,andamilderwinterintionof23.3Bcmor4.9%,largelyNortheastAsia.ThehighLNGInChina,continuedlockdownattributedtoamildwinter3.Asprices,drivenbyasurgeinLNGmeasuresandreducedgasseeninFigure12,Russia’sgascon-demandinEuropetoreplacedemandfromprice-sensitivesumptionmixstandsoutsinceitsRussianpiped-gassupplies,industrialplayersresultedinaheatingreliesheavilyongas-pow-triggereddemanddestructionofdeclineofnaturalgasdemanderedcentralisedheatingsystems.LNGinAsia.Itpushedcountriesby0.8%from370BcmtoAlthoughEuropeandpartsofAsiawithrelativelyweakpurchas-367Bcm,whichisthefirstdrophavesimilarsystemsinoperation,ingpower,likeBangladeshandingasdemandin30years.mostregionsapartfromRussiaPakistan,toattempttoswitchtoFurthermore,themildwinterinpredominantlyrelyonelectricityhighlyemittingenergysourcesNortheastAsiareducedspaceanddistributionofpipedgasandlikefueloilandcoal,resultinginaheatingrequirementsandlocalheatboilersforheating.12%and15%reductioningasdampenedgasconsumption,Consequently,duringthewarmdemand,respectively.Thiscontributingtotheoveralldeclinewinterof2022,Russiawasthechallengepersistedfrom2022inAsia’sgasdemand.RecentonlyaffectedregiontoseeandcontinuesintoSeptemberdevelopmentsinAsiahavesignificantreductionsingas2023,particularlyinmeetingsignalledpossibledivergenceusageforsuchheatingpurposes,powerdemand.AlthoughPakistanbetweenpoliciessupportingaccountingforabout71.1%ofandBangladeshcontemplatedgrowthincoaltogasswitchingtheregion’stotaldemandturningtoalternativefuelstoandthecontinuingexpansionofcontraction.Thedeclineinsustainpowergeneration,coal.In2022,Chinaapproveda3TransparencyonRussianfigureshavebeenreducedposttheonsetoftheRussia-Ukrainewar,yetRystadEnergybelievesthefallisrealandattributabletoheatingandpower.GlobalGasReport2023171/Reviewofthemostturbulentyearinthehistoryofgasrecord-breaking86GWofnewlockdowns.China’stotalLNGandincreasedrivenprimarilybyin-coal-firedplants,whileotherpipelineimportsincreasedbycreasedutilisationofgasforpow-countrieslikePakistanpledged5.8%from2022,reaching76Bcm.ergenerationaswellasresidentialtoquadrupleitscoal-firedNonetheless,itsimportsarestillandcommercialapplications.Ingenerationfrom2GWin2022tolowerthanthe81Bcmpre-crisisthepowersector,thiswaslargely10GWby2030.Thiswouldlevelinthefirsthalfof2021,dueduetotheretirementofcoal-undermineenergytransitiontoChina’seffortsinboostingfiredplants,relativelyhighercoaltargetslike“peakemissionsdomesticgasproductionandprices,andbelow-averagecoal2030”forChinaand“50%amildeconomicrebound.Instocks.Consequently,therewasareductionofemissionsby2030”contrast,JapansawgasnoticeableshifttowardsincreasedforPakistan,whichrequiregasconsumptionandLNGimportsutilisationofgasforpowergen-toprogresstowardsdecarbonisa-decreasing9%to48Bcmin2022eration.Additionally,theUnitedtiongoals,andatthesametimeand14%to33Bcmyear-on-yearStatesexperiencedrecord-highmeetindustrialisationneeds.Thisinthefirsthalfof2023.In2021,temperaturesinsummerof2022,hasresultedinmuchuncertaintybeforetheRussia-Ukrainecrisis,boostingpowerdemandforcool-surroundingAsia’sfuturegasJapan’sLNGimportsamounteding.Intheresidentialandcom-demandandtheoverallenergyto53Bcm.Thedropfrom2022mercialsectors,colder-than-aver-landscape,astheswitchbackisattributabletoJapan’sagetemperaturesinJanuary2022tocoaldeviatesawayfromexpandednuclearandsolarresultedinincreaseddemandsustainabilityandcouldgenerationcapacityandahighfromgasboilersforspaceheat-potentiallysetemerging5.4milliontonnesinventorylevelinginresidentialandcommercialeconomiesinAsiabackintermsbyJune2023.Beforethe2023/24buildings.In2023,thegasmarketofindustrialisationandriskwinterseason,Japan,andSouthexperiencedadentindemandpri-significantdelaysinlocalKoreaplantohaveanaddition-marilyinresidentialandcommer-decarbonisationeffortsandalcombined6GWofnuclearcialsectorsforheatingduringtheglobalnet-zerotargets.capacityonline,furthersofteningmildwinterinthenorthernhemi-theirdemandforLNGduetolesssphere.Conversely,therewasalsoInthefirsthalfof2023,Chinadependenceongas-firedpowerariseinelectricitygenerationforsawgasdemandrecoveringandgeneration.coolingwhenheatwavesaffectedgrowingat5.6%year-on-yearlargepartsofthesameregion.Fortoreach194Bcm,largelyNorthAmerica’sgasdemandbyexample,intheUnitedStates,theattributabletofullyreopeningcontrastgrewby4.8%or49BcmgasconsumptionintheresidentialitseconomyfromtheCovidyear-on-yearin2022,anotableandcommercialsectorsdroppedFigure14.1:GlobalpowermixsplitbyenergyFigure14.2:2022globalpowermixbyregion,sourcesplitbyenergysourceTWh27,47627,34628,66229,30540,00035,0002%3%0%2%2%0%2%2%0%2%2%0%30,00010%10%10%9%25,00010%12%13%14%20,00016%15,00016%16%15%10,00023%23%22%22%5,00036%34%35%34%02020202120222019GasHydroCoalNuclearBioenergyRenewablesOther(non-renewable)LiquidsSource:RystadEnergySource:RystadEnergyGlobalGasReport2023181/Reviewofthemostturbulentyearinthehistoryofgasby9%year-on-yearto3.2Bcmandindustrialsectorsandremainedlargelystableinthefirstquarter,whilecon-ongoingeffortstodemocratisebetween2021and2022,eveninsumptioninelectricitygenerationenergyandgastobolsterthefaceofasubstantialincreaseroseto33.2BcminJune,a2.3%economicdevelopment.IntheininstalledrenewablecapacityincreasefromJune2022.MiddleEast,gasdemandandgas-to-coalswitching.increasedmodestlyfrom612BcmNevertheless,itisworthSouthAmerica’sgasconsumptionin2021to615Bcmin2022,notingthatregionaldisparitiesreducedby6.6%or10Bcmindrivenbyhigherelectricitypersist,asseeninthechart2022,from159Bcmin2021,demandandimprovedgassupplyabove.Asdiscussedintheduetoimprovementsinforpowergeneration.Australiafollowingchaptersofthishydroelectricitygenerationwitnessedaslightuptickof1.6report,eveninareaswheretheconditionsinBrazilandlowerBcmingasdemand,despitethepowersectorisexpectedtodemandfromtheindustrialgrowthofrenewablesinthegraduallytransitiontolarge-scalesectoramidhighgasimportpowermix,ascoalplantclosuresrenewables,thedispatchabilityprices.Conversely,Africa’sgasrequiredgastostepupasaandflexibilityofgas-fireddemandsawa3.1%or5Bcmdispatchablesource.powermakesitanessentialpartincreasein2022,comparedtoofthedecarbonisedpower167Bcmin2021,primarilyduetoInthecontextoftheworldwidesystem,providingresilienceandincreasedneedswithinthepowerpowermix,gasutilisationgridstability.SupplyandgasinvestmentsFigure15:CapexandOpexinglobalgasproduction(nominalupstreamgasfield-relatedexpenditures)BillionUSD(Nominal)300250200Opex150Capex1005002011201220132014201520162017201820192020202120222010Source:RystadEnergyTurningtothesupplyside,wereducedinvestmentsinoilandgaswithagrowingpolicyuncertain-examinetheevolutionininvest-asglobaloilpricesdeclinedsignif-tyamidstthestrongerfocusonmentsinthecycleleadinguptoicantly,withabundantinjectionsclimatechangemitigation.Manytheenergycrisisstartingin2021.ofsupplyintothemarketfromoperatorsfacedelevateddebtTherehasbeenapronouncedthestrongUnitedStatesshaleandlowerprofits,promptingdownwardtrendinupstreamproductionthatwasbearingfruitcautiousinvestmentdecisionsinvestmentoverthepreviousfrominvestmentspriorto2014.focusedoncostreductionanddecade,settinginaftertheoilThen,from2015to2019,capitalcapitaldiscipline.Thisperiodleddownturnin2014.expenditurestagnatedduetotomanycompaniesintroducingthelingeringaftermathoftheoilcostsavingprogrammestoreduceTheperiodfrom2014to2016sawandgaspricedropaccompaniedexpenditureandallocatecapitalGlobalGasReport2023191/Reviewofthemostturbulentyearinthehistoryofgasmoreefficiently.Withoutsignifi-duringthisperiodcontinuestothatE&Pexplorationbudgetscantcostreductions,thisperiodcontributetohighcommodityhavebeenreviseddownfromwouldhavebeenmuchmorepricesandenergyscarcitytoday.almost160billionUSDin2013volatileintermsofenergycosts.toaround65billionUSDin2023,GlobalaveragewellcostsfellThereboundhelpedexpenditurebothnominalfigures.Thisisabymorethan28%from2015levelstorecoverin2021andintroublingfact,becausesustainedto2021.Inflationarypressure2022,capitalexpenditureongasexplorationandupstreaminvest-in2022markedthefirstyearoffieldsincreasedby26%,attribut-mentsareessentialtorebalanceincreasingunitcosts,withaverageedtobothahighinflationarytheenergymarketandrestorese-wellcostsgrowingby8%year-on-environmentandincreasedcurityofsupply,avoidproductionyear.economicactivitylevels.Capitalshortagesandpricespikesandcostshavebeenrisingduetotoenablecoalreplacement,thatThedeclineininvestmentsmultiplesupplychainpressureswouldotherwiselimitandchal-continuedfrom2019to2020,exacerbatedbythecrisis,tightlengeenvironmentalgoalsandlargelyduetotheCovid-19marketsforspecialisedlabourandreversedecarbonisationefforts.pandemic.Uncertaintiesinfutureservices,andtheeffectofhigherConsequently,inabidtoimprovedemandandpolicydirectionsenergypricesonessentialenergysecurity,somecountriesledtoafrugalinvestmentstanceconstructionmaterialssuchashavecommittedtoattractingacrossindustries,includingsteelandcement.upstreaminvestmentclimatetoenergy.Thisdeclineininvestmentincreaseitsdomesticproductionlevelsin2020furthercompound-Itisimportanttonotethatmostofgas.Indonesia,forexample,hasedthepreviouslyobservedtrendofthecurrentcapitalexpenditureisannouncedanambitioustargettoofreducedinvestmentssinceassociatedwithexpansionpro-increaseitsdomesticgasproduc-2015.In2020,atemporaryreduc-jectsratherthanexplorationintionfrom58Bcmin2022to124tioninoperationalexpendituregreenfieldareas.MostoperatorsBcmby2030.Thisisinlinewithitscanbeattributedtothepandem-arestillrelativelycautiousandun-goaltoincreasetheshareofnat-ic’sdisruptiveeffects.Thewillingtotakeonincreasedrisksuralgasintheprimaryenergymixrecoveryfromthepandemicinassociatedwithnewexploration,from17.8%in2013to22.4%in2021and2022wasmarkedbyaduetoongoingenergytransition2025and25%in2050,accordingsharpreboundinindustrialtrends,uncertaintyaboutaccessi-toitsNationalEnergyPlan(RUEN).activity,transportation,andblefinancingandpoliticalrisk,asTheupstreamregulatorofIndone-consumptionofcommodities,policiescontinuetobeissuedtosia,SKKMigasestimatesaddition-includingnaturalgas.Lowinvest-banfutureuseofnaturalgas.alannualupstreaminvestmentofmentintotheupstreamsectorRystadEnergy’soverviewshows18to20billionUSDtofulfiltheFigure16:Globalgasproduction,splitbyregionFigure17:Globalgasproductionyear-on-yearchange(2021–2022)BcmBcm604,5003,9733,8384,0414,04916.48.64.14,0004%4%4%4%40-0.7-2.93,50053.13,0004%4%4%4%2,5006%6%7%6%202,0006%6%6%6%16.918%18%15%16%016%17%17%17%-2017%18%1,50017%17%-4029%-87.21,00029%29%202130%-60500MiddleEastAustralia20220Russia-802019SouthAmerica2020-100NorthAmericaEuropeAsiaNorthMiddleAsiaEuropeSouthAustraliaAfricaRussiaAfricaAmericaEastAmericaSource:RystadEnergySource:RystadEnergyGlobalGasReport2023201/Reviewofthemostturbulentyearinthehistoryofgastarget.However,itsfiscalregimeNorthAmericaconverselyin-tionstruggledtokeepupwiththeremainsasoneofthemostcreasedproductionfrom1,160region'ssurgingdemand.DespitecomplexandstringentintheBcmto1,213Bcm,anincreaseofthisdevelopment,importswillworld,withgovernmenttakeabout4.6%year-on-year.Aboutcontinuetoplayacrucialroleinaveragingbetween60%to72.8%oftheincreasedNorthmeetingdemandgrowthinAsia.75%,disincentivisingforeignAmericanproductionstemmedinvestmenttodevelopmentitsfromtheUnitedStates,wheregasEuropeanproductionincreasedgasresources.Policyalignmentsupplygrowthwaslargelydrivenbyabout8.6Bcmin2022,anin-betweenenergypoliciesandbyincreasedshaleactivityinthecreaseofapproximately3.8%.Theregulationsunderpinninginvest-Permian,Haynesville,andEagleincrementalproductionprimarilymentclimateisespeciallyimpor-Fordplays.UnlikeHaynesvilleandstemmedfromNorway,asthetantfordevelopingcountriesEagleFord,naturalgasproductioncountrystrategicallyrampeduplikeIndonesia,whichisstillhighlyinthePermianisprimarilytheoutput,resultinginaremarkablereliantoncoal.Thedevelopmentresultofassociatedgasproduc-increaseofover9.2Bcm(approx-ofgasresourcesprovidesapath-tionfromoilwells.Haynesvilleisimately7.5%)year-on-year.Thiswaytoamoresustainable,secure,astrategiclocationforoperatorssurgewasaimedataugmentingandaffordablefuture,andaidstodrillfornaturalgasbecauseofexportstocontinentalEurope,itsindustrialisationforfurthertheproximitytotheGulfCoast,effectivelycounteringthede-economicgrowth.whereindustrialdemandandLNGclineinRussiansupply.IncreasedproductionandexportterminalsproductionpermitsissuedbytheOnagloballevel,gasproductionhavebeengrowing.NorwegianMinistryofPetroleumremainedrelativelyflatin2022andEnergyallowedEquinortocomparedtothepreviousyear.TheMiddleEastsawthesecondmaintainhighproductionlevelsatOntheotherhand,onaregionallargestgrowthingasproductionitsTroll,OsebergandHeidrungaslevel,2022broughtashocktoin2022,risingfrom670Bcminfields,increasingproductionbylocalmarkets.2021to687Bcmlastyear,witharound1.6Bcm.Thiswasfurther40.2%and24.1%oftheincreasessupportedbytherestartoftheFollowingtheRussia-UkrainestemmingfromIranandSaudiHammerfestLNGfacilityinearlycrisis,productioninRussiaArabia,respectively.Thesignifi-June2022,withallits40cargoesdecreasedby87.2Bcmor12.3%cantincreasestemsfromthere-shippedtoEurope.from709.7Bcmin2021togion’sgoaltoboostself-sufficien-622.5Bcmin2022.Thereasoncyandfurtherexportpotential.Bycontrast,Africasawgasforthedecreasedoutputisproductiondipby2.9Bcm(abouttwo-fold.First,thedivisionofInAsia,gasproductionrose1.1%)between2021and2022,Russia'sgassupplysystemintomodestlyfrom695.9Bcmin2021mainlyduetodecliningproduc-twodistinctsegments,oneintheto712.2Bcmin2022.Mostnota-tionfromlarge,maturingfieldsinwestandoneintheeast,withoutbly,therewasasignificantsurgeEgypt.However,netproductioninterconnection,posedacompli-inChineseproduction,amountingincreasesfromAlgeriaandLibyacationforredirectinggasexports.toaremarkableincreaseof12.5remainedstrong,increasinginConsequently,lackofgasBcm.Theincreaseisinalignmenttotalabout2.9Bcmin2022,infrastructureintheeast,otherwiththestrategicobjectivesout-partiallyoffsettingthedeclinesthansolelythePowerofSiberialinedinthecountry’slatestfive-inmaturefieldproduction.Thepipeline,forcedGazpromtocutyearplanfor2020-2025,whichpotentialforadditionalgrowthinproductioninlinewithreducedseekstobolsterdomesticgaspro-thesupplydevelopmentinAfricagasexportstoEurope.Byductiontoenhanceenergysecuri-ishigh,asthecontinentholds8%contrast,theindependentLNGty.ApartfromChina,theregion’softheworld’sgasreservesandproducerNovatekboostedgasupturncanbeprimarilyattributedhasambitiousplansfortheiroutputin2022,mainlythankstotoexpansionsinTurkmenistandevelopment.Importantly,moreitsLNGportfoliowhichismoreandAzerbaijan,withtherestofgaswillbeneededtofuelresilienttomarketturbulence.AsiaexperiencingeithermarginaldomesticindustrialisationandSecond,theexplosionsinthegrowthoradeclineinproductionimprovemodernenergyaccesstoNorthStreaminfrastructureinduring2022.Withtheaforemen-itsgrowingpopulation.With600September2022significantlytionedadditions,theyearof2022millionAfricanslackingaccesstodiminishedRussia'sexportmarksthefirsttimesince2013electricityandwithitsyoungandcapabilitiestoEurope.AfurtherthatAsia'sgasself-sufficiencyfast-growingpopulation,Africaisexaminationofthesedevelop-ratehasgrown.Thisreversalofagoodcandidatefordevelopmentmentscanbefoundunderthethetrendsignifiesanotableshiftofdomesticgasmarkets.However,TradeFlowssection.fromthepast,wheregasproduc-capturingthispotentialwillGlobalGasReport2023211/ReviewofthemostturbulentyearinthehistoryofgasrequireconcertedeffortfromAccordingtotheIEA,Africa’s2022,mainlyattributabletothekeyregionalactorstoenergysectorstillfacesArgentinaandPeru.Thisaddressexistingbarrierssuchaschallengesinreboundingregiontoohassignificantsecuringcapitalandbuildoutoffromthesharpdeclineinoilpotentialintheonshoresignificantinfrastructure,aswellandgasspendinglevelsin2014.resourcesthatcouldbeasstreamliningpolicyanddevelopedtomeetgrowingimprovingbusinessclimateSouthAmericasawamodestlocaldemandandevenfacilitateandprojectdeliverytimelines4.supplygrowthof4Bcminforexports.TradeflowsFigure18:Gasdemand,production,andimport/exportvolumes,splitbyregionBcmEuropeAsiaAustraliaAfricaRussiaMiddleEastNorthAmericaSouthAmerica1,800IMPORTERIMPORTEREXPORTEREXPORTEREXPORTEREXPORTEREXPORTERBalanced1,6001,40020101,20020221,000201020228002010600202240020102002022201002022-2002010-4002022-6002010202220102022ProductionDemandImpliedimportneedsImpliedexportpotentialSource:RystadEnergyFigure18illustratesthedisparityFigure19:Globalnetgasexportvolumes,splitbyflowtypeingasproductionanddemandacrossvariousregions.SomeBcm1,124regionsexhibitasurplusof1,200gasproductionovertheirlocal1,042demand,categorisingthemas1,000exportingregions,whileothersexperienceadeficit,classifying46%themasimportingregions.Inthecaseofexportingregions,the800LNG51%volumetheycanexportwithouttappingintotheirstoredgas600reservesistermedthe"impliedexportcapacity".Conversely,for400importingregions,thequantitytheycanimportwithout54%Pipelineresortingtotheirstoredgasreservesisdenotedasthe49%"impliedimportrequirements".2004IGU“GasforAfrica2023”020222021Source:RystadEnergyGlobalGasReport2023221/ReviewofthemostturbulentyearinthehistoryofgasAspreviouslyhighlighted,thenamelyRussiaandNorthAmerica,1pipeline,andthesurgeofyear2022broughtsubstantialasillustratedinFigure18.2022LNGflowingintoEurope.Thisfluctuationsinboththesupplywitnessedasubstantialshiftinsub-chapterexamineshowtheanddemandofgas.Thesefluctu-theshareofexportsfrompipelinechangesinRussianpipelineflowsationsinturnhadnotableconse-toLNG,primarilyattributedtotriggeredcascadingimpactsonLNGquencesonglobaltradeflows,thereductioninRussianpipelinetradepatterns,influenceddevelop-especiallyforthetwolargestgasexportsfollowingthecommence-mentsinEuropeangasstorageandimportingregions,EuropeandmentoftheRussia-Ukrainewar,infrastructure,andshapedtrendsAsia,andlargeexportingregions,theexplosionoftheNordStreamintheSPAcontractscene.DevelopmentsinRussianpipelinetradeflowsFigure20:Russiangasflows2021Figure21:Russiangasflows2022Bcm710475Bcm800800700700623452600600500Domestic500400production400300300Domestic200200production1002351911001711070Storage(2)MiddleEast(28)Storage(18)Asia(6)Domestic0DomesticMiddleEast(18)-100demandLNG(41)EuropedemandLNG(45)EuropePipeline(168)Pipeline(83)(191)Asia(-4)(107)TotalpipelineTotalpipelineTotalexportsTotalexportsexportsexportsSource:RystadEnergySource:RystadEnergyIn2022,Russianproductionplum-NordStream1pipeline.ExportsPoland,itcouldreduceRussianmetedbyaround87.2BcmamidstthroughthispipelineweregaspipelineflowstoEuropeeventhewarinUkraineduetocurtail-reducedbyRussiafromJunefurther.mentsbyGazprom.Inturn,net2022,beforehaltingcompletelypipelineexportswerereducedbyfollowinganexplosionoftheTocounterthecurtailedimports,about44%,from191Bcmto107NordStream1and2pipelinesonEuropeanproducersattemptedBcm,withEuropebeingthemost26September2022.Priortothis,tomaximiseoutputwithintheaffectedimportingregion.NordStream1wasresponsiblelimitationsofexistinginfrastruc-foralmost50%ofRussianexportsture.AmongthenotableEurope-Europesawthenumberofoper-intoEurope.Russianpipelinegasanproductionboosts,Norway,atingpipelinegassupplyroutesexportstoEuropeviaUkraine,andtheUnitedKingdomachievedfromRussiareducefromsixtototallingabout27Bcmyearly,productionincreasesof9.2Bcmtwoduring2022,whichremainscontinuedthrough2022andper-and5.5Bcm,reflectingyear-on-thecaseinSeptember2023.sistintermsofdailyvolumesasyeargrowthratesof7.5%andConsequently,morethan84BcmofSeptember2023,althoughthe17.1%,respectively.AsalternativeofRussianpipelinegasstoppedagreementfortransitsthroughgaspipelinestoEuropewereflowingtoEurope,equivalenttoRussia’sexitpointatSudzhaisduealreadyoperatingclosetofullabout34%ofEuropeanimportedtoexpireon30December2024.capacityorwasconstrainedbyup-gasvolumesand17%oftotalgasIftheagreementisnotrenewedstreamsupplyavailability,Europeconsumptionintheregion.ThebyRussiaandUkraine,ortheflowturnedtoLNGimportsforthelargestimpactcamefromthebeingredirectedthroughrescue,asubjectcoveredinmorereductioninexportsthroughthealternativeroutesviaTurkeyordetaillaterinthissub-chapter.GlobalGasReport2023231/ReviewofthemostturbulentyearinthehistoryofgasFigure22:RussianpipelinegasflowstoEuropebyentrypointMillioncubicmetersperday(MMcmd)400350300250200150100500Nov-21Jan-22Mar-22May-22Jul-22Sep-22Nov-22Jan-23Mar-23May-23Jul-23Sep-23Sep-21NEL(NordStream)OPAL(NordStream)Imatra(Russia-Finland)Mallnow(Yamal-Europe)Sokhranovka(Ukraine)Strandzha2(TurkStream)Sudzha(Ukraine)Source:RystadEnergyInAsia,Russia’snetpipelineex-contributiontothisdevelopmentboostexportstoChinaby50Bcmportsturnedpositive,asimports,wasPowerofSiberia1increasingannuallythroughPowerofSiberiaprimarilyfromTurkmenistan,pipelineexportstoChinabyover2,whiletheexistingPowerofdecreasedwhileexports,primar-50%.Further,itwascommunicatedSiberia1pipelineissettodeliverilytoChina,increased.ThemainthatRussiaplanstofurther38Bcmperyearby2025.Figure23:Russianpipelinegasimports/exportsFigure24:Russianpipelinegasimports/exportswithAsia2021withAsia2022BcmBcm3535302530201525102017.1518.80Export1512.9-512.5Import106.3Netexport50-4.3-5ExportImportNetexportKyrgyzstanChinaArmeniaAzerbaijanChinaArmeniaAzerbaijanKyrgyzstanKazakhstanTurkmenistanUzbekistanKazakhstanTurkmenistanUzbekistanSource:RystadEnergySource:RystadEnergyLimitedsupplyofLNGbroughtfiercecompetitionToreplaceallthecurtailedRussianpotentialshiftwouldbe.Europeworld’stotalgasproductionwasgassupplytoEuropewithLNGattemptingtocoverasmuchofexportedintheformofLNG,atwouldrequiremorethan21%thedemandaspossiblebroughtaanestimated401.5millionofthetotaltradedLNGglobally,cascadeoffar-reachingeffects.tonnes.ThisrepresentsanunderscoringhowprofoundtheIn2022,roughly13%oftheapproximate6.8%riseinLNGGlobalGasReport2023241/Reviewofthemostturbulentyearinthehistoryofgasexportsfromthe375.9millionconsumptionofLNGinEurope.oftradedLNG,predominantlytonnesrecordedin2021.OnThisshiftwasdrivenbyagreatersourcedfromtheUnitedaregionallevel,themostwillingnesstopayapremiumStates,andalsofromAsiatonotableshiftwastheincreasedprice,resultinginaredirectionEurope.Figure25:GlobalLNGtradeflows2021Figure26:GlobalLNGtradeflows2022MilliontonnesChina:78.9MilliontonnesJapan:73.8Australia:81.1Australia:81.7Qatar:80.0Japan:77.8Qatar:80.9China:62.0UnitedStates:71.7SouthKorea:47.4UnitedStates:78.6SouthKorea:46.5India:23.1France:27.1Russia:30.7Russia:33.6Spain:22.3Malaysia:23.4ChineseTaipei:20.4Malaysia:24.3Nigeria:17.0Spain:15.4Nigeria:15.1ChineseTaipei:20.6Algeria:11.8Indonesia:11.5India:19.9Indonesia:10.9France:13.3Oman:11.3Oman:10.1UnitedKingdom:11.5Algeria:10.4UnitedKingdom:19.8Others::42.7Others::47.7Netherlands:12.4Turkey:9.9Others:90.7Others:81.7MadewithSankeyMATICMadewithSankeyMATICSource:RystadEnergySource:RystadEnergyEuropesawthelargestincreaseMonthlytradedvolumesofLNGofRussianLNG.ThecollectiveinimportedLNG,risingfrom74areshowninFigure27,witheffortmanagedtobridge97%milliontonnesin2021to124theuptickoftheUnitedStatesofthegapinpipelinegassupplymilliontonnesin2022,anincreaseexportsclearlyvisibleatthecausedbytheRussianpipelinegasofalmost68%.Outofexportersbeginningof2022andremainingreductions.EventhoughtheEU27tofilltheEuropeandemand,thehigheversince.Qatar,Russia,andsuccessfullymitigatedthemajori-UnitedStatesincreasedexportsNigeriaarethenextthreedomi-tyofthelosses,gasconsumptiontoEuropebymorethan30mil-nantexportersofLNGtoEurope,stilldecreasedbyaround41Bcmliontonnesfrom2021to2022,withtheregion’slargestbeingandattheexpenseofrisingcoala159%year-on-yearincrease.France,Spain,Belgium,andtheconsumption.ItisworthnotingWithinEurope,FrancewastheNetherlands.Significantly,despitethattheEU27accumulatedasub-dominantLNGimporter,morethepipelinegascurtailments,stantialstoragebuildupof33BcmthandoublingLNGimportsfromRussianLNGexportstoEuropeduringthatyear.13milliontonnesto27millionhavemaintainedaconsistenttonnesyear-on-year,ofwhichovergrowthtrajectory,increasingbyAsaresultofEurope’ssurging64%camefromtheUnitedStates.morethan260%in2022com-demandforLNGin2022,manyOtherlargeEuropeanimport-paredto2018.leadingimportingnationsintheersSpain,theUnitedKingdom,regionoperatedregasificationfa-theNetherlands,andItalyalsoInEurope,theEU27sawthecilitiescloseto,orevenexceeding,increasedLNGimportsby43%,largestreductionofRussiannameplatecapacityforprolonged75%,98%and44%respectivelyinpipelinegasimports,amountingdurations,asillustratedinFigure2022,withmostoftheincreasesto80Bcmbetween2021and29.Forexample,regasificationcomingfromtheUnitedStates.2022.Tooffsetthisshortfall,facilitiesintheNetherlandssawAlthoughgasdemandinGermanytherewasanotablesurgeingasaconsistentutilisationrateoverwashighduring2022,thecoun-importspredominantlyfromthe100%inthefirsthalfof2022,atryimportedinsignificantLNGUnitedStatesintheformofLNG,trendwhichonlyreversedonceavolumesformuchoftheyeardueandfromNorwayandtheUnitednewimportfacilitystartedtoalackofregasificationfacilitiesKingdomintheformofpipedoperatinglaterthatyear.untilitsfirstFSRUcameonlinegas.Thiswasfurthercomple-Consequently,Europeannewlytowardstheendof2022.mentedbyanincreaseinimportsinstalledregasificationcapacityGlobalGasReport2023251/ReviewofthemostturbulentyearinthehistoryofgasFigure27:EuropeanLNGimportsbyoriginMilliontonnes(Mt)121086420FJan-21eb-21Mar-21MApr-21ay-21Jun-21Jul-2Au1g-21SOep-21ct-21NDov-21ec-2Ja1n-22FMeb-22ar-22MApr-22ay-22Jun-22Jul-2Au2g-22SOep-22ct-22NDov-22ec-2Ja2n-23FMeb-23ar-23MApr-23ay-23AlgeriaAngolaEgyptEquatorialGuineaFinlandFranceNigeriaOmanPeruPuertoRicoQatarRussiaTrinidad&TobagoUSOthergrewbymorethan14milliondeclininggaspipelineflowsfromSource:RystadEnergytonnesperannum(MTPA)in2022Russia.andabout11MTPAsofarin2023ChinawereredirectedtoJapan,(asofSeptember),asignificantInAsia,themostsignificantshiftwithSouthKorea,Chineseincreasecomparedtoearlieryears.in2022wasChinareducingLNGTaipei,andThailandaccountingNearly80%and100%respective-importsfromAustraliaandtheforapproximately51%.Converse-lyofnewEuropeanLNGimportUnitedStatesby10.9millionly,asignificantportionofQatar’scapacityhasinvolvedFSRUs,astonnesand10.1milliontonnesexportsthatwerepreviouslythesehaveshorterleadtimesthanrespectively,whileboostingimportsdestinedforJapanwereredirect-traditionalonshoreterminalsandfromQatarbyapproximately7.4edtoChinain2022vialong-termenabledEuropetorapidlyscaleupmilliontonnes.About36%ofthecontractssignedwithChinesegasimportcapacitytooffsetthereducedAustralianexportstoimporters.Further,duringthefirsthalfof2023,lowerspotprices,highercontractedvolumes,andFigure28:EstimatedchangesinEU27gasavailabilityfrom2021to2022,splitbysourceSource:RystadEnergyGlobalGasReport2023261/ReviewofthemostturbulentyearinthehistoryofgasFigure29:RegasificationutilisationinselectedEuropeancountriesUtilizationvs.Nameplatecapacity2022140%120%100%80%60%40%20%0%2019201920192019201920192020202020202020202020202021202120212021202120212022202220222022202220222023202320232023Jan-ar-ay-Jul-Sep-Nov-Jan-ar-ay-Jul-Sep-Nov-Jan-ar-ay-Jul-Sep-Nov-Jan-ar-ay-Jul-Sep-Nov-Jan-ar-ay-Jul-MMMMMMMMMMFranceItalyNetherlandsSpainUnitedKingdomCapacitySource:RystadEnergyrecord-breakingwarmtempera-Figure30:RussianLNGproductioncapacityturesledtoariseinLNGimportstoChina.Inrecentdecades,monthdecreaseprimarilyfromSource:RystadEnergy;IGULNGReportJapaneseentitieshavebeenproducersinQatar,Norway,andacquiringequitystakesinforeignAustralia,whichwereunabletotonnes,adifferencetranslatingupstreamgasprojectsandLNGberemediedbymodestincreasetoabout37cargoes.Nonethe-developmentstoensuresupplyfromIndonesiaMalaysia,andless,LNGexportsreboundedinintoJapan.Mitsui,MitsubishiMozambique.ThisledglobalLNGJulyandkeptabove33.2millionandInpexarethelargestacquir-exportstofallfrom34.9milliontonneslevelinAugust.InSeptem-ers,withtowngascompaniesintonnesinApril2023to32.3ber2023,therehavebeendisrup-TokyoandOsakaalsosecuringamilliontonnesinMay2023,belowtioningassupplyduetorollingpresencefurtherdownthevaluethe2022averageof33.9millionstrikes,workbansandstoppageschain.JapaneseentitieshaveattheGorgonLNGandbeeninvestingsignificantlyinWheatstonefacilitiesinWesternAustralia,theUnitedStates,Indonesia,Canada,andotherareaswithgasresources.SimilarinvestmentsarebeingundertakenbyChineseoperatorsSinopec,CNOOC,andPetroChinawhichhavebeeninvestinginTurkmenistan,Kazakhstan,Australia,Egypt,andothergas-richcountries.Duringthefirsthalfof2023,monthlyglobalLNGexportsconsistentlysurpassedthe2022levels,resultinginacumulativeyear-on-yearincreaseof4.1%andtotalling205milliontonnes.Duringthenorthernhemispheresummer,LNGsupplyexperiencedsomevolatilityduetofacilitymaintenanceandoutages.May2023sawthebiggestmonth-on-GlobalGasReport2023271/ReviewofthemostturbulentyearinthehistoryofgasAustralia,potentiallyimpactingFigure31:Globalliquefactioncapex,splitbyregionabout5%ofglobalLNGpro-duction.GorgonLNGhasthreeBillionUSDliquefactiontrainswithacom-binedcapacityof15.6MTPAof40LNG,whileWheatstone’stwoLNGtrainshaveacombinedcapacityof3533348.9MTPA.Thisposesthreatsifthestrikesandoutageslastuntilpeak3027winterseason.2523232422RussianLNGexportvolumeshave21been,andarestillinSeptember2023,exportedtobothAsianand20181817Europeanbuyers.Since2017,Russiahasmorethantripledits16LNGexportcapacitythroughthedevelopmentoftheYamalLNG15facilities.Further,ThePortovayaLNGexportterminalwas10completedin2022andis10expectedtocontributetowardsevenhigherLNGexportcapacity5in2023whichwillbeitsfirstfullyearofproduction.Thethree0trainsatArcticLNGcurrentlyin2010201120122013201420152016201720182019202020212022developmentwillbolsterexportcapacitythroughthenortheasternAustraliaNorthAmericaAfricapassageandtoEurope.Notewor-thily,thesecondtrain,ArcticLNGRussiaAsiaMiddleEastT2,hasfaceddelaysandisEuropeSouthAmericaTotalcurrentlyexpectedtostartoperationin2024.TheBalticLNGSource:RystadEnergy;IGULNGReportprojectisbeingdevelopedbyGazprominproximitytoEuropeanthegrowthadditionsremainSeptemberhavealreadyexceededbuyers,expectedtoadd13millionsignificantlybelowthehighpointsthetotalsforeachofthetonnesofLNGcapacity.Althoughof2013-14.Newliquefactionindividualfullyearsof2020,2021,previouslyexpectedtofinishininvestmentsin2022weremainlyand2022.Despitegrowthand2023,theprojectisnowfacinganledbytheUnitedStates,Canada,positivesentimentsamidstcurrentexpectedtwo-yeardelay.Mozambique,Australia,Qatar,marketevents,significantuncer-andMexico.FromthebeginningtaintyarouondtheLNGmarket’sGlobally,liquefactioninvestmentsof2022toSeptember2023,futuretrajectoryandtheroleofgasrecoveredin2022,growingbyabout81.2MTPAofnewcapac-intheenergytransitioncontinues23%comparedto2021.Yet,ityreachedFIDorconstruction,toweighheavilyon,andinsomewiththeUnitedStatesandQatarcasesdelay,investmentdecisions.representingabout70.6%andThisinturnposessignificantchal-19.2%oftheadditionsrespectively.lengesforseveralcriticalaspects,In2023,therehasbeenaincludingsupplysecurity,industryremarkablesurgeinnewlyinstalleddevelopmentpredictability,unmetcapacity,astheinstallationsbydemand,andpricing,amongothers.EuropeangasstoragegoalsweresurpassedDespitetightgasbalancesbythesamedateinsubsequentConsideringtherecentadvance-throughoutthewinterofyears.Onanaggregatelevel,mentsingasstoragelevels,2021/22,Europeanstoragelevels2022’sgoalwasreachedbyEuropeisexpectedtoencounterareboundedinmid-2022aftertheend-August2022,exceedingthewinterseasonthatismorerobustEUrevisedgasstorageregulationstargets,althoughsomecountriesandresilientthantheprevioustoincreasestocksinresponsetostillstruggledtoadheretotheiryear.Yet,itisimportanttotheRussia-Ukrainecrisis.Throughobligations.For2023August,acknowledgethattherearetheREPowerEUinitiative,theEUstoragelevelsinEuropehaveseveralpotentialfactors,suchasmandatedthatstoragefacilitiesconsistentlystayedcloseto,orat,temperaturesandfurthersupplyshouldbeatleast80%fullbyrecordlevels,exceedingtheevents,thatcouldsignificantlyNovember2022and90%fullstorageobjectivessetbytheEU.upsetthebalance.GlobalGasReport2023281/ReviewofthemostturbulentyearinthehistoryofgasFigure32:DailyEuropeangasstoragevolumesandrangeinundergroundstorage,excludingUkraineBcm140120100806040200FebMarAprMayJunJulAugSepOctNovDecJanMin/Max5-year202120222023Source:RystadEnergyGlobalLNGcontractsmainlyfocusedonlongevityHistorically,AsiahasbeentheFigure33:LNGcontractedvolumes,splitbyregionandportfoliolargestpurchaserofLNGvolumes,followedbyEurope,withtheMilliontonnesAsianregionactivelycontracting80evenlargerandlonger-termvolumesoverthelastdecade7067.467.2(seeFigure34forcontractdu-rations).However,followingthe2%naturalgassupplycrunchin2021,newlysignedcontractsfor60LNGvolumesspikedduring2021and2022,mainlyaimedat51.232%bolsteringenergysecurityinthe55%faceofgrowinguncertainty.This5011%trendwasprimarilycausedbystrategicdecisionstakenaround17%3%energysupplyinAsiaandEurope.WhileAsiacontinuedtosecure4034.4contractedvolumes,Europemainlyfocusedonobtaining13%29.131.6spotvolumesthroughportfoliocontracts.Itisnoteworthythat3023%25.01%26.616%volumesstemmingfromportfoliocontractswilleventuallyendupin21%14%thespotmarket,availablenotonlytoEuropebutalsoAsiaand2048%21%31%64%otherregionsoptingtoimportLNG.Thestrategicdivergence12%25%61%betweenAsiaandEuropeulti-matelyresultsindifferentlevels59%24%30%ofpredictabilityandreliabilityfortheirrespectiveLNGsupplies,103%53%31%withAsia’sstrategypositioningit38%25%43%3%019%20152016201720182019202020212022AsiaEuropePortfolioOthersSource:RystadEnergy;IGULNGReportformorereliableLNGsupplyhigherpercentageofnewthanEurope.Whilethetotalcontractsbeinglong-termincontractedvolumeofLNGhasnature.Asmuchas67%ofallsurgedinrecentyears,alargenewvolumesignedin2022wasshareofthiscomesfromanuptickforover20yearsinlength,anintheproportionoflong-termincreaseof24percentagepointsagreements.Thisshiftinfocusfrom2021whichwasalreadyatcontinuedin2022,withanevenrecord-highlevels.GlobalGasReport2023291/ReviewofthemostturbulentyearinthehistoryofgasTable2:LNGcontracttypesLNGtransactiontypesDescriptionSpot•PurchaseorsalesofLNGaremadeatpricesinrealtimePortfoliocontracts•MostspotmarkettransactionsaresettledinafewdaysLong-termcontracts•ByplayerswhoholdLNGsuppliesfromdifferentregions,andhaveshipping,storage,andregasificationassets•Contractscanbeeithershort-termorlong-term•Pricescanbeonaspotortermcontractbasis•Priceisoftenlinkedtonaturalgasandoilbenchmarkprices•Contractperiodistypicallymorethan15yearsSource:RystadEnergyFigure34:NewLNGcontractedvolumes,splitbyFigure35:NewLNGcontractedvolumedurationsduration(2022),splitbydurationMilliontonnesMilliontonnes80507067.467.245604037.251.243%35504%3067%4034.439%2571%20.95%29.131.6203025.026.619%27%53%26%4%28%19%1560%2034%9.155%1051%73%25%28%1024%31%17%28%528%66%27%34%19%24%6%19%11%Europe2%Portfolio015%7%5%5%020152016201720182019202020212022AsiaLessthan5Between5and10Between11and20Morethan20Lessthan5Between5and10Between11and20Morethan20Source:RystadEnergy;IGULNGReportSource:RystadEnergy;IGULNGReportPricingInresponse,theEuropeanCouncilreachedaconsensusinDecemberIngeneral,2022standsoutasaresponses.Thereafter,gasprices2022,settingapricelimitatyearofunparalleledturbulenceembarkedonastreakofre-180EURpermegawatt-hourforglobalgasmarkets,comingoncord-breakingsurges.Thepeak(equallingabout55USD/MMBtu).thebackofalreadyelevated2021ofthischaoticperiodcameinAcrossAsiain2022,acombinationpricesamidstatightgloballate-August2022,whennaturaloffactorsincludingfluctuatingmarket.Theyearbeganwithangaspricesreachedanall-timedemandduetoCovid-19-relatedairofuncertaintyoverRussianhighastheNetherlands-basedlockdownsinChina,price-inducedpipelinesuppliestoEurope.FromTitleTransferFacility(TTF)closeddemandcontractioninthethere,gaspricesexperiencedataround90USD/MMBtuandSouthandSouth-East,andfuel-theirfirstrecordspikeaftertheAsianpricessurgedpast60USD/switchingledtoAsiangasRussiawarwithUkrainebeganMMBtu.Amidstthehikeinprices,pricesconsistentlytradingbelowinlate-February2022,andseveralEuropeanUnionmemberTTF.triggeredacascadeofstatescalledforapricecapongeopoliticalandenergysectornaturalgaspriceswithintheEU.GlobalGasReport2023301/ReviewofthemostturbulentyearinthehistoryofgasFigure36:InternationalnaturalgaspricesReportsofsabotageontheNordStreampipelinesandthreatstoenergyUSD(real)perMMBtuinfrastructureasEuroperoiledunder120100concurrentheatwaves80OnsetofRussia-Ukrainewar60heightensconcernsover40Russianpipelinesupply2020220JMan-19ar-19May-19Jul-1S9ep-19Nov-19JMan-20ar-20May-20Jul-2S0ep-20Nov-20JMan-21ar-21May-21Jul-2S1ep-21Nov-21JMan-22ar-22May-22Jul-2S2ep-22Nov-22JMan-23ar-23May-23Jul-2S3ep-23HenryHubLNGNortheastAsiaTTFSource:RystadEnergy;Argus(LNGNortheastAsia)Figure37:InternationalnaturalgaspricevolatilityInter-monthlystandarddeviation(USD(real)perMMBtu)15ReportsofsabotageontheNordStreampipelinesandthreatstoenergyinfrastructureas14Europeroiledunderconcurrentheatwaves1312OnsetofRussia-Ukrainewar11heightensconcernsoverFearofstrikesinAustralia10Russianpipelinesupplyfollowedbythestrike9sintaArtuinggucsatuasneddSperpicteemhbikeers876543AverageTTFvolatilitylevelsin2023arealmost25xhigherthanthoseof2019and202010Jan-19Mar-19May-19Jul-19Sep-19Nov-19Jan-20Mar-20May-20Jul-20Sep-20Nov-20Jan-21Mar-21May-21Jul-21Sep-21Nov-21Jan-22Mar-22May-22Jul-22Sep-22Nov-22Jan-23Mar-23May-23Jul-23Sep-23HenryHubLNGNortheastAsiaTTFSource:RystadEnergy;Argus(LNGNortheastAsia)Sofarin2023(September),gasprices.Atthesametime,pricepected,mainlyduetotheexceed-naturalgaspriceshavepredomi-reductionsinearly2023triggeredinglytightmarketbalanceswithnantlybeenonadownwardtrend,somespotbuyingactivityfromnomajornewsupplyadditionstowherefactorssuchasdemandprice-sensitivemarketsinAsia.comeforthenexttwoyears.ThiscontractionandarelativelywarmSofarin2023,thepricesremainvulnerabilitywasclearlydemon-beginningtothenorthernautumnmuchlowerandlessvolatileinstratedbythemarket'spricehaveledtopricereductions.Onthanin2022.Despitetheim-responsetothelabourstrikesatthesupplyside,FreeportLNGprovementsseenfrom2022,gasChevron'sfacilitiesinAustraliainintheUnitedStatesreturnedpricesandpricevolatilityin2023September2023,whichhavenowtoproductioninFebruary2023remainssignificantlyhigherthanbeenresolved.Goingforward,anyafterbeingoutofserviceduetoinpre-crisisyears(asdepictedinnotableshiftoneitherdemandorafireinJune2022,restoringafigures36and37).AsofSeptem-thesupplyside,likeaharshwintersignificantshareofliquefactionber2023,thegaspricesshoworasupplyshortageboundforcapacityandputtingdownwardextremesensitivitytoanychangeEuropeorAsia,coulddisruptthepressureonEuropeanandAsianinmarketconditions,realorex-fragileequilibriumonceagain.GlobalGasReport2023311/ReviewofthemostturbulentyearinthehistoryofgasTurbulentLNGmarketscausedlocalgaspricestospikeForimportingregions,thegasFFigiugruer3e-3W8h:oWlehsaolleePsraicleeLperviecles2le00v5etlos22002025BytoRe2g0io2n2byregionpricesinlocalmarketsaredeterminedbythesupplyofgas$/MMBTU35.0atthemarketentrypoint,where30.0theseentrypointpricesinturnare25.0dependentonlocalisedfactors,20.0includinginfrastructurecapacity.15.0Theseregionsaretypicallypriced10.0againstglobalLNGprices,astheycompeteforthesamescarceLNG5.0volumes.Throughout2022and0.0extendinginto2023,themassivedemandforLNGimportsto200520072009201120122013201420152016201720182019202020212022EuropeledtoabiddingwarbetweenEuropeandAsiaforNorthAmericaEuropeAsiathesescarceLNGvolumes,leadingAsiaPaciﬁcLatinAmericaFSUtolocalgaspricessoaringinAfricaMiddleEastWorldbothregions.ThiswasinturnreflectedinAsianspotandTTFSource:IGUpricingdevelopments.AsEurope'sdependenceonthisdependenceworksbothdevelopmentofthesedynamics,traded-marketLNGhassurged,waysinanenvironmentoftightwheredisruptionsthatwouldwhileitspreviouscushionofglobalsupplywheregreaterpreviouslyhavehadlimitedlong-termcontractedRussiandemandcompetesforlimitedimpactonEuropeanmarketspipelinegashaslargelyresources.Theimpactofthenowcausedthepricetosoarbydisappeared,thereisagreaterSeptember2023strikesinabout18%and13%followinginterdependencebetweenAustralianonEuropeangasthestrikewarningandtheEurope’smarketandtheotherfuturepricesservesasacommencementofthestrike,regions.As2022demonstrated,compellingillustrationoftherespectively.HenryHub’scorrelationwithotherLNGmarketshas,andcouldcontinueto,strengthenMarketsthatrelyprimarilyonincreasecomparedtopreviousvariationofprices5onaglobaldomesticproductiontomeetperiods,asitfollowedthepricescale.In2022,itsoaredtonearlylocaldemandhavehistoricallyincreasesmoreclosely.While100%,markingasubstantialdevelopedalmostindependentlyLNGexportscontributedtotheseincreasefromaround60%intheofothermarkets,withpricessetdevelopments,increasedlocalpreviousyear.Intheforeseeablebylocalforces,ascanbeseengasdemandintheUnitedStates,future,Europeexpandingitsre-inmostoftheMiddleEastandcoupledwithconstraintsinthegasificationcapacityandengagingtheUnitedStates.In2022,andpipelineinfrastructuretomeetinmorespotvolumetrading,continuinginto2023,thisdynamicthisdemand,alsoplayedacoupledwiththeUnitedStateswasmirroredinthedevelopmentssignificantrole.Thus,theincreasedexpandingtheirpipelinenetwork,oftheHenryHubwhichaveragedcorrelationwasnotnecessarilyaespeciallyfromthePermianbasin,apriceaboutfiveandsixtimescausaleffectofexportsalone.andincreasingliquefactioncapac-lowerthanAsianspotandTTFity,couldsetthesceneforfurtherrespectively.Yet,inboth2022Throughathoroughexamination,priceconvergence.However,anduptoSeptember2023,HenrytheIGU'sWholesaleGasPriceprevailinguncertaintiespersistHub’scorrelationwithotherSurveyfor2023revealedanotableregardingvariousfactors,includ-LNGmarketsexhibitedanotablesurgeinthecoefficientofingEuropeangasdemandand5Thecoefficientofvariationofpricesofadatasetinacertainyearisdeterminedbythestandarddeviationdividedbythemeanvalueoftheseprices.Theamountofabsolutepricevariation(standarddeviation)isthusmeasuredrelativetotheaveragepriceinacertainyear.Alowcoefficientofvariationindicatesahigherlevelofpriceconvergenceandvice-versa.GlobalGasReport2023321/ReviewofthemostturbulentyearinthehistoryofgasAmericanassociatedshaleforwardshouldentailTTFpricesandpremiums,andassuchbeinggasexports.Nevertheless,tradingattheHHpricewithmorecloselycorrelatedwiththeefficientLNGmarketsgoingadditionalshipping,liquefaction,HHprice.Highgaspricesdrovegas-to-coalswitchingFigure39:DailyEuropeangasprices(TTF)vsFigure40:MonthlyaverageLNGpricesvscoal-switchingpriceintheNetherlandscoal-switchingpriceinJapanUSDpermillionBritishthermalunits(MMBtu)USDpermillionBritishthermalunits(MMBtu)1206010020225020228040603040202010--Jan-M20ar-M20ay-2J0ul-2S0ep-N20ov-2J0an-M21ar-M21ay-2J1ul-2S1ep-N21ov-2J1an-M22ar-M22ay-2J2ul-2S2ep-N22ov-2J2an-M23ar-M23ay-2J3ul-23Jan-2M0ar-2M0ay-20Jul-2S0ep-N20ov-2J0an-2M1ar-2M1ay-21Jul-2S1ep-N21ov-2J1an-2M2ar-2M2ay-22Jul-2S2ep-N22ov-2J2an-2M3ar-2M3ay-23Jul-23Coal34%vsGas56%Coal36%vsGas54%Coal38%vsGas52%Coal34%vsGas56%Coal36%vsGas54%Coal38%vsGas52%Coal40%vsGas50%Coal42%vsGas48%TTFDayAheadCoal40%vsGas50%Coal42%vsGas48%AsiaLNGspotpriceSource:RystadEnergySource:RystadEnergyInfigures39to41,Coal42%vsGas48%Figure41:MonthlyaverageHenryHubgasprice(greyshadedarea)signifiesthelowervscoal-switchingpriceintheUnitedStatesrangeofthecoal-to-gasswitchingbandbetweenhigh-efficiencycoal(42%)andUSDpermillionBritishthermalunits(MMBtu)low-efficiencygas(48%),whileCoal34%vsGas56%(indarkblue)showsthehigher16rangeofthecoal-to-gasswitchingbandbetweenlow-efficiencycoal(34%)and142022high-efficiencygas(56%).Whentheyellowlinecrossesthegreyareaitischeaperto12turnonthemostefficientcoal-firedpowerplantsattheexpenseoftheleastefficient10gas-fired,similarly,ifthelineisaboveallofthebandseventhemostefficientgas-fired8powerplantsaremoreexpensivethantheleastefficientcoal-firedones.642-Jan-2M0ar-2M0ay-20Jul-2S0ep-N20ov-2J0an-2M1ar-2M1ay-21Jul-2S1ep-N21ov-2J1an-2M2ar-2M2ay-22Jul-2S2ep-N22ov-2J2an-2M3ar-2M3ay-23Jul-23Coal34%vsGas56%Coal36%vsGas54%Coal38%vsGas52%Coal40%vsGas50%Coal42%vsGas48%HenryHubFronthMonthSource:RystadEnergyIfgaspricesreachhighlevels,theexistinginfrastructurethatevaluatedusingcoalswitchingpotentialforswitchingtohaslaindormantduetopricebands.Broadlyspeaking,alternativefuelscomesintoplay.environmentalconcernsandthewhenthegaspriceexceedstheTypicalfuelsusedinsuchcasesgrowingintegrationofcarbonband,itbecomeseconomicallyincludecoalandfueloil,forwhichpricing.Thechoicetoswitchviabletoswitchtocoal.Asnumerouscountrieshavepre-fromgastocoaliscommonlyillustratedinfigures39to41,inGlobalGasReport2023331/ReviewofthemostturbulentyearinthehistoryofgasFigure42:EuropeanEmissionAllowance(EUA)price–EUEmissionTradingSystem(EUETS)USDpertonneofCO212011010090807060EUApricejumpedaround300%inoneyear5040EUA302010Phase3(2013-2020)Phase4(2021-2030)0May-20Jun-20Jul-20Aug-20Sep-20Oct-20Nov-20Dec-20Jan-21Feb-2M1ar-21Apr-21May-21Jun-21Jul-21Aug-21Sep-21Oct-21Nov-21Dec-21Jan-22Feb-2M2ar-22Apr-22May-22Jun-22Jul-22Aug-22Sep-22Oct-22Nov-22Dec-22Jan-23Feb-2M3ar-23Apr-23May-23Jun-23Jul-23Aug-23Source:RystadEnergy2021thegaspricesurpassedthiscoalswitchinginAsiaandEuropacontinuetorisefromthebandatalltradingpoints.Thistrendhasweakenedasgaspriceshavepreviousyear,favouringcoal-intensifiedin2022forbothAsiandecreased,promptingnumerousto-gasswitching.Subsequently,spotandTTF,drivenbythesoaringpowergenerationcompaniestomanyregionsswitchedfromgasprices.In2022switchingwasreverttousingnaturalgas.usinggastousingcoal,driveneconomicallyattractiveandasbothbyeconomicfactorsandsuch,EuropeandAsiasawacoal-EuropeancarbonpricesareconstraintssuchaslimitedimportfiredpowergenerationincreaseincorporatedintheEuropeancapabilities.Adirectconsequenceof1.3%and2.6%respectivelyincoal-switchingpricebands,asoftheincreasedadoptionofgas-2022comparedwith2021.Coalcoalisahigheremitterthangas.to-coalswitchingwasareboundpricesrosewithincreaseddemandConsequently,ahighcarbonpriceincarbonprices,asenergyandwithhighergastocoalswitchingmakesgasandotherlowemitterscoal-relatedsupplychainswereactivity.LeadinguptoSeptemberpreferabletocoal.Thebeginningrequiredtobuymorecarbon2023,theeconomicjustificationforof2022sawcarbonpricesallowances.EmissionsFigure43:Globalenergyemissions,splitbyenergysourceDespitesignificantreductionsinenergyuseinmanyregionsinresponsetotheglobalenergyMegatonnesCO2eq.crisis,globalemissionsfromenergystillreachedarecord-breakinglevelin2022ofalmost4250,00040,00440,84541,81541,98239,92541,56242,029gigatonnes.2022sawtheintroductionofnew45,0008%8%8%8%9%9%9%energytransitionaccelerationpolicies,including40,00016%theInflationReductionAct(IRA)intheUnited35,00017%17%17%18%18%17%StatesandREPowerEUinEurope.30,00036%25,00036%35%35%34%34%34%In2022,totalglobalenergy-relatedCO220,00040%emissionsgrewbyabout1.1%,continuingthe15,00039%39%39%39%40%40%upwardtrajectory.Emissionsfromnaturalgas10,0002016consumptionsawaminordecline,partlyCoalattributedtopricespikeswhichincentivisedthe5,000adoptionofalternativeenergysources.Asa0resultofgas-to-coalswitching,totalemissionsfromcoalincreasedin2022albeitdecreasingin201720182019202020212022portionoftotalemissionmix,reachinganLiquidsGasOthersSource:RystadEnergyGlobalGasReport2023341/Reviewofthemostturbulentyearinthehistoryofgasall-timehighofabout16,752Figure44:Asia’spowermix(2016-2022),splitbyenergysourcemega-tonnesofCO2equivalents.TheriseintotalcoalusageTWhdespiteworldwideinitiativestodiminishitsdependencyoncoal,16,00011271119181257213002132401406114531asitisthemaindriverofglobal14,0002%2%1%2%1%2%1%2%1%2%1%2%emissionscontributingto12,0001%2%climatechangehighlightsthat10,0004%4%5%5%5%5%5%thefuelremainsahardtoreplace6%7%8%9%11%13%energysource.Coalhasbeen8,00015%15%15%12%responsibleforroughly40%of6,00015%14%theannualenergy-related13%12%12%15%14%emissionsconsistentlyoverthe12%11%lastyears,asseeninFigure43.12%11%Asianpower4,00058%58%56%55%55%54%productioncontinuesstrongdependence58%oncoal2,000Asiahasexperiencedasubstantialsurgeinpower0201720182019202020212022demandcoupledwithits2016robusteconomicgrowthoverGasHydrothepastdecade,andthisCoalNuclearBioenergywasprimarilymetbycoalasanRenewablesOther(non-renewable)energysource.From2021toLiquids2022,therewasamarginal0.9%reductionintheuseofgasforSource:RystadEnergypowergeneration,whilecoalsawanotable2.6%increase.Figure45:Europe’spowermix(2016-2022),splitbyenergysourceThesedevelopmentsweremainlydrivenbyChina,TWhaccountingforaabout68.7%of5,000theincreaseincoalconsumptionandabout37.5%ofthereduction4,0003936393539703898376539203818ingas.Lookingaheadto2023,3,0005%5%5%5%5%5%5%bothChinaandIndiaare2,00015%14%15%14%16%15%14%sustainingtheupwardtrajectory17%18%20%ofcoalutilisationforpower16%18%17%23%23%26%generation.InJuly2023,these20%countriesexhibitedyear-on-year17%20%18%15%19%18%19%growthratesincoal-based12%13%14%powerproduction,withChina21%24%23%24%22%22%19%experiencinga7.9%increaseandIndiarecordinganevenmore1,000201720182019202020212022substantial9.3%growth.24%CoalGasHydroBioenergy0Other(non-renewable)2016NuclearRenewablesLiquidsSource:RystadEnergyCoal’spositionintheEuropeanpowermixcontinuesreversedtrendUntil2021,coal-firedelectricityHowever,in2021coalgainedenergy.In2022,theshortagegenerationhadbeensteadilypositivemomentumagainduetoofgassupplyinEuropecreateddeclininginEuropesince2012,ingrowingaffordabilityconcernsmorepositivemomentumforcoallargepartthankstoswitchingtosurroundinggas,coupledwithovergas.Additionally,accordingnaturalgasandrenewables.availabilityconcernsofrenewabletotheIEA,EU-countriesfacedaGlobalGasReport2023351/ReviewofthemostturbulentyearinthehistoryofgasFigure46:ChangestopowerconsumptioninEUcountries(2021-2022),bygeneratingsourceTWh2021totaldemandDecreasesinnuclearandhydrogenerationoffsetbyincreasesin2022totaldemand=2,888TWhpowergenerationfromgas,coal,solar,wind,andothersources=2,809TWh0-20YOY33YOY-40decliningtotal-60Theuptickincoalandchanges-80-119gaswouldhavebeena-1001-120-79-140-160lothigherwithout39-180windandsolargrowthYOY-200growing285Nuclear-66GasCoalSolarWindOther62022DemandHydroSource:Embermonthlyelectricitydatalossof119TWhofnuclear2022despitedecreasesinoverallfrom2021,to26milliontonnesgenerationduetonuclearoutagespowerconsumptionthroughoutCO2equivalents.Yet,thereversalinFranceand66TWhofhydrotheyear.Germany,duetolimitedofthelong-termtrendoncuttinggenerationstemmingfromtheabilitiestoreroutegasimports(asdownoncoalusageisexpectedextremedroughtacrossEurope,discussedintheTradeFlowstobetemporaryasEUcountrieswhichwasfulfilledmainlybycoal,sub-chapter),wasintheforefrontreturningtoimplementingtheirsolarandwind.Consequently,ofthisdevelopment.PowersectorpledgestophaseoutcoalintheEuropeancoalconsumptioninemissionsintheEUcountriesfuture–Netherlandsin2029,andpowerproductionincreasedinincreasedin2022byabout3.9%GermanyandRomaniain2030.Thedirecteffectofgas-to-coalswitchingonpower-relatedemissionsTable3illustratesthedifferentcarbonintensitiesTable3:Emissionsinpowerapplications,byofcoal,liquids,andgas.Naturalgashasanenergysourceemissionsprofilethatisabout50%lowerthancoalandabout20%lowerthanliquids,makingEnergysourceDirectemissionswitchingfromcoalandliquidstonaturalgasinpowergenerationawaytosignificantlyreducefactoremissions.(MtCO2-eq/TWh)TherearemultiplepathwaystodrivedowntheCoal0.8emissionsinnaturalgasfurther.OneprimarymethodinvolvesimplementingcarboncaptureLiquids0.5technologies(CCSandCCUS),whicharepivotalforthesuccessoftheenergytransitionatlarge.AnotherGas0.4pathwayisreducingthecarboncontentofthefuelthroughthedeploymentofgreenorlowcarbongasSource:IPCCAR6technologies.Thisincludestheutilisationofrenewablenaturalgasorbiomethane,hydrogen,andotherpotentialemergingformsoflow-emissiongaseousfuels.FurtherexplorationofthesestrategiescanbefoundinChapter2.6Includesbioenergy,otherrenewables,otherfossilfuelsandnetimports.GlobalGasReport2023361/ReviewofthemostturbulentyearinthehistoryofgasFigure47:CoalandgasintheEuropeanpowermixFigure48:PowergenerationandemissionsfromcoalandgasinEuropePercentofcoal-gas-mix100%MWh(leftaxis),MegatonnesCO2eq.(rightaxis)90%1,6001,0001,4009001,200-16%1,00080%80080070%60070040060%200600-22%50%G>C02018201650040%40030%30020%20010%1000%2017201920202021202220172018201920202021020162022GasCoalPowergenerationfromcoalandgas(leftaxis)Poweremissionsfromcoalandgas(rightaxis)Source:RystadEnergySource:RystadEnergyFigure49:CoalandgasintheNorthAmericanFigure50:PowergenerationandemissionsfrompowermixcoalandgasinNorthAmericaPercentofcoal-gas-mixMWh(leftaxis),MegatonnesCO2eq.(rightaxis)3,500100%2,00090%-5%80%3,00070%60%2,500-13%1,50050%2,0001,00040%G1,50030%20%1,00010%5000%20165002017201820192020202120220201720182019202020210GasCoal20162022Powergenerationfromcoalandgas(leftaxis)Poweremissionsfromcoalandgas(rightaxis)Source:RystadEnergySource:RystadEnergyFigures47and48pertaintoEurope,withFigure47illustratingthecoal-gasmixforpowergenerationandFigure48showingthepowerandrelatedemissiongeneratedfromcoalandgas.Figures49and50focusonNorthAmericaandshowcasethesamecontents.AsshowninFigure49and40,bothEuropeandNorthAmericahavereducedpowergenerationfromcoalandgas,butrelatedemissionshavedecreasedmoresubstantiallythanpowerproduction.Thisisduetoashiftintheircoal-gasmix,asbothregionsincreasinglyfavourgasovercoalinthepowermix,asevidentinfigures48and50.TheeffectofhavinghigherproportionofgasinpowermixonemissionreductionwhilemaintainingstablepowergenerationisparticularlynoticeableinNorthAmericabetween2021and2022.Inthisperiod,NorthAmericaincreaseditsfossil-basedpowerproductionwhilereducingrelatedemissions.Thiscanbeattributedtoahigherutilisationofgasinpowergeneration,drivenbyHenryHubconsistentlyremainingatorbelowthelowerendoftheswitchingbandthroughout2023,makinggasamoreeconomicaloptionthancoal.GlobalGasReport2023371/ReviewofthemostturbulentyearinthehistoryofgasDevelopmenttrendsoflowcarbongasesLowcarbongasesareacriticalscalingoflowcarbongaseousspeedandscalearestillfarcomponentofdecarbonisingtheenergy.2022hasseenanbehindwhatisneededfortheconsumptionofgas,andaincreaseincapacityandahigherenergytransitionandforthenecessarybuildingblockinalevelofprojectannouncements,worldtodevelopinaccordancesuccessfulenergytransition,sendingapositivesignaboutthiswithlowerglobalwarmingwhichwillrequiresignificantmarketsegment.However,thescenarios.BluehydrogensawlimitedgrowthconsideringspikingnaturalgaspricesCurrently,mostoftheworld’sFigure51:Globalbluehydrogennameplatecapacity,splitbyregionhydrogenisproducedusingnaturalgas,andbluehydrogen,Milliontonneshydrogenwhichisdecarbonisednaturalgas4based,hasasignificantlylargershareofthenascentlowcarbon3.03.03.1hydrogenmarketcomparedtogreenhydrogen.Thisislargely3duetoitsfavourableeconomicsandanalreadyestablishedsupply2.52.52.52.5chain.Thecompetitivenessofbluehydrogen7facedchallenges2amidtheelevatednaturalgaspric-esin2022.However,itremainsan1attractiveoptiontoproducelowcarbonhydrogenandiscost-0201720182019202020212022competitivecomparedtogreen2016Asiahydrogen,aswasthecaseeveninthehigh-pricednaturalgasNorthAmericaMiddleEastEuropeenvironmentin2022.Normalisingnaturalgaspricesin2023furtherSource:RystadEnergystrengthenitsbusinesscase.BluehydrogenprojectsfinancedinH2PerthinAustralia,andHydrogenAsofSeptember2023,blue2023areonaverage59%cheapertoHumberSaltendintheUnitedhydrogenremainssmallbutwithtoproducethangreenhydrogenKingdom.Duringthefirsthalfsignificantpotential,bothaccordingtoa2023analysisdoneof2023,atotalofaround1.4throughretrofittingofgreybyBloombergNEF.ThishasdrivenMTPAofnameplatecapacityforhydrogenfacilitiesandgreenfieldEuropeancorporationstoincludebluehydrogenprojectshasbeenprojects.Mostofthebluehydro-bluehydrogenintheirhydrogenannounced,whichwouldresultgennameplatecapacityisconcen-strategies,whereforinstanceinanincreaseof45%oftotaltratedintheUnitedStatesandRWEannouncedplanstoofftakenameplatecapacityfrom2022Canada,with49.7%and24.6%bluehydrogenfromEquinorinlevelsifrealised,indicatingstrongoftotalannualbluehydrogenJanuary2023.Significantgreen-momentuminthesegment.production,respectively.Forafieldbluehydrogenprojectsarealsoemerginginotherpartsoftheworld,seenbyprojectslikeBaytownCCSandH2OKintheUS,7BluehydrogenisproducedbysplittingnaturalgasintohydrogenandCO2,wheretheCO2iscapturedandstoredthroughCCUS.GlobalGasReport2023381/ReviewofthemostturbulentyearinthehistoryofgasdeeperexplorationofexpectedhydrogenfacilitytostartreceivedcertificationforfuturelowcarbongasandCCSoperations,contributinganproductionofblueammoniaindevelopments,seeChapter2additional70kilo-tonnes2022,andthecompanyhaditsand3.hydrogennameplatecapacity.firstshipmentof25kilo-tonnesofblueammoniatoSouthKoreainIntheUnitedStates,theInflationAmmoniaisahydrogencarrierDecemberthesameyear.DuringReductionAct(IRA)offersthatcanbeusedfortransportationthefirsthalfof2023,thecarbonemissionstaxcreditswhichandstorageofhydrogen.Itiscompanyhasexpandedbothimprovesthecompetitivenessofproducedthroughsynthesisproductionandexportroutes,allhydrogenproductionmethods,combininghydrogenandandisnowexporting138kilo-althoughgreenhydrogenreceivesnitrogen,canbeshippedasliquidtonnestocountrieslikeChina,thehighestshareofincentive.orsolid,andthencrackedbacktoSouthKorea,andJapan.In2023,IncontrasttotheUnitedStates,hydrogenattheconsumer.BlueSaudiArabiancompanySABICinAsianmarketslikeSouthKoreaammoniaasacarrierforblueconjunctionwithSaudiAramcoandJapanshowednostronghydrogenhasalsogainedtractionstartedtheSABIC-Aramcobluepreferenceforproductioninthefirsthalfof2023,withammoniaproject,whichinmethodoflowcarbonhydrogen.SaudiArabiadrivingtheprojectApril2023shippedthefirstIn2022,theChineseprojectdevelopmentsthisyear.TheSaudiindependentlycertifiedlowSinopecQiluPetrochemicalCCSArabianminingcompanyMa’adencarbonammoniaforuseinwasthesoleadditionalpurebluepowergenerationinJapan.ThegreenhydrogensectorisputinthecentreofnewlegislationsThepipelineofgreenhydrogen8Figure52:Globalgreenhydrogennameplatecapacity,splitbyprojectshassteadilyexpandedinregionrecentyears,withgrowthseeninstandalonehydrogenprojectsThousandtonneshydrogenandthosethatusethegenerat-80edhydrogentomakeotherendproducts,suchasgreenammonia.65.2Greenhydrogencurrentname-60platecapacityremainsrelativelysmall-scale,accountingforabout41.22.1%ofdecarbonisedhydrogen40capacityin2022.Nonetheless,itsgrowthissubstantial,with25.0annualnameplatecapacityhavingdoubledeachyearsince2020.In19.420.62022,morethan20kilo-tonnesofnewnameplatecapacitywere2015.5addedglobally.FromJanuary6.7toSeptember2023,roughly30kilo-tonnesofnewcapacityhave0201720182019202020212022beenadded,allfromassetsin2016China,withtheKuqaGreenHydrogenProjectaccountingNorthAmericaEuropeAsiaSouthAmericafor20kilo-tonnesofthisAustraliaAfricaMiddleEastincrease.Source:RystadEnergyAswiththecaseforblueammonia,alsogreenammoniapowergeneration.In2022,byFertiberia'sammoniaplantinhasgainedtractionrecentlyforgreenammonia’snameplateSpain.Inthesecondquarterofapplicationslikehydrogencapacitygrewbyaround19kilo-2023,thegreenammoniacarriage,industrialfeedstock,fueltonnesfromnearlynegligibleprojectNEOMinSaudiArabiasubstituteandfordirectuseinlevelinearlieryears,contributedreachedFID.TheFIDiscurrently8Greenhydrogenisproducedthroughelectrolysisofwater.GlobalGasReport2023391/Reviewofthemostturbulentyearinthehistoryofgasthebiggestforgreenhydrogenmakinggreenhydrogencheapermetby10milliontonnesofintheworld,markingamilestonethanblueorgreyversionsinthedomestichydrogenproduction,forthehydrogensectorastheshortterm.6milliontonnesofimportedfirstgigawatt-scalegreenhydrogen,and4milliontonneshydrogenprojecttoreachthisTheActalsointroducesa30%ofgreenhydrogenfromstage.Uponcompletionin2026,investmenttaxcreditforammonia(andderivatives)the8.4billionUSDprojectiszero-emissionprojects,withtheimports.TheEUhydrogenexpectedtoproduce1.2MTPAofpossibilityofhigherincentivesdemandtargetof20milliongreenammonia.basedonlocalconditions.Intonnesin2030comparedtoEurope,theREPowerEUinitiativethecurrentglobalgreenWhilethecapacityincrementssignalledthatgreenhydrogenhydrogennameplatecapacityweremodest,2022sawtheistobecentralinaddresstheof71kilo-tonnes,resultsinaimplementationofseveralpressingclimatecrisisintheEU.requiredincreaseinproductionpoliciesthatsignificantlyAssuch,theplanenvisionsacapacityofabout280timesthebolsteredtheeconomicfeasibilitydrasticallyincreasedgreencurrentgloballevels.Theplanofgreenhydrogen.IntheUnitedhydrogendemandtargetwouldbebackedupbytheStates,theIRAwasintroducedcomparedtothepreviousEuropeanHydrogenBank,withaseriesoftaxcredits.WhileFit-for-55scheme,boostingitprovidingfinancialincentivesbenefitingalltypesofhydrogen,fromaprojected7millionforgreenhydrogenproducers.thepolicyoffersadditionaltaxtonnesto20milliontonnesbyDetailsregardingthispolicycreditsforhydrogenfrom2030.Theambitiousnewwillbefurtherdiscussedinrenewablesornuclear,potentiallydemandtargetisexpectedtobeChapter3.Renewablenaturalgasorbiomethaneissmall-scalebutcontinuestoseestronggrowthBiomethane,alsocalled35Bcmby2030.NorthAmericamentionedearlier,theregionisrenewablenaturalgas,provideshasanadditionalbiomethanepro-expectedtokeepgrowingrapidly,apathwayforreducingductioncapacityofaround4BcmasoneoftheactionsproposedemissionsbysubstitutingplannedandunderconstructioninREPowerEUisforEuropetonaturalgasthroughcapturingasofSeptember2023.Current-scaleupitsannualbiomethaneandutilisingmethaneorbiogasly,themajorityofproductionisproduction,diversifyingawayfromdecomposingwaste,suchasconcentratedinEurope,andthefromRussiangassupplies.Thislandfillsormanure,whichwouldregionsawthelargestincreasewouldmeanarequiredincreaseinotherwisebeemittedintotheininstalledcapacityin2022.Europeansupplyofalmost9timesatmosphere.ItthereforeprovidesThroughouttheyear,144newcomparedtocurrentownproduc-highemission-reducingvalueplantswereadded,increasingtionlevels.AsofSeptember2023,byutilisingmethaneemissionscapacityby0.2Bcm.TheUnitedtheUnitedStatesoperatesaroundproducedbyotherpartsoftheStateshasthelargestbiome-1000plantsproducingabout4economy,includingagriculture,thaneproductioncomingfromBcmyearly,growingataslightlytoproducebiomethane.Afteronesinglecountry,andin2022,lowerratethanEuropecombined.capture,thebiogasisupgraded17plantscameonstreamintheAlthoughstillinitsinfancy,Asiaandpurifiedtoyieldbiomethane,country,presenting0.08Bcmincontinuestobethemostpromis-whichcandirectlysubstituteadditionalvolume.Regardingtheinggrowthsupplymarket,withitsnaturalgaswithintheexistingchoiceoffeedstock,Europehasabundantfeedstockresourcesandinfrastructure,withnoretrofittingexperiencedanoticeabletrendincreasingenergydemands.InChi-required.towardstheutilisationofagricul-na,AirLiquidestartedoperationturalresidues,organicmunicipalofabiomethanefacilityinHuai’anGlobally,estimatedbiomethanewaste,andsewagesludge,whileCityin2022,whichfeedsthegasnameplatecapacitystoodatNorthAmericahasbeenmainlygridofthecity.However,despitearound7Bcmin2022,accountingusingorganicmunicipalwaste.substantialinvestmentfromtheforabout0.2%ofglobalgascentralgovernment,themarketdemandthisyear.However,theAsofSeptember2023,Europeishasnotprogressedasmanypotentialismuchgreater.Europe,stillthemostdominantregioninanticipated.inalignmentwithREPowerEU,themarket,withmorethan1200aimstoscaleupannualoperatingplantsrepresentingThemainvaluepropositionforbiomethaneproductiontoalmost4Bcmofyearlysupply.AsbiomethaneisitscapabilitytoGlobalGasReport2023401/Reviewofthemostturbulentyearinthehistoryofgasdisplacetraditionalnaturalgaswillbegettingstricterinthetargets,asillustratedthroughinvariousindustrialapplicationsfuture,increasingitscompetitive-forinstancethescalingneedandbuildings,assumingthatness.However,asignificantneedforEuropeansupplytomeetcarbontaxesandthecarbonforaccelerationandscalingof2030targetssetoutinmarketregulatoryenvironmentsupplyisneededinordertomeetREPowerEU.Syntheticmethanehasgainedtractionproducinge-methanethatinrecentlythroughseveralpilotprojectsturncanbetransportedtoanddistributedinJapanusingSyntheticmethaneore-methanedecarbonisetheirnaturalgasexistingLNGandnaturalgasisanotherlowcarbongasthatisconsumptionthroughsyntheticinfrastructure.InJuly2022,asgainingattention,andasformethaneandhassettargetsforpartofapilotproject,abiomethane,itisespeciallysyntheticmethaneuptakeinpartnershipincludingEngieinterestingasitcouldsubstituteexistinginfrastructureof1%byconductedthefirstinjectionofnaturalgasinitsapplications2030and90%by2050.TokyosyntheticmethaneintothewithoutanyneedforchangeGas,Japan’stopcitygasFrenchgasdistributionnetwork.ininfrastructure.E-methaneissupplier,beganatrialinJuneIfbreakthroughstoreducecostsproducedthroughusingsurplus2022,aimedatproducingcanbeachieved,e-methanesupplyofrenewableenergytoe-methanetoreplace1%ofthecouldprovetobeamajorproducegreenhydrogenandcitygasvolumeby2030.Further-technologyfordecarbonisingthecombinethiswitheithercarbonmore,thecompanyisconductingnaturalgassupply.However,fromdirectaircapture(DAC)orfeasibilitystudiesinMalaysiawithbothscale,technology,andcarboncapturefromindustrialSumitomoandPetronas,andincostarechallengeswhichsites.Thee-methanetechnologyNorthAmericaandAustraliawithe-methanewillneedtoisstillinearlystages,andcurrentMitsubishi.TheJapanesegasovercomeforwideradoptionprojectsconsistsofpilotstotestcompanyOsakaGashaspartneredtobeachieved.viabilityandcommerciality.withMarubeniandPeruLNGinPeruandSantosinAustraliaForinstance,JapanaimstoinvestigatingthepossibilitiesofThehistoricalevolutionofenergypolicyprioritiesthroughtheenergytrilemmalensTheenergytrilemmareferstofuturedemandchangesoraccomplishedvariesduetothebalancebetweenthedevelopments,andthatisfactorslikegeography,finances,often-conflictingenergypolicyequippedtomanageexternalresourceavailability,geopolitics,priorities:ensuringenergyrisks.Thelatterisusuallyaccom-andstakeholderinterests.security,affordability,andplishedthroughenergysystemsustainability.Securityreferstoplanning.AffordabilitymeansthatIntheperiodfollowingthe2014havingreliable,uninterruptedenergyisnotonlyavailable,butoilpriceplungetriggeredbytheavailabilityofenergywheneveritalsoaffordableforconsumers.abundanceoftheUnitedStatesisneeded.Intheshortterm,thisSustainabilityrequiresthatenergyshaleproduction,theindustrycouldmeananenergysystemproductionanduseminimisefocusshiftedtoloweringenergythatdeliversstableenergytoharmtotheplanetandfutureproductioncostsinacorrectedconsumersinthetimeandgenerations.Ideally,energypolicymarket.Atthesametime,globalquantityitisneeded.Inthelongshouldaimformaintainingenergypolicyemphasisgenerallyshiftedterm,itmeansprovidingenergysystemsthatbalancethesidesoftowardstheenergytransition,supplythatdevelopsintrendwiththeenergytrilemmatriangle,withdecarbonisationgainingdemand,inanticipationofanybuthowthisbalancecanbemomentumafterthesigningofGlobalGasReport2023411/ReviewofthemostturbulentyearinthehistoryofgasFigure53:TheenergytrilemmaFigure54:EffectsofrecenteventsSecuritySecuritySecuritySecurityRussia-UkrainewarEnergyEnergytrilemmaEnergySustainableenergypolicytrilemmatrilemmaGlobalwarmingEnergypricespikeSustainabilityAffordabilitySustainabilityAffordabilityustainabilitySustainabilityAffordabilityAffordabilitySource:RystadEnergySource:RystadEnergy2015ParisAgreement.However,dataset.Lastly,theRussia-Ukraineachievea45%renewableshareasageneraltrend,manyconflictunderscorestheneedforinfinalenergyconsumptionmixdecarbonisationpoliciesfavoureddependableanddiversifiedby2030fromthecurrentlevelofmeasuresonthesideofenergyenergysources.Thisfocushasabout16%.Thiscoincideswithitssupply,includingrestrictingdrivennationstoestablishnewlegislationtobefullyindependentfossilfuels,overdemandsideenergypartnershipsandshiftofRussiangasby2027.management,andalackofaawayfromtraditionalsuppliersglobalemissionspricingregimein2022anddemonstratedthatToreachthesetargets,theEUhasisastarktestamenttothatwhenenergysecurityandfocusedonincreasingshort-termimbalance.Thiscontributedtoaffordabilityarecompromised,gassupplyfromdifferentagrowingdisconnectbetweensustainabilityprioritiesaresuppliersliketheUnitedStatessupplyanddemandevolution,difficulttomaintain.andNorway,aswellasexploringwithincreasinglyrestrictedsupplyoptionsinEgyptandIsrael.ThestartingtolagtheunrestrictedEuropewasforcedtoshiftitsshort-termapproachhingesondemand.TheCovid-19pandemicfocusfromsustainabilitytoachievingtheEU2030targetfurtherworsenedinflationarysecurityfollowingtheofreducingitstotalnaturalgaspressures,wherestrainedRussia-Ukraineconflict.Thisdemandby50%(eventhoughthisglobalsupplychainscoupledresultedinbothadelayincoalambitionstillhastotranslateintowithanunanticipatedrapidpost-phase-outandtoanincreaseinanactualplan,sincethelatestlockdownsurgeindemandsetspotLNGimportstosecureENTSOGscenariosof2022sawaofftheriseinenergypricesinshort-termreliability.Further,thereductionofonlyabout24%be-2021.In2022,theRussia-Ukraineregionisplanningtoelectrifyitstween2021and2030).Thepolicywartookthesupplytightnesstoenergysystemandexpandrenew-strategyisfocusedonavoidingaglobalcrisislevel,culminatingablepowergenerationtorein-excessafter2030,andarguablyinhighesteverpricespikes.Thisforceenergyself-sufficiencyandprioritisingtheriskofstrandedpromptednationstoprioritisereducedependencyonimportedassetsovertheriskofunder-affordability,demonstratedbyfuel.Here,theformerrepresentssupplyiftargetsfallshortofthesubstantialgrowthincoaluse,asaconflictbetweensustainabili-50%reductionindemandthatkeycountriesinAsiaandEuropetyandsecurity,whilethelatterthepolicyenvisions.Therearelookedtomoreaffordablespeakstoasynergybetweenalsoplanstorepurposealternatives.Itwasalsoseeninthetwodimensions.Currently,existinggasinfrastructureforthestrengthenedenergyelectricityrepresentsabout23%cleanhydrogeninthefuture.consumersubsidies.Forinstance,ofEurope’sfinalenergyEurope'sfuturedemandfortheIndonesiangovernmentconsumptionoraround2,478naturalgasishighlyuncertain,increaseditsenergysubsidiesbyTWhintheEUandgoingforward,giventheaimtotransitiontolow39%in2021toIDR243trillion,itisforecastedbytheEuropeancarbongasesandhesitancetoandEuropehascumulativelyCommissiontoincreasetoaboutsignlong-termLNGcontracts.spentcloseto651billionEURon33%or2,687TWhin2030inHowever,thetechnicalandsubsidiesfrom2021SeptembertoaccordancewithREPowerEU.economicfeasibilityofreplacing2023June,accordingtoaBruegelTheREPowerEUtargetsaimto50%ofnaturalgasdemandwithinGlobalGasReport2023421/ReviewofthemostturbulentyearinthehistoryofgassixyearsfacessignificantFigure55:Grossinlandconsumptionbyfuelin20199andintheuncertainty.Primarily,theREPowerEUscenario10constructionandmodernisationofenergyinfrastructureisaTWhtime-consumingandcapital-intensiveendeavour.Evenforpro-18,000Total:16,473TWhTotal:12,796TWhjectsthatcancompleteconstruc-16,0009%,SolidFuelstionswithinayear,suchason-14,00011%,Solidfuels13%,Nuclearshorewindfarmsandsolarplants,12,000theentiredevelopmentprocess10,00014%,Nuclearusuallylastsfourtoeightyears.Interconnectionisoneofthe16%,mostcriticalanddifficultphasesRenewablesinthedevelopmentphaseasthegridsgetincreasinglycongested.8,00024%,Natural34%,AccordingtoLawrenceBerkeley6,000gasRenewablesNationalLab,thetypical4,000interconnectionassessment2,00035%,Liquids11%,NaturalgasdurationfromrequesttoagreementintheUnitedStates33%,Liquidswas35months(justshyofthreeyears)in2022.Additionally,in02030REPowerEUordertotripletherenewables2019capacityanddoubleelectrificationoftheenergysystem,itwouldbeSource:EuropeanCommission;EuroStat;Primesnecessarytoexpandtheelectri-caltransmissionanddistributioncanbeseenamidrecentevents,increasingcoalcapacity.Gascouldgrids.AccordingtotheIEA,thewithseveralcasesofgastocoalprovideavaluablelifelineforPaki-averageleadtimetoconstructswitching,andlargeenergystaninachievingsecurity,afforda-anoverheadtransmissionlinesubsidiesfocusedonkeepingbilityandsustainabilityifpoliciesis10years11.TheEU’spushforenergyaffordable.InabidtoprioritiselongtermLNGpurchasesecurityandsustainabilitythroughlowerpowergenerationcostsandagreementsovervolatilespotrenewableshasalsounveilednewenhancesecurity,Pakistanhasan-marketprocurement.LargeAsianconcernsascriticalmaterialsandnouncedthatitwillnotbuildneweconomieslikeChinaareexpand-supplychainsarehighlyconcen-gas-firedpowerplantsinthecom-ingtheircoal-firedtratedgeographicallyoutsideingyears,andplantoquadruplegeneration,with115GWofEurope,introducingsimilarsecu-itsdomesticcoal-firedcapacitytoapprovedcoalcapacityin2022.rityrisks.Toreducesecurityrisks10GWinthecomingyears,fromCoalremainsakeyenergysource,andbolstercompetitiveness,the2.3GW.Ashortageofgas,whichstandingat56.2%ofthepowerEUintroducedtheGreenDealaccountsfor33%ofthecountry’smixin2022,underpinningChina’sIndustrialPlantoscalemanufac-poweroutput,plungedlargecontinuedfocusonaffordableandturingandtechnologycapabilitiesareasintohoursofdarknessinreliableenergy.However,coal-initspursuitofnet-zero.However,2022duringsurgesinglobalLNGfiredgenerationhasledtopoorchallengessuchasprolongedleadpricesaftertheRussia-Ukraineairqualityandseverepollution,timesforlocalproduction,strainedconflictmadeLNGunaffordablepromptingChina’s“BlueSky”globalsupplychains,andsoaringforPakistan.policyin2017,whichpromotesinflationareslowingdecarbonisationcoaltogasswitchingtoimproveefforts,makingnaturalgasmoreWhilePakistanaimstoreduceurbanairquality.Thepolicylikelytohavecontinuedpresenceinemissionsby50%againstits2015resultedin25millionruraltheEuropeanenergymix.baseline,thiswillbechallenginghouseholdsswitchingawayfromwiththeupcomingplansofcoalforheatingintheheavilyAcrossAsia,anevidentshifttowardssecurityandaffordability9GrossinlandconsumptionreferstoprimaryenergyconsumptionintheEU,excludinginternationalmaritimebunkers.PrimaryenergyconsumptionhasnodirectrenewabletargetsbyREPowerEU,whilefinalenergyconsumptionhastargetsof45%by2030.10UnitsareconvertedusingIEA’sfactorof1Mtoe=277.8/23.88TWh.Solidfuelsrefertocoalandcoalderivatives,accordingtotheEuropeanCommission.11IEA,AverageleadtimestobuildnewelectricitygridassetsinEuropeandtheUnitedStates,2010-2021.GlobalGasReport2023431/ReviewofthemostturbulentyearinthehistoryofgaspollutedregionsbytheendofbillionUSD,whichbringsintoreliesonrudimentarycooking2020,ofwhich52%optedforquestionthesubstantialmeanssuchascoal,charcoal,andgas,38%forelectricity,andthefinancialcommitmentsrequiredagriculturalwaste.Naturalgascanremainingforcentralisedheatingforthetransitiontotakeplace.helptoacceleratetheuptakeofandrenewablesources.GasisAvailabilityofcapitalamidacleancooking,thoughthisoptsexpectedtocontinueplayinganperiodofhighinflationaryforthedevelopmentofaccessimportantroleinChina’senergypressureandcostescalationcouldinfrastructure.mix,mainlyintheformofathreateneconomicstability.dispatchableandflexiblesource.Inconclusion,theenergytrilemmaIncontrast,otherAsiancountries,IndevelopingregionssuchashighlightsthechallengesandincludingSingapore,SouthKorea,Sub-SaharanAfrica,poorenergyshiftsinpoliciestobalanceandJapan,havelargelyreliedonaccesshasunderpinnedthelacksecurity,affordability,andenergyimports,accountingforofenergysecurity.Accordingtosustainabilityinenergysystems.over80%oftheirdomesticenergytheWorldBankestimates,almostSustainabilitycannotbefullyconsumption.Thesecountries800millionpeoplelackedaccessrealisedwithouttheimportantaremajorimportersofcoalandtoelectricitygloballyin2021,pillarsofsecurityandaffordability,gas.Singapore,forinstance,600millionoftheminAfrica.Thisandthereforeallthreeneedtoderivedover95%ofitspowerwasfollowingthecost-of-livingbeinbalance.Naturalgasandfromnaturalgasin2022.DespitecrisispostCovid-19,whichmadelowcarbonandrenewablegasestherelianceonimportedcoalelectricitymoreexpensiveemergeaskeyenergysourcesinandgas,thesecountriesmitigateglobally.Ensuringaccesstobalancingtheenergytrilemma.Gasenergysupplysecurityrisksenergyforimpoverishedregionsofferssecuritythatcanbolsterthroughlong-termLNGcontractsiscrucialfordrivingeconomicdevelopmentandindustrialisationanddiversifiedsources,includingdevelopmentandindustrialisation.indevelopingregionsovercomingcountrieslikeAustralia,Indonesia,Forthistotakeplace,amassivepoverty.ForareasthatrelyheavilytheUnitedStates,Colombia,andadditionalenergydemandwilloncoal,gasprovidessimilarSouthAfrica.requireareliableandaffordablesecurityandaffordability,energysource.Naturalgas,withenhancingsustainabilitybyTheshalerevolutionhastakenaprogressivelydecarbonisedaddressingairqualityproblemstheUnitedStatesfrombeingthegaseousenergymixinthefromcoaluseandreducingworld'smostsignificantenergycomingyears,canmeetthisneedemissions,whilemakingthegridsimportertoasignificantenergyasgascanserveasasourceofmoreresilienttosupporttheexporterfrom2020.Thishasledheat,power,andfeedstockmassivescale-upofrenewablesthecountrytoleancomfortablyforcriticalindustry-includingneededtoreachtransitiongoals.onitsownenergyproductioninfertilisertoprovidefoodsecurityFordevelopedregionslookingtorecentyears,despitetheenergyandsteelandcementtobuildtransitiontorenewablesinamuchcrunchthataffectedregionssuchroadsandmodernbuildings.shorterterm,naturalgasandasEuropeandAsiasince2021.ThoughruralpartsofAfricaarelowcarbonandrenewablegasesAlbeitsomereactiontoariseinexploringtheoptionofbuildingserveasflexibleanddispatchabledomesticgaspriceswasPVmicrogrids,thatisbynomeanssourcetacklingintermittency,observedintheUnitedStatesasabletosustainheatandpower-enhancingthereliabilityofgrids,well.Aclearshiftinfocustowardsintensiveindustrialoperationsandfosteringcompetitivesustainabilityisevidentthroughsuchasrunningacementorindustrydecarbonisation.theenactmentoftheIRA.Thefertiliserfactory.OntheFurthermore,thesegasescanIRAisexpectedtoacceleratethesustainabilityfront,therearestillexploitexistinginfrastructure'senergytransition,emphasisingsus-significantsharesofindustrialadaptability,wideningtherangetainabilitywhilepreservingenergysectorsaroundtheworld–ofoptionsfortheenergysecuritybyincentivisingthescale-especiallyAsia–thatusecoalfortransitionwhilehelpingtoupofdomesticvaluechainsforpowerandheat,wheregascanreduceitscostandensuringgreenindustriesandtechnologies.servethesamepurposes,andfutureproofingofneededThetotalbilloftheIRAiswithloweremissions.Additionally,investmentstowardsstrengtheninganticipatedtobenearly800nearlyathirdoftheworldstillofsupply.GlobalGasReport2023442/2030andbeyond–assessingtheassumptionsaboutfuturegasdemandandoutlooks2/2030andbeyondThischapterevaluatesthefuturescenariosofnaturalbalanceinglobalgasmarkets,particularlywiththegasdemandleadingto2030andbeyondto2050.risingglobalrequirementforflexibleandreliableDespitetheremarkableuncertaintyacrossexistingenergyamidstincreasingextremeweatherchallengesenergytransitionscenarios,naturalgasisexpectedtoenergysystems.toremainasignificantparticipantinglobalenergymarketsinthecomingdecades.However,thelevelFurthermore,thischapterexploresfuturenaturalgasoffuturenaturalgassupplyhasbeenlargelylefttodemandscenariosandsomeoftheuncertaintybandschance.Theverylargedifferenceinlevelsofacrossdifferenttransitionscenarioassumptionstoanticipateddemandacrossdifferentscenarios–drawattentiontotheveryrealpotentialsecurityofincludingthosethatprojectsuchdeepdemandsupplyimplications,particularlyas2030drawscloser.reductionsthatnonewnaturalgasprojectsareThischapterseekstozoominonwhatvariousneededanywhereintheworldtoday–makeitveryscenariosmeanforthegasindustryanditschallengingtoplaninvestments,whiletheincreasinglystakeholders(governments,financialinstitutions,restrictivepolicyenvironmenthasraisedthecostofandenergycompanies),andmoreimportantly,fortheseinvestments.Meanwhile,thecurrentlevelofconsumers.ThechapterutilisesdataandscenariosnaturalgasandLNGsupplyplannedandexpectedtofromtheIEAWorldEnergyOutlook(WEO)scenariosbeavailablethisdecadeisinsufficientforaresilientfrom2022.Highlights•Thereisaneedtodevelopadditionalgasresources,asmanyscenariospointtowardssubstantialdemandfornaturalgastowards2030andbeyond.ExistingoperationalandFID-ednaturalgasproductionisinsufficienttomeetmostnaturalgasdemandscenarios.Eveninthedeepdecarbonisationscenarioslikethe1.5-degreescenarios,around100billionUSDofinvestmentsareneededin2050,andlowcarbongasesplayanimportantroleinthisscenario.Whenconsideringalessaggressivescenario,suchastheRystadEnergy1.9-degreescenario,theshortfalloffuturesupplybecomesmoreapparent,totallingover1,000Bcm.Globally,therearemorethan200Tcmofprovenandprobablenaturalgasresources,whichismorethanenoughtocoverhighdemandscenarios.However,itisessentialforsupplytobewellplannedandbuiltoutaheadoftimetoreducetheriskofimpendingglobalshortages,potentiallythreateningenergysecurity,affordability,andsustainability,andtoavoidanenergycrisis,asseenin2021and2022.•Deepdecarbonisationscenarioscallformassiverenewableenergyandelectrificationinvestments,posingcapitalavailabilitychallenges.Balancingbothinvestmentswhilemaintainingthepaceofnaturalgasdevelopmentsaddsrisktobothexistingandfutureenergysystemsandcallsforsoundpoliciesandincentive-basedframeworkstofacilitatesustainabledevelopment.Scarcityofcapitalmaydelayrenewableenergyadoptionanddivertcapitalawayfromessentialgasdevelopmentsthatwouldcausemajorturbulenceinenergymarketsinthecurrentandcomingdecades.Hence,thereisaneedforintegratedplanningtoensureinvestmentsignalsarenotdisconnectedfromreality,andsufficientcapitalisavailablefortheinvestments.•Gasproductionofoperationalandunderdevelopmentprojectsisexpectedtofallshortby1,000Bcmin2050frommorethan4,000Bcmin2023duetonaturaldecline.Theoutputvolumesareprojectedtodeclineto3,134Bcmin2030,andfurtherdeclineto1,849Bcmin2040,followedbyadecreasetojustunder1,000Bcm,fallingto974Bcmin2050.GlobalGasReport2023462/Lookingto2030andbeyondUncertaintyinfuturegasdemandscenariosFigure56:Globalgasdemandscenariosfromvariousinstitutions12Bcm6,000IEEJ5,000ReferenceCase4,0003,000RystadEnergy2,0002.2-degrees1,000StatedPolicies0(2022)2010RystadEnergy1.9-degreesAnnouncedPledges(2022)RystadEnergy1.6-degreesNetZero(2022)RystadEnergy1.5-degrees20152020202520302035204020452050AwiderangeofperspectivesInthecontextofenergyscenariosSources:IEA;IEEJapan;RystadEnergyhaveemergedoutliningtheanalysis,itisimportanttohighlightpotentialtrajectoryoffuturethedifferentmethodsinfollowingtextarebuiltonnaturalgasdemandandsupplymodellingthescenarios.assumptionsrequiringsignificantneedstowards2030andbeyond.ForecastedscenariosarebehaviouralchangesandInthissection,weassesseightforward-lookingprojectionsbasedcommercialisationanddistinctscenariosfornaturalonactualhistoricaldata,currentwidespreaddeploymentofagasdemand:threebythetrendsandpoliciesshapingthewiderangeofemerging,new,InternationalEnergyAgencyprojection(IEAStatedPolicies,andexistingtechnologies,both(IEA),onebyTheInstituteofAnnouncedPledges,IEEJintheprivateandpublicspheresEnergyEconomics,Japan(IEEJ)Referencecase).Ontheotherglobally.FailuretoachieveandfourbyRystadEnergy.Eachhand,backcastedprojectionsthesebehaviouralchangesorscenariohighlightstheongoing(IEANetZero,RystadEnergydeploymentscalescouldleadtoandfutureneedforgasinthescenarios)startwithanassumedadecelerationindecarbonisationenergysystem,eveninfutureoutcome,suchasspecificeffortsandtherebydifferentscenarioswhereasubstantialemissionreductionandenergytrajectoriesacrossvariousintegrationofrenewableenergysystemcharacteristics,andaresectors,includingpower,industry,isanticipated.Giventhatallmodelledbackwardstodeterminebuildings,andtransportation.scenarioshavevaryingunderlyingpossibletrajectoriesandassumedLong-termbackcastmodellingassumptions,thereareawidechangesneededtoarriveatthatisbasedonasetofcriticalrangeofoutcomesacrossthefuturefromthepresentsystem.assumptionsabouttechnologyscenarios,highlightingthepathsthatitemploystoalignuncertaintiessurroundingtheForexample,thescenariosthecurrentstatetoanoutcomeoutlookforgasdemand.outlinedinFigure56andtheoverseveraldecadesfromthecurrentsituation.Itisahighlyvaluabletooltouseasa12Allhistoricalandforecastedvaluesarescaledtobeidenticalin2022toaccountfordifferentheatingandcaloricassumptions.Thisfigureshowsthe2022versionofNZE,APS,andSTEPSandtheNZE2022versionfromtheIEAWEO2022presentedisquitesimilarandalignedtotheversionpublishedon26thSeptember2023.AnyreferencetotheIEANZEinthisreportisconnectedtothe2022editionoftheNZEscenario.GlobalGasReport2023472/Lookingto2030andbeyondguide;however,itisnotaenergysupplyplanning.Thisisavoidshortagesandpriceshocks,perfectpredictoroftechnologyparticularlytruefornaturalgas,furtheremphasisingtheneedevolution,anditisalsonotawhereproductionneedstobeforlong-termsystemplanningofsuitablereplacementfordevelopedaheadofdemandtoenergy.Table4:Selectedassumptionsacrossscenarios13Source:IEA;IEEJapan;RystadEnergyIEA:IEA’sthreescenarioscompleteattainmentoftechnology.ItassumesagascomprisetheStatedPoliciescountry-levelgoalsforelectricitygrowthrateofabout1.3%toScenario(STEPS),theAnnouncedaccessand‘clean’cooking.InthecontinueforwardwithincreasedPledgesScenario(APS),andtheAPS,low-emissionshydrogenadoptionofrenewablestowardsNetZeroEmissionsby2050productionrisestoreach30million2050.ThescenariopredictsaScenario(NZE2022).STEPSistonnesofhydrogenperyearincontinuedrelianceontraditionalalignedwiththe2.0-degree2030.TheNZE(2022)isalignedenergysourcesinconsumptionscenarioundertheIntergovern-withthe1.5-degreescenariounderandenergydemanddrivenbymentalPanelonClimateChange’stheIPCCAR6carbonbudgetandIndia,theMiddleEast,ASEAN,and(IPCC)SixthAssessmentReportenvisionsaworldinwhichallCO2NorthAfrica.Naturalgasisalso(AR6)carbonbudgetandexam-emissionsreleasedtotheatmos-widelyassumedasthestabiliserineshowglobalenergymarketsphereareoffset,effectivelyresult-amidenergysecurityconcernsandcouldevolveifcountriesfollowinginnetzeroemissionsby2050.servesasakeyenergysourcethroughonannouncedstrategiesThisrequirestremendouseffortinreplacingcoalinlargecoalandtargetsrelatedtoenergyenergymixtransition,withrenewableconsumingcountriesthroughoutproduction,consumption,andenergyandgreenfuelsrapidlyAsia.Gasisalsoassumedtobetheemissionsreduction.TheAPSisreplacingtraditionalenergyandlargestsourceofelectricityalignedwiththe1.8-degreewideadoptionofcarboncapturegenerationin2050.Naturalgas-scenarioundertheIPCCAR6andstoragetechnology.UnderthebasedbluehydrogenandbluecarbonbudgetandassumesIEANZE(2022),lowemissionfuelsammoniawillplayacrucialroleincountriesmeetingnationalcomprise20%ofallliquid,solidandthedecarbonisationoffossilfuels.targetstowards2030andgaseousfuelsusedworldwideinAssuch,theIEEJstressesthebeyond.TheAPSprovidesan2030and65%by2050.needforthenaturalgasmarketoutlookforexportersoffossiltobestabilisedtoensurethefuelsandlowemissionsfuelssuchIEEJ:TheIEEJReferenceCaseintroductionofbluehydrogen/ashydrogen,shapedbywhatfullscenarioreflectstheanticipatedammoniaastheircompetitivenessimplementationmeansforglobaleffectsandprogressfromcurrentinmaterialisingislargelydemandandthetimelyandenergypoliciesandavailabledependentonthepriceofgas.13Finalenergyconsumptiongrowthpercentagesarerepresentedasthecompoundannualgrowthrates(CAGR)between2021to2030,and2030to2050.In2022thepowergenerationwasmadeupof22%naturalgasandelectricitymadeup17%oftotalfinalenergyconsumption.GlobalGasReport2023482/Lookingto2030andbeyondRystadEnergy:RystadEnergy’sand2,900Bcmrespectively.wherearound65%isbiomethane,fourscenariosanticipatewhatTheIEA’sSTEPSispositionedmostlyinjectedintoexistinggaswouldberequiredtolimitbetweenRystadEnergy’s1.9-distributionnetworks.Despitetheglobalwarmingto1.5degrees,degreeand2.2-degreescenarios.decline,naturalgascontinuesto1.6degrees,1.9degreesandLookingtowards2030,theremainacriticalsourceofpower2.2degrees.Thescenariosareinindustrialsectoremergesasthesystemflexibilityandindustrialaccordancewiththegreenhouseprimarydriverofgasdemandfeedstock,contributedbygasemissionsbudgetsinIPCCgrowth,particularlyinemergingpotentialsynergieswithCCUS.AR6whichlooksatlimitingglobaleconomiesacrossAsiaandAfrica.warmingtocertaindegreesSTEPSalsoassumeslargerscaleRystadEnergy’s1.5-degreeCelsiuswitha50%probability.Eachelectrification.IntheIEA’sAPS,scenarioenvisionsanet-zeroscenariohasavaryingassumedthereisanacceleratedgrowthinsocietyby2050andisalignedoptimalresourcemixtostayrenewables,resultinginareductionwiththeIEA’sNZE(2022).Assuch,withinthedesignatedcarbonoftotalgasconsumptionwithinthepaceofdeclineinnaturalgasbudget.Asthescenariosarethepowersector,despitetheinboththeNZE(2022)andRystadbasedonemissionbudgets,thereincorporationofsupplementaryEnergy1.5-degreeisrelativelyisarangeofoutcomesassociatedcapacitytobolsterflexibilitysimilar,withonlyslightvaria-withthepaceofcurbingvariousrequirements.Inaddition,thetionspost-2035,likelydrivenbyfossilfuelstomeetthebudgets.shiftindemanddirectlygravitatesdifferencesinmethodologyandThescenariosshowcaseRystadtowardsrenewablesorotherlowassumptions.TheRystadEner-Energy’sviewonthemostlikelycarbonemissionalternatives,gy1.6-degreescenariofollowspaceoftransitionforallenergytherebybypassingcoal-to-gasasimilarshort-termtrendasthesources.switching.Additionally,globalcleanIEASTEPS,wheregasdemandishydrogenproductionreaches30expectedtoincreaseandpeakWhilemostscenariosshowamilliontonnesperyearin2030,in2030at4,267Bcm,beforede-longtermgradualdownwardenablingnaturalgassubstitutioncliningto1,854Bcmin2050.Thetrajectoryinnaturalgasdemandintheindustrialsector,especiallyshorttomediumtermincreasetowards2050,therateofdeclineinrefineries.By2050,cleaningasdemandisdrivenbycoaltovarieswildlyacrossscenarios.IEEJhydrogentradepatternsaregasswitchinginAsia.Post2030,ReferenceCase,ontheotherexpectedtobewellestablished,renewablesareexpectedtogrowhand,envisionsnaturalgastowithAustraliaandtheMiddleEastsignificantly,replacingtheshareofincreasegraduallytowards2050,asthelargestexportingregions.naturalgasinpoweracrossEuropepeakingbeyondthistimeframe.andNorthAmerica.Additionally,al-Thisisprimarilydrivenbynon-WhileonthemostaggressiveternativelowercarbonfuelssuchasOECDcountriesledbyIndiaandenergytransitionside,theIEA’sgreenhydrogenbegintoincreaseIndonesia,wherecoaltogasNZE(2022)outlinesapathwayinscale,replacingnaturalgasintheswitchingisexpectedtorise.Itsfortheglobalenergysectortoindustrialsectortowards2050.shareintheprimaryachievenetzeroCO2emissionsbyenergymixincreases,fromjust2050,requiringhighinvestmentinInRystadEnergy’s1.9-degreeabove23%in2021to24%inrenewables,CCUS,hydrogen,andscenario,naturalgasdemand2030,26%in2040and27%bybiofuels.IntheNZE(2022),nat-peaksin2034at4,705Bcmbefore2050.Duetocoal’sdecline,gasuralgasdemandfallsby20%todecliningto3,361Bcmin2050.becomesthesecondlargestfuel2030,andis70%lowerthan2021Naturalgasiswidelyconsideredinthemixafter2030.by2050.By2050,theNZE(2022)animportantpartofthetransitionassumes190BcmofnaturalgastowardsalowcarbonsocietyinThedeltabetweentheRystadusedinnon-combustionsectorsmarketsthatarecurrentlyhighlyEnergy1.5-degreesscenarioandsuchaschemical,100BcmisuseddependentonhigheremittingcoaltheIEEJReferenceCaseisaboutinpowerplantsequippedwithandoil.Naturalgasdemandcontin-4,700Bcm,whichismorethanCCUS,andover560Bcmuseduestogrow,replacingcoalinAsiathetotalglobalgasconsumptionwithCCUStoproducehydrogenwhilerenewablestakesharesfromtodayofaround4,000Bcm.Asandafurther150BcmusedwithnaturalgasinEurope,theMiddlesuch,massivedevelopmentsinCCUSinindustry.Over25%oftheEast,andNorthAmerica.Naturalgasgasinfrastructurearerequiredhydrogenproducedin2050isisalsosettobethemainsourceofinthefuturetomeettheIEEJconvertedtohydrogen-basedpowergenerationduringperiodsofReferenceCase’stargets.fuelssuchasammonia,methanol,intermittencyofrenewables.ComparingitwithIEA'sstatedandsynthetichydrocarbons.However,growthinbatterypoliciesandannouncedpledges,Biogasisalsoassumedtoreachstoragecapacity,accumulatingtothedifferenceisabout1,200Bcmmorethan400Bcmby2050,nearly67TWhin2035,supportsGlobalGasReport2023492/Lookingto2030andbeyondthecasefordeclininguseofgassectorcontinuetorelyonAmerica,andtheMiddleEast.post-2035,primarilytomeetshortbothcoalandnaturalgasasGlobaldemandfornaturalgasdurationdispatchableneeds.anaffordableandpracticalremainsonanupwardtrajectorySimilarly,theindustrialsectorsolution.inthepowersectoruntil2030,isexpectedtoincreaseitsrateattributedtothetransitionfromofdecarbonisationpost-2030,RystadEnergy’s2.2-degreecoaltogasinthepowersectorprimarilythroughtheuptakeofscenarioprovidesaplausibleacrossAsiaandlowerinvestmentscleanhydrogen.Cleanhydrogenupperboundbeyondtheinnewrenewablecapacity.Bothandammoniaareexpectedto1.9-degreescenario.IntheNorthAmericaandtheMiddlecomprisearound12%ofthe2.2-degreescenario,naturalEastseecontinuedgrowthinenergymixby2050,fromlessgasassumesacentralroleinnaturalgasdemandinto2030,than1%in2022.However,thefacilitatingthetransitiontoalowwhileEuropeannaturalgasuptakeofreplacementfuelsiscarbonglobalenvironment,demanddeclines,drivenbyangradual,asheat-intensiveparticularlywithinmajornaturalincreasedpaceofelectrificationprocesseswithintheindustrialgasmarketssuchasAsia,Northacrossallsectors.NaturalgasinvestmentsstillcrucialinthelongrunFigure57:AnnualglobalenergyCAPEXFigure58:AnnualglobalgasCAPEXinvestmentsinvestmentsacrossvaryingdegree-scenarios,acrossvaryingdegree-scenarios,real202214real202214BillionUSDBillionUSD5,0001,0004,5009004,0008003,5007003,0006002,5005002,0004001,5003001,0002005001000201520202025203020352040204520500201520202025203020352040204520502010RE2.2DG2010RE2.2DGRE1.5DGRE1.6DGRE1.9DGRE1.5DGRE1.6DGRE1.9DGSource:RystadEnergySource:RystadEnergyFigure57showcasesannualpivotaltofacilitatetheextensivetwofold.Thisstarkcontrastenergyinvestmentsacrossfourscale-upofrenewableenergy,underscoresthesubstantialdistinctRystadEnergyscenarios:cleanfuels,andCCUSinitiativesfinancialcommitmentrequiredto1.5,1.6,1.9and2.2degrees.mandatedbythisscenario.transitiontoadecarbonisedenergyNotably,inhigh-renewableenergySpecifically,inthe1.5-degreesystemswiftlyandaggressively.penetrationscenariossuchasscenario,annualenergyinvest-RystadEnergy’s1.5-degreementsareanticipatedtopeakjustGlobalrenewableenergyscenario,thereisaneedforbelowUSD4.3trillionin2027,ainvestmentsarecomparedheightenedinvestmentstowardsfigureexceedingthatofthe1.9andtoglobalnaturalgas2030.Theseinvestmentsare2.2-degreescenariosmorethaninvestments(figures57and58),14TheRystadEnergy1.5-degreescenariohassimilargasdemandtrajectoriesastheIEANZE(2022)scenario.GlobalGasReport2023502/Lookingto2030andbeyondFigure59:AnnualglobalrenewableenergyCAPEXFigure60:Annualrenewablecapacityadditionsinvestmentsacrossvaryingdegree-scenarios,acrossRystadEnergyscenarios14real202214BillionUSDGW3,0005,0004,5004,0002,5003,5002,0003,0002,5001,5002,0001,5001,0001,0005005000201520202025203020352040204520500201520202025203020352040204520502010RE2.2DG2010RE2.2DGRE1.5DGRE1.6DGRE1.9DGRE1.5DGRE1.6DGRE1.9DGSource:RystadEnergySource:RystadEnergyfromthisthereisaclearcallforThe1.5-degreescenarioshowsthemajorityoftherenewablesupplygreatergasinvestmentsintheimportanceofgaswithinthechainsareconcentratedinChina,longterm,evenforaggressiveenergylandscapeinbridgingthethismaypotentiallyintroducedecarbonisationscenariossuchastransitiontorenewableenergysimilarsingle-sourcedependencyRystadEnergy’s1.5-degreealternatives.RystadEnergy’s1.6,risks,puttingenergysecurityatscenario.Inthisscenario,theglobal1.9and2.2-degreescenariosshowrisk.Additionally,thesurgenaturalgasinvestmentsaregasinvestmentsincreasingintheinlarge-scalerenewableinvest-hoveringaround300to400billionshorttomediumterm,beforementsrequiredtomeetlowerbetween2023and2030andthengraduallydecliningtowards2050.temperatureclimatetargetsdecliningto80billionUSDbycoincideswithaperiodofrising2050.ThisscenarioalsohastheThereisanunprecedentedneedinvestmentsandsentimentinthehighestlevelofuncertaintyandforacceleratedinvestmentsinoilandgassector.Itcouldbefaster-than-expectedtransitionrenewablestomeetlowerchallengingtoobtainadequateawayfromhigh-emittingfossilfueltemperaturetargets.Withcapitaltomeetbothrenewablesources.However,thisscenarioreferencetoFigure60,the1.5-investmentswhilemaintainingthecouldcallforincreasedgasdemanddegreescenarioexpectsaroundpaceofoilandgasdevelopments.andstillbeinaccordancewiththe2,800GWofrenewablecapacityThisaddsriskstobothexistingandcarbonbudget,e.g.,fasterphaseadditionsin2030,around5.5timesfutureenergysystemsandcallsoutofcoalandswitchingwithgashigherthantheannualcapacityforsoundpoliciesandincentivewouldresultinhighergasdemandadditionsinthe1.9-degreescenarioframeworkstofacilitatewhilstmeetingthecarbonbudget.at497GW.Inatimewherethesustainabledevelopment.MostscenarioscallforhighernaturalgasproductionThissectioncomparestheexpectedtoreach4,098Bcmin1,849Bcmin2040,followedbyadifferentdemandscenarioswith2023.Theseoutputvolumesaredecreasetojustunder1,000Bcm,producingandapprovednaturalprojectedtodeclineto3,134Bcmfallingto974Bcmin2050.gassupply.Withreferencetoin2030duetoassetmaturationFigure61,totalproducing,andandnaturaldecline.TheprojectionIntheshorttomediumterm,approvedgasproductionisindicatesafurtherdeclinetogassupplygrowthisprimarilyGlobalGasReport2023512/Lookingto2030andbeyondFigure61:Globalgasdemandscenariosfromvariousinstitutionsversusoperational,approvedanddiscoveredassets(2010–2050)15Bcm6,000IEEJ5,000ReferenceCase4,0003,000RystadEnergy2,0002.2-degrees1,00020152020202520302035204020452050StatedPolicies0AbandonedProducingDiscovery(2022)2010RystadEnergy1.9-degreesAnnouncedPledges(2022)RystadEnergy1.6-degreesNetZero(2022)RystadEnergy1.5-degreesUnderdevelopmentSource:IEA;IEEJapan;RystadEnergydrivenbytheMiddleEast,notablyarestillrequiredtofacilitateforAsofAugust2023,therearemoreQatar’sNorthFieldEastexpansionthegrowthinexportandtomeetthan210Tcmofgasreserves,forLNGexportsandincreasedrisingdemandinnewregions.Asunderscoringtheavailabilityofnon-associatedgasproductioninshowninFigure61,productionfromglobalgasreservestofulfilevenIran,SaudiArabia,andtheUnited“Discovered”assetsisrequiredtohighergasdemandsthanthatArabEmirates.TheUnitedStatesmeetfuturedemand.Thesearepresentedinthescenarios.Thatissettoincreaseproductionfromassetsthathaveprovenreservessaid,prioritisingthecost-effectiveshalegasresourcessuchasbuthavenotprogressedtoandaccessiblemonetisationofMarcellusandUtica,aswellasappraisalordevelopment/FIDgasisimportant.GasresourcesPermianBasinassociatedgas.stage.Evenincluding“Discovered”thataredeemedeconomicallyInAsia,Chinahascommittedtoassets,supplyisstillnotsufficientunviableatcurrentandforecastedboostingdomesticgasproductiontomeetdemandintheAPSandpriceswouldremainundeveloped,throughconventionalonshoreand1.9-degreescenario.Thisiscriticalparticularlyinthecurrentpolicyshaleplayinthewesternterritorytonoteasthereisareasonableenvironment,bothpoliticalandofXinjiang,whileSoutheastAsia’slevelofriskthatassumptionsandfinancial.Inparticular,thereareproductionissettostabiliseaspoliciesdonotdeliverasstillsignificantgasreservesininvestmentsoffsetdecliningfields.anticipated,resultinginhigherthegroundthatcouldenterthePotentialupsideisalsopresentinthananticipatedgasdemand.Infuturegasmarket,seenbybothAfrica,ledbydevelopmentsinthatsituation,supplycouldbethediscoveredandundiscoveredMozambique,whereforcemajeureunabletoreactquickenoughforresourcesinFigure62thatformin2021isgraduallybeingliftedfordemandtobemet,leadingtoaabout62%ofallgasreservesdevelopmentstoresume.potentialenergysecuritycrisis,worldwide,especiallyinSouthandgrowingglobalemissionsbyAmerica,Asia,andAfrica.FutureInthecomingdecades,thereisaincreasedutilisationofcoal.Assuch,explorationactivityandgrowingcallonexplorationandadditionalitiscriticaltohavesufficientavaila-localdemandcouldprovethesediscoveriesofgasprojectstomeetblesupplythatcanbeleveragedtoresourcestobecompetitiveandincreasingdemandsacrossallscenari-meettheuncertainsurgesinfuturedemandedwhichinturnwouldos,excepttheIEA’sNZE(2022)anddemand.Similarly,regasificationliftthedemandandexportableRystadEnergy’s1.5-degreescenario.andliquefactioninfrastructurepotentialintheseregions.IntheNZE(2022)and1.5-degreemustbeinplaceinvulnerablescenarios,theexistingandunderde-areasincaseofshortfalloflocalMonetisationofassociatedvelopmentgasfieldsaresufficienttoproductionorimports,asseeningas16:Anotherwaytobolstermeetfuturedemand.However,mid-,EuropewiththereducedRussianproduction,whilereducinganddownstreamgasinvestmentspiped-gasimports.emissions,istomonetise15Allhistoricalandforecastedvaluesarescaledtobeidenticalin2022toaccountfordifferentheatingandcaloricassumptions.16Naturalgasfoundwithincrudeoildeposits,eitherdissolvedintheoilorasafreegaslayerabovetheoilinthereservoir.GlobalGasReport2023522/Lookingto2030andbeyondFigure62:Existinggasproductionbyregions39%37%13%22%7Tcm33Tcm43%42%51Tcm4%6%14%36%18%7%32%Europe51Tcm44%RussiaNorthAmerica35%37%32%8%39Tcm28%MiddleEast3%Producing12%3%37%28%UnderSouthAmerica13Tcm11%17TcmAsiadevelopmenthasover70%of74%7%30%DiscoveryundiscoveredSouthAmerica31%naturalgasresources28%7TcmAfrica9%30%UndiscoveredAustraliaassociatednaturalgas,whichisforassociatedgas,andthereSource:RystadEnergyoftenflaredorventedduringoilaremanycasestudiesacrosstheproduction.Thisnaturalgascanworldwhereassociatedgasfuelinfrastructurefinance,becapturedandutilisedinthebecomesaviablecommercialtheseinvestmentsarefacinglocalmarket,however,oftenthesupplysource.Thisisimportantforever-growingbarrierstoo.naturalgasisimpossibletoexportenergy-poorregionslikeAfrica,duetolackinginfrastructure.whichlacksreliableelectricityac-WhileglobalsupplyanddemandAdvancesintechnologyhavecessyetaccountedforaround10%willeventuallybalance,tradingisenabledeconomicdeploymentofofglobalflaringvolumesin2022.vitalforachievingregionalgas-to-liquids(GTL),gas-to-powerMonetisingassociatedgaswouldequilibrium.Addressingcountry(GTP),andgas-to-chemicals(GTC)reduceflaringandventingandandregionalshortfallsinvolvesconversion,withGTPbeingthecontributepositivelytowardsthedevelopingnewinfrastructuresuchmostcommonapproach.InmanyenvironmentbyreducingcarbonaspipelinesandLNGfacilities.Tocasesthough,thereisabusinessandmethaneemissions.However,delvedeeperintoregionalbalances,caseforinfrastructuretobebuiltwithrestrictivepoliciesonfossilthefollowingtradebalancesub-chapterexplorestheregionaltraitsoffuturegasmarkets.FuturebalancesoftradeflowTheRystadEnergy1.9-degreewouldbecentredinChina,withFollowingtheRussia-Ukrainescenarioisusedforfuturetradeincreasedpipedgasimportsfromwar,Europeanpolicymakersarebalancesanalysis(Figure63).RussiaandCentralAsia.TwomajorstrivingtoreducerelianceonLookingaheadto2030andRussianpipelines—the10BcmFarRussianenergyimports.Europe’sbeyond,AsiaandEuropecontinueEastpipelineandthe50BcmPowerREPowerEUStrategyaimstotobethelargestnetimportersofofSiberia2—areanticipatedtoreplace101.5Bcmofpre-warnaturalgas.Tomeetthe1.9-commenceoperationsby2026andRussianpipedgasintheshortdegreescenariotransition2030,respectively.Additionally,termwithLNGandalternativepathway,gasimportsintoAsiatheCentralAsia-Chinapipelinepipelineimports.DespiteaareanticipatedtoincreasefromDisexpectedtostartoperatingdecliningtrendindomesticgas257Bcmin2022toover533Bcmby2026.Atpresent,thePowerproduction,Europeislikelytoin2030,peakingaround2040atofSiberia1pipelineisgraduallyremainimportdependenteven725Bcm.Tosupportthisgrowth,increasingitscapacityto38Bcmasgasconsumptiondecreases.thereisawaveofLNGimportby2025,boostingChina’spipedTooffsetthelossofRussiangas,terminalsunderconstructioningasimportsfrom69Bcmin2022EuropeneedstoincreaseLNGtheregion.Growthafter2030to136Bcmin2030.importsanddecreasegasGlobalGasReport2023532/Lookingto2030andbeyondFigure63:Gasproductionandimport/exportvolumes17BcmEuropeAsiaAustraliaAfricaRussiaMiddleEastNorthAmericaSouthAmerica1,8001,600IMPORTERIMPORTEREXPORTEREXPORTEREXPORTEREXPORTEREXPORTERBalanced1,4001,20020231,000205020238002050600202340020502002023205002023-2002050-4002023-60020502023205020232050ProductionDemandImpliedimportneedsImpliedexportpotentialSource:RystadEnergyusage.MuchoftheadditionalRystadEnergy’s1.9-degreeofnewLNGsuppliesareneededLNGrequiredwillcomefromscenario,globalLNGtradeisby2030,risingto196.9millionuncontractedvolumes,portfolioexpectedtoremainrobustinthetonnesin2040and198.1millionplayers,alongsidecontractedshorttomediumterm,althoughatonnesin2050.ThisislargelyvolumesfromQatar,theUnitedgradualdeclinewouldbeexpecteddrivenbyAsia,MiddleEast,andStates,andNigeria.post-2040.Nonetheless,thereAfrica,withanacceleratedpaceofisaclearcallforadditionalLNGrenewableuptakeonlyoccurringLNGplaysakeyroleintheglobalsupplieseveninthelongtermasfrom2035onwards.However,tradebalance,offeringflexibilityupstreamassetsdeplete.Fromgiventheuncertaintiessurroundingandreachingacrossregions.InFigure64,about48.4milliontonnestheassumptions,therearerisksofFigure64:PotentialLNGimportscenarioagainstoperationalandapprovedproduction(2010–2050)MilliontonnesLNG80070060048.4196.9500198.14003002001000201520202025203020352040204520502010AbandonedProducingUnderdevelopmentRystadEnergy1.9-degreesSource:RystadEnergy17TheillustrationisbasedoninformationavailableonthecompetitivenessandavailabilityofgasassetsinSeptember2023.Acceleratedregionalexplorationeffortscouldchangethispictureinthefuture.GlobalGasReport2023542/Lookingto2030andbeyondanevenlargersupplyshortage,ifFigure65:GreenfieldLNGinvestmentbycommitment/FIDyeardemandweretofallsslowerthan(2023–2030)expected.BillionUSD,nominal2023TheMiddleEast,ledbyQatar,60willbeanimportantregionintheLNGlandscape.Withongoing50expansionplansatthehugeNorthField,Qatarcouldpotentially40boostLNGexportcapacityto12630MTPAby2030,from77.8MTPAasofAugust2023.Giventhelow-20costproductionofNorthField10Eastfieldsandshippingcostadvantages,Qatarisprimedto0servebothEuropeanandAsian20202021202220232024202520262027202820292030LNGdemandinthelongterm.Source:RystadEnergyNorthAmericaisalsowellpositionedtoleadasthetopAvoidingfutureshortagesoffinancialinstitutionsneedtoglobalLNGexporterinthelonggashingesoninvestmentsingasensurethatsufficientcapitalisterm.Itsgasproductionisprojectedassetsandinfrastructure.Rystadallocatedandbalancetherisktooutpacedemandthrough2050.Energyestimatesrevealaneedofamajorglobalunder-supplyThestrongoutlookforgasdemandforaround$175billioningreen-shockwithariskofunder-utilisedhasalreadytriggeredawaveoffieldLNGinvestmentsbetweenassetsinthefuture.HavingreserveFIDsforgasinfrastructure2023and2030toexpandLNGcapacityforasecureandflexible(pipelines,liquefaction,andcapacity(Figure65).Thenextfewenergysystemisbetterthanbeingregasification)whichisexpectedyearsareparticularlycritical,asunabletomeetdemand.Thelattertocontinueinthecomingyears.theLNGmarketisanticipatedtoismoredamagingtoeconomies,NorthAmericahastheresourcesremainfinelybalanced,withlivelihoods,andtheenvironment–availabletohelpclosetheglobaladditionalsupplyrequiredtowheneconomicdevelopmentsupply-demandgap,butcatertothegrowingdemand,asishaltedinareaswithlowcontinuedinvestmentingasillustratedinthefigureabove.Topurchasingpowerandwheninfrastructurewillbeneededtoensurethenecessaryinvestmentsdirtieralternativesareusedtomitigatemarketvolatilityandandfinancing,regulatorsandfillthegap,asseenin2022.periodsofextrememarkettightnesstoachieveenergysecurity.Around78milliontonnesofFID-edLNGcapacityisexpectedtocomeonlineinNorthAmericabetween2024and2027.AddressinguncertaintiesinfuturegaspoliciesThelargerangeofdifferencesinhighlevelofriskoffuturesupplyshortofwhatisneededtoassumptionsaboutfutureimbalances.Despiterecentproducesufficientsupplytonaturalgasdemand(especiallyinoptimismaroundcertainLNGrebalanceandensuresecurityinthemediumtolongterm),investments,theinvestmenttheglobalenergymarkets.Thiscoupledwithahighlevelofgrowthisoccurringonthebackofriskmeansthatthecurrentenergymisalignmentbetweennear-termaprolongedperiodwithlowenvironmentmayexperiencesupplyneedswithpolicyandinvestments,andthetotallevelfuturecrisesasseenin2021andfinancialdevelopments,createsaandoff-takeagreementsarestill2022,withmoresevereandGlobalGasReport2023552/Lookingto2030andbeyondfrequentpriceanddemandFigure66:Greendebtissuanceagainstfossilfueldebtissuanceshocks.ThiswouldinturncausedisruptionsineconomicBillionUSDdevelopmentandenvironmental1,000consequences–especiallyinthedevelopingworld,wheredemand900fornaturalgascouldfailtobe800met,andgreateruseofcoal,oil,andbiomassusemayoccur.Gasisprojectedtoremainakey700componentintheenergypoliciesofmajorglobalconsumersatleast600until2050,however,therearechallengesandsignificant500uncertaintyonhowfuturegasprojectswillbedevelopedand400maintained.Theseuncertaintiesencompassfinancingchallenges,300carbonpricing,andpublicsentiment.200Financing:Consideringthe100Russia–Ukraineconflict,theBidenAdministrationannounced0anagreementcommittingthe201420152016201720182019202020212022UnitedStatesLNGindustrytosupplyatleast50BcmofFossilfuelGreenadditionalUSLNGuntilatleast2030,equatingtoaroundSource:BloombergLeagueTablesone-thirdoftheEU’sgasimportsfromRussiain2021.Thisiswidelyshiftisdrivenbyasubstantialdevelopers.ThiscollaborationregardedasawindowoftransformationinthepoliciescanhelpmitigatethepotentialopportunityforUSLNGprojectoflenders,andotherfinancialimpactoftransitionriskslikedeveloperswhichwillrequireenablers,aligningwithboththeirstrandedassets,facilitatingtheanincreaseinexportcapacity.net-zeroscenarioassumptionsdevelopmentofnecessaryHowever,ontopofthestruggleandtargetssetbytheirrespec-assetsandinfrastructure,whiletosecurelongtermoff-takerstotivehomecountries.Additionally,providingamoreeffectiveleverunderwritefinancing,financingwithreferencetoFigure66,debttoenforceenvironmentalconditionshavebecomeissuedforfossilfuelprojectshaveperformance.considerablymoredifficult,withbeenonadeclineandwashigherinterestratesunderpinningsurpassedbygreenprojectsinCarbonpricing:AsofAugustuncompetitiveprojecteconomics.2022.Theinabilitytosecure2023,accordingtotheWorldThoughthisislargelytopenalisefinancingwillresultindelaysinBankcarbonpricingdashboard,thefinancingofhighlypollutingprojectFIDs,placingmorestressonly23%ofglobalgreenhousesectorssuchascoal,thegasonanalreadytightglobalgasgasemissionsarecoveredbyindustryhasalsobeenaffected.market.Forexample,theFIDofexistingcarbontaxesorLeadingfinancialinstitutionshaveNextDecade’sRioGrandeLNGemissionstradingschemestakenacategoricalstance,vowingprojecthasbeenrepeatedly(Figure67),amountingto11.7toceasenewprojectfundingdelayedduetorisingborrowinggiga-tonnes18ofCO2equivalentforfutureoilandgasprojects,andlabourcosts,andFrenchbankoutofthetotal50.7giga-tonnesespeciallyontheproductionside.SocieteGeneraleSAwithdrawingemittedin2023.ThisisForexample,largebankssuchasastheleadbankoftheprojectininsufficienttoincentiviseING,BNPParibasandHSBChave2022.large-scaleswitchingtowardscommittedtoseizefundingforcleaneralternativeenergynewoilandgasprojects.ThisAssuch,fortheneededgassources,includinggasandprojectstoproceed,policymakersrenewables.shouldworkcloselywithfinancierstocreateamorefavourableCarbonpricingisakeyenablerfinancingenvironmentforprojectforcoal-to-gasswitching,18TheWorldBankCarbonPricingDashboard:https://carbonpricingdashboard.worldbank.org/GlobalGasReport2023562/Lookingto2030andbeyondFigure67:GlobalcarbonpricingmapCanada’sCarbonEUETS:ETSandcarbontaximplementedTax:60USD/tCO2eETSorcarbontaxunderconsideration/development48USD/tCO2eETSimplementedotherpricingunderconsideration/development~125USD/tCO2eETSimplementedby2030CarbontaximplementedCarbontaximplemented,ETSunderUSA’sCarbonArgentina’sCarbonTax:Australia(SafeguardMechanism):consideration/developmentTax:3USD/tCO2e11USD/tCO2eSource:RystadEnergy;WorldBank12–30USD/tCO2eNofederalcarbontaxbutsomestatesimposetheirowntaxesChile’sCarbonTax:5USD/tCO2eincreasingtheattractivenessofgaseffectively.Meanwhile,carboncautiousinpurchasingdecisions,asacleanerfuel,andrenewablespricinglevelsaregloballyfarpotentiallyfavouringsuppliersasanemission-freeenergysource.belowthisthreshold,asillustratedwithlowercarbonfootprint.FortheworldtoacceleratetheinFigure67above.fuelswitchingawayfromemissionInconclusion,thereisagrowingintensivesourcessuchascoalandTheEUCarbonBordergapbetweenthetrajectoryoffueloil,carbonpricingneedstoAdjustmentMechanism(CBAM)supplydevelopmentandbewidelyadopted.Andthepriceaimstoaddressesunequalcarbonplausibledemandfornaturalneedstobecommensuratetothetaxationlevelsbytaxingthegasthatcouldberiskyforrealcostofemissionsto“untaxed”carbonemissionsforeconomicalanddecarbonisationdisincentivisetheuseofimportsintotheEU.Aspartofdevelopments.Thereisahigheremission-intensivesources.IntheEUGreenDeal,theCBAMwillpossibilityofheighteneddemandJapanforexample,theMinistryofapplyacarbontariffoncarbon-andpriceshocksinthecomingEconomy,Trade,andIndustryhasintensiveimportedproducts.EUdecades–liketheonesseenincommitedtoreducingcoalintheimporterswillbuycarbon2021and2022–likelytobeenergymixfrom32%in2019certificatescorrespondingtothedrivenbymutedsupplyoutlooksto19%by2030,whilescalingcarbonpricethatwouldhaveandchallengingfinancialrenewablestoalmost40%bybeenpaidhadthegoodsbeenconditionsinagasmarketthat2030,from18%in2019.However,producedundertheEU’scarbonseemstobehighlyfragileanditscurrentcarbontaxstandsatpricingrules.Themeasureisthinlybalanced.Thus,itiscrucialforUSD3pertonneofCO2,whilethedesignedtoreducecarbongovernments,financialinstitutions,IEAestimatesacarbonpriceofatleakageandensurealevelandenergycompaniestoalignleastUSD130pertonneofCO2isplayingfieldforimportersandeffortsandincentivestoensurerequiredfordevelopedcountries,thedomesticproducers.Assuch,reliable,sustainable,andaffordablefortransitiontotakeplaceEUimporterswillbemorefutureenergymarkets.GlobalGasReport2023572/Lookingto2030andbeyondCasestudy:TheroleofgasinChina’senergytransitionChina,theworld’smosttobuildnewnuclearfacilitiesAfterwhich,coalasthepopulousnationandaglobaltoprovidebaseloadpower,baseloadenergysupplywouldeconomicpowerhouse,standsincreaseintermittentrenewableneedtograduallybephasedatthecrossroadsofenergyenergysources,andaccelerateout,withothercleanersourcesdemandandsustainability.gas-firedcapacitydevelopment.suchasnuclearsteppingup.WithapopulationexceedingThesemeasurescollectivelyaimInAugust2023,theChinese1.4billionpeople,thecountry’storeplacethehistoricalreliancegovernmentapprovedtheenergyneedsarevastandoncoalanddiversifytheconstructionofsixnewnuclearever-expanding.AsChinastrivescountry’spowermix.reactorsaspartofitsplantotowardsitsenvironmentalreducecarbondioxideemissionstargetsofpeakcarbonHistorically,Chinahasreliedonbymorethandoublingnuclearemissionsby2030andcarbondomesticallyproducedcoalasitspowercapacitythisdecade.neutralityby2060,itsenergymainenergysource.Coalcom-AsofJune2023,Chinahadmixwillcertainlyevolve.Thisprised56.2%ofthecountry’s57GWofnucleargeneratingcasestudyhighlightssomeofenergymixin2022(Figure68),capacity.Thegovernmenttherecentkeyenergy-relatedadvancingitsmarketsharebyplanstoexpandthescaletopoliciesandunderscoresthe0.2%from2021.AsofAugust70GWby2025anduptocrucialroleofgasinChina’s2023,Chinahas243GWof150GWby2030(Figure69),journeytofulfilitsenergycoal-firedpowerplantsunderwhereitislikelytobecomerequirementswhileachievingconstructionandpermitted,theworld’slargestgeneratoritsemissionreductiontargets.indicatingthatcoalwillcontinueofnuclearenergy,wellaheadofChina’spowerdemandissettobetheprimaryenergysourceUS(95GW)andFrance(61GW).toriseinthecomingdecades,forthecountryatleastuntilpeakChinahasbeensteadilyandtocopewiththis,theyplanemissionsby2030isreached.expandingitsnuclearfleetFigure68:ChinatotalenergyconsumptionbyFigure69:China’sannouncednuclearcapacityenergysource(2022)19developmentsGWGW150Non-fossilsources,15017.5%+80GWGas,8%45.4+80GW70PWhCoal,56%+13GW+13GW70Crudeoil,18%5757202320252030Source:NationalEnergyAdministration;NationalBureauofSource:NationalEnergyAdministration;NationalBureauofStatistics;NationalDevelopmentandReformCommissionStatistics2;02N3ationalDevelopm20e2n5tandReformCo2m03m0ission19Non-fossilsourcesincludenuclear,hydropower,wind,solarandgeothermal.GlobalGasReport2023582/Lookingto2030andbeyondtoprovidestable,reliable,emission-freebaseloadFigure70:Chinapowergenerationbytypeelectricityforitsgrowingeconomy.Alongsidehydropower,14nuclearisanticipatedtoreplace12.2coalastheprimarybaseload12powersource,formingthecoreofChina’slowcarbonbaseload1010.0capacityadditions.UnderRystadEnergy’sanalysis,8Peakcarbonemissionsnaturalgaspowergenerationis65.1expectedtoincreasealongside5.8renewableenergygeneration,5.1from0.3PWhin2022to0.6PWhin2030and0.8PWhin42040.Theadditionalgas-firedcapacityactsasabackupand2.32.0dispatchableenergysourceintheeventofashortageof21.00.61.31.6renewablepowergeneration,0.40.30.80.70.8enablingChinatocallonastablesourceofenergywith-2050quickramp-upcapability.RenewablesAccordingtoaspeechmade202220302040byHuangWeihe20attheInternationalHigh-LevelCoalNuclearGasForumonGreenandLowCarbonEnergyRevolutioninSource:RystadEnergyBeijingindicatedthatChina’sgas-firedpowergenerationFigure71:ChinagasimportssplitbyLNGandpipedgasisprimedtoreach150GWbycountries212025.Thiswillbefollowedbyasubsequentincreaseto330BcmGWby2040,nearlytriplingtheexisting115GWofgas-firedca-250pacity.Thisisdrivenbytheneedformorepeak-shaving,drivingPipedgasexpectedtogasdemandinthepowersectorfrom122Bcmin2025to308200surpassLNGin2039Bcmby2040,asmentionedbyHuang.Huangalso150highlightedthatthedemandforgasusedeitherasfuelor100feedstockwillcontinuetogrowuntil2040,before50taperingoff.0202520302035204020452050ThistrendmeansthatChina2020RussiaOthersLNGwillhavetoimportmoregastobridgethegapbetweendemandTurkmenistananddomesticproduction.Source:RystadEnergy20MemberoftheChineseAcademyofEngineering,whoservedasvicepresidentofChina’slargestoilandgascompany,PetroChina,in2008.21OthersincludeKazakhstan,Uzbekistan,andMyanmar.GlobalGasReport2023592/Lookingto2030andbeyondThecountryhasregardedpipeline(30Bcmperyear)thatChina’sgasimportswilldomesticproductionastheareprogressingquickly.Pipedremainrobust,asoperational,cornerstoneofitsgassupplygasimportsareexpectedtoandapprovedassetsarenotmix,prioritisingself-sufficiency,surpassLNGbythetwonextsufficienttomeetdemand.andisunlikelytoallowimportsdecades,asseeninthechartAssuch,LNGwillbekeyintoaccountformorethan50%below.fulfillingremainingconsump-oftotalsupplyinthefuture.Intion,andthisisexpectedto2022,Chinaconsumed367BcmInthedomainoflowcarbonremainrobust,eveninofgas,40%,or146Bcmcamegases,ChinaSouthernPowerdecarbonisation-centricfromimports.AccordingtoGrid(CSPG)isexploringscenariossuchastheRystadEnergy’sanalysis,pipedoptionstoharvestsurplusIEAAPSandtheRystadEnergygasimportsareexpectedtorenewablegenerationforlater1.6-degreeprojection.China’sincreaseatafasterpaceasusethroughproductionofenergylandscapeisundergoingChinaplanstoexpandthegashydrogenfromexcesssignificanttransformation,andpipelinenetworktobetweenrenewableenergy.Thenaturalgasisexpectedtoplay170,000to200,000kilometrescompanyhasbroughttwoacentralroleinensuringgridby2040,from120,000pilothydrogenpowerplantssecurityandfirminginChina’skilometresasofJune2023.onlineinKunmingandpursuitofalowcarboneconomy.ThemainsuppliersofpipedgasGuangzhou.LookingatChina’sAtthesametimelowcarbontoChinaareRussiaandhistoricaldomesticgasgasescouldpotentiallyprovideTurkmenistan,asdevelopmentsproduction,LNGisrequiredtoinnovativestoragepotentialforforthePowerofSiberia2(38fillupthedemandgap.AcrosscurtailedrenewableelectricityinBcmperyear)andCentralAsianvariousscenarios,itisevidentthelongterm.Figure72:Chinagasdemandscenariosfromvariousinstitutionsagainstoperationalandapprovedproduction(2010–2050)800700ForecastRystadEnergy2.2-degrees6002025ProducingRystadEnergy5001.9-degrees400Historicalsupply-demandIEEJReferenceCasegapwasfilledbyLNGStatedPolicies300(2022)RystadEnergy2001.6-degreesAnnouncedPledges(2022)100020152020203020352040204520502010AbandonedLNGUnderdevelopmentSource:IEA;IEEJapan;RystadEnergyGlobalGasReport2023603/NaturalgasandlowcarbongasesintheenergytransitionGlobalGasReport2023633/NaturalgasandlowcarbongasesintheenergytransitionThischapterbuildsonthescenariospresentedinindustry.Transportationisnotevaluateddespitethepreviouschaptertolayoutfuturepathwaysofitsgrowingimportanceasadecarbonisationtooldecarbonisingtheconsumptionofnaturalgasbecauseofthecurrentlimitedsizeofthemarket.andincreasingthesupplyoflowcarbongases.ThecriticalityofnaturalgassupplydecarbonisationAhigh-levelgasdecarbonisationframeworkhelpsandthedramaticgrowthnecessaryinlowcarbontosetthesceneforanalysingthepossibilitiesandgastechnologiesgoeshandinhandwithchallengeswithinthe3largestgasdemandaddressingthelargevarietyofpossibleoutlookssegments:powergeneration,buildings,andofnaturalgasdemandtowards2030andbeyond.Highlights•Energyconservationmechanismshavelargelybeenoverlookedasapowerfultooltoreduceemissionsandreduceoverallenergyuse.Demandresponse,timeofusepricingandcombinedheatandpowergenerationaretoolsthatwouldreducethestressintheenergymarkets,improveefficiencyandultimatelyreducethetotalemissionsfromtheenergysystem.Energyefficiencyisanimportantpillarinexistingdecarbonisationscenarios,andtogetherwithconservationmeasures,itcandeliverrealvalue,includingbutnotlimitedtoreductionsinnaturalgasdemand.Thesemeasuresrequiretargetedpolicyattention.•Gasdemandwilllikelyremainresilientinpowerandindustryatagloballevel,offeringunmatchedflexibilityasadispatchablesourceinpowergeneration,andprocessheatapplicationsforhigh-temperatureindustries.Batteryenergystoragesystems(BESS)andgasofferdifferentvaluepropositionsasflexibleenergysourcesbutarecomplementaryandshouldnotbeviewedasmutually-exclusivealternatives–bothwillbenecessary.BESSareenergy-limitedresourcesandprovidetheirhighestvaluewhenusedinshort-durationrapidresponsegridandrenewablesbalancingdispatchment,whilegas-firedpowerisanenergy-unlimitedresource(providedthefuelisavailable)anditsmostvaluedqualityislong-durationdispatchablereserve.Simplyput,gasgenerationenablessustainedlong-termstabilityofthepowersystem,whilebatterieshelptoensuresustainedpowerqualitybysmoothingsuddenspikes.Forheatintensiveprocesses,therearecurrentlynocost-effectiveandscalablealternativestonaturalgasformeetinghightemperaturesrequiredintheindustrialsector.•Renewableandlowcarbongasesshowpromisingresultsinreducingtheemissionsofnaturalgassupplyinthepower,industrial,andbuildingssectorstomeetheating,reactantandfeedstockneeds,providedtheyareproducedefficiently,sustainably,andcost-effectively,andareaccessibleinsufficientquantities.WithCCUSemergingasacompetitivedecarbonisationlevercoupledwithsignificantdevelopmentsinpoliciestoencouragetherolloutofcapturefacilities,deindustralisationcanbeavoidedbyretrofittingexistingfacilitiesandinfrastructuretobelesscarbonintensive.Lowcarbonhydrogencansupplementorreplacenaturalgasincertainsectorsandprocesses,althoughinfrastructureintegrationchallengesstillexist.Biomethane,whichisarenewablyproducednaturalgas,ande-methane,whichislowcarbonhydrogentransformedintomethane,offeraone-to-onedirectsubstituteofnaturalgas,requiringnomodificationstoexistingnaturalgas-relatedinfrastructure.Biomethaneisalreadyproducedandusedacrosstheworld,eventhoughitsscaleremainssmallrelativetocurrentnaturalgasusage.E-methaneisatechnologythatisactivelypursuedbyseveralplayersintheindustry.Alltheabovelowcarbongastechnologiesrequireaggressiveaccelerationfromtheinsufficientlevelstodaytobeinstepwiththetransitionneeds.•Methaneemissionsinexistingnaturalgasoperationsmustcontinuetobeaggressivelyreducedforgastomaximiseitsvalueasatransitionfuelandremainasanefficientandsustainableproductforresolvingthechallengesposedbytheenergytrilemma.Methaneisapowerfulshort-termgreenhousegas,withthenaturalgassupplychainbeingthesourceofapproximately13%ofanthropogenicmethaneemissions.Intotal,theoilandgassectorsareresponsibleforroughly25%ofglobalmethaneemissions.Mitigatingmethaneemissionsfromthenaturalgasvaluechainprovidestheoilandgasindustrywithanopportunitytostayrelevantinanincreasinglydecarbonisedworld,andthus,reducingthelikelihoodofstrandedgasassetsandincreasingthequantitiesofsellablevolumesofgas.GlobalGasReport2023623/NaturalgasandlowcarbongasesintheenergytransitionGasdecarbonisationframeworkTable5:GasdecarbonisationframeworkH2H2FossilThissectionexploresthefuturedemandin2022.GasisanSource:RystadEnergyofgasintheenergytransitionimportantpartofthepoweranditsassociatedchallengesandmixandoffersgreatflexibilityinThefollowingfourstrategiesopportunities.Itleveragesthepowergeneration.Inthecanbedeployedtoreduce'Gasdecarbonisationframework'industrialsector,gasisusedasenvironmentalimpactand(Table5)toestablishabaselineareactant,feedstockandfordecarbonisenaturalgasinthefortheroleofgasintheenergyhigh-temperatureheating.power,buildings,andindustrialtransition,andtooutlinemajorsectors:capturingthelow-decarbonisationpathwaysforManyregionsoftheworldhangingfruitofreducingthethreemostimportantgasdependonpipedgasdistributionconsumptionwithpro-activedemandsegmentsthroughfournetworkstorunutilitiesandconservationprograms,distinctstrategies.Gasoffersprovideheatinhomes,schools,andeffectivedemand-response,diverseopportunitiesandhospitals.Notably,eventhoughitisandefficiencyimprovementsinattributesthatcontributenotincludedintheabovetable,processes,insulation,orre-usesignificantlytotheglobalenergygashasbeenagrowinginputofexcessheatfromprocesses;system,particularlyintheintothetransportationsector,electrificationthroughpower,industrial,andbuildingwhereLNGhasbeenhelpingtodecarbonisedelectrons;(residentialandcommercial)displaceoilandreduceemissionsgraduallyreplacingnaturalgassectorswhichwereresponsibleassociatedwithlong-haultransportwithlowcarbonandgreenforaround85%ofglobalgasandshipping.gases;continueduseofnaturalgaswithcarboncapturefacilities.GlobalGasReport2023633/NaturalgasandlowcarbongasesintheenergytransitionEnergyandgasdemandconservationconsiderationsAmidtheenergytransitionandconservationmeasures,fourofconservationandmoreefficientshiftingsupplydynamics,energywhichwarrantcloserreview.energyuse.conservationhasbeenlargelyoverlookedasapowerfultoolforDemandresponseprogrammes:Timeofuse(TOU)pricing:emissionsreductionbyreducingDemandresponseprogrammesConsumersarechargedvaryingoverallenergyuse.Itinvolvesareclassifiedas‘reactive’electricityratesbasedonthetimeusingenergymoreefficientlymeasures.Theseprogrammesaimofday,promotingenergyandthoughtfullythroughtoreduceelectricityconsumptionconservationduringpeakhours,demand-sidemanagement,andduringpeakdemandperiodsbyandencouragingusageduringbolsteringsupplythroughencouragingandincentivisingoff-peaktimes.TOUprovidesoptimisation.Theseactionsconsumerstoadjusttheirenergyconsumerswithoptionstosavebyimproveresourceavailability,usage.Thiscanbedonethroughconservingandshiftingenergyshoreupenergysecurity,andvariousstrategies,suchasshiftingusetocheapertimesoftheday.stabilisetheenergylandscape.non-essentialactivitiesoff-peakCoupledwithsmartmetersandMeasuresfallinto'preventive'andhoursortemporarilyreducingthedigitalisationtechnologies,TOUcan'reactive'categories,proactivelyoperationofcertainappliancesorbothreducethestrainonthemanagingconsumptionandequipment(forinstance,chargingenergysystemandreducetherespondingduringperiodsofelectricalvehiclesatperiodsenergycostfortheconsumers.resourceconstraintsorgridstress.withlowerstressonthegrid).Researchby“EnergySavingTrust”IndustrialplayerscanbidintosuggestthattheloadduringpeakDemand-sideenergyconservationdemandresponseauctionswheredemandwouldbereducedbymeasuresareactionsandtheywouldbepaidforthecapacity,5%-10%withimplementationofstrategiestakentoreduceenergytheyoffertoreducethedemandtoTOU.Ontario,Canadahasbeenconsumptionbytheconsumerorreducethestressinperiodsofhighoneofthefirstjurisdictionsintheend-user.Thesemeasuresfocusdemand.Thisalleviatesstrainonworldtorolloutsmartmetersandonoptimisingenergyuse,theenergysystem,enhancesgridimplementrobustconservationincreasingefficiency,andstability,andminimisestheneedandTOUprograms,anditestimatesminimisingwaste.Therearemanyforadditionalpowergeneration,thatconservationwillhavesaveditexamplesofdemand-sideenergyultimatelycontributingtoenergyover30TWhofelectricity.Table6:EnergyconservationdemandmanagementmeasuresDemandmeasureAimImpactonpeakdemandImpactonenergydemand•EnergyefficientReducetheoverallappliancesenergydemand•Cogeneration/CHP•DemandresponseDecreaseDecrease•DemandresponseShiftpeakdemandto•Ecosystemoff-peakhours(loadintegrationlevelling)DecreaseUnchangedSource:RystadEnergyGlobalGasReport2023643/NaturalgasandlowcarbongasesintheenergytransitionCombinedheatandpowerneeds.CogenerationplantscanIntheEU,theRenewable(CHP)/cogeneration:achieveimpressiveenergyEnergyDirectivewithintheSimultaneousproductionofefficiencylevelsofaround90%,Fit-for-55packageincludeselectricityandusefulheatduringoptimisingresourceutilisationprovisionsthatsupporttheusegas-firedpowerproduction.Theandminimisingwaste.Theseunitsofhigh-efficiencycogeneration.goalistoenhanceenergyeffi-aremuchmoreefficientthanItacknowledgescogeneration’sciency,especiallybyrepurposingconventionalopenandcombinedroleinenhancingoverallenergywasteheatfrompowergenera-cycleturbineswheretheenergyproductionefficiency,decreasingtionandindustrialprocessesforefficiencytypicallyisintherangeemissions,andaidingtheheatingbuildings,industrialof40%–60%,dependingontheintegrationofrenewableapplications,andevencoolingageandqualityoftheturbine.energysources.GasasaflexibleanddispatchablesourceofpowerFigure73:Powergenerationbyprimaryenergysource22TWh70,00060,000Historically,fossilfuelsdominatedbaseloadcapacityMovingforward,roleofgasshiftsawayfrombaseload50,00040,00030,00020,00010,000020052010201520202025203020352040204520502000LiquidsNaturalGasNuclearRenewablesCoalBiomassHistorically,thepowersectorhaslikelytodisplacefossilfuelsasSource:RystadEnergybeendominatedbyfossilfuels,thedominantpowergenerationwithcoalandgascomprisingsource.Thisisexemplifiedbynecessaryformaintaininggridaround40%and22%oftheRystadEnergy’s1.9-degreestabilityanddeliveringreliable,globalpowermix,respectively.scenario(Figure73)inwhichtheconsistent,anduninterrupted,Thesesourcesmainlyserveasshareofcoaldeclinesto4%,whilepowersupply.Thegrowthinbaseload,intermediateand/ortheshareofrenewablesscalesshareofrenewablesinthepeakingpowertoprovideyear-toaround77%by2050.Inturn,generationmixisdirectlyroundstabilitytoglobalpowernaturalgasshiftsfrombeingacorelatedwithagrowingneedgrids.Powergenerationbaseloadprovidertobecomingforflexiblebalancingcapacityaccountedfor34%oftotalgasaflexible,dispatchablecapacitythatgasprovides.Assuch,evendemandin2022.Astheenergyresourcetobalancetheelectricitywithhighrenewablecapacitytransitionprogresses,inmanygridintimesofrenewablesadditions,additionalgas-firedpartsoftheworldrenewablesareintermittency.Thisbalancingisgenerationcapacitymustlikelybedevelopedtomaintainenergysecurityingrids.22RystadEnergy’s1.9-degreescenariohasbeenusedasanexample.GlobalGasReport2023653/NaturalgasandlowcarbongasesintheenergytransitionFigure74:CO2savingsfromcoal-to-gasswitchinginselectedregionscomparedwith2010MilliontonnesCO2201220132014201520162017201820110-100-200-300-400-500-600UnitedStatesChinaEuropeIndiaRestofworldSource:IEA–TheRoleofGasinToday’sEnergyTransitions,2019Figure75:Powergenerationbynaturalgasinvaryingdegree-scenariosTWh9,0008,0007,0006,000RystadEnergy5,0002.2-degrees4,0003,000RystadEnergy2,0001.9-degrees1,000RystadEnergy01.6-degrees2010RystadEnergy1.5-degrees20152020202520302035204020452050Source:RystadEnergyTheroleofgasasaflexible,accessonthecontinenthaveofCO2emissionsby2018.Thedispatchablesourcevariesweakandunstablegrids,withlargestemissionsreductionfromdependingonthepaceofenergyfrequentoutages.Thesegridscoal-to-gasswitchinghasoccurredtransitionindifferentcountrieswouldrequireadditionalintheUnitedStates,wheretheandregions.Emergingeconomies,reinforcementandflexiblecapacityriseofshalegas(andassociatedsuchasthoseinAfricawheretointegratelarge-scalerenewablesgas)reducedlocalnaturalgasgeneralenergypovertyisstillwithoutriskingacollapse(furtherprices,introducedabundanthighandAsiawherecoalplantsdetailscanbefoundintheIGUsupply,andallowedlarge-scalestilldominate,considergasasa“GasforAfricaReport”).switchingfromcoaltogasinthestableandsustainablealternativepowersector.Between2010andtoenergiseeconomiesandlowerWithreferencetoFigure74,2018,thisresultedinemissionsthecarbonintensityofthegrid,positiveeffectsofcoal-to-gasdecliningbyafifthto280millionbeforemovingtowardsincreasingswitchingarealreadyevidenttonnesofCO2.renewableenergyadoptionandincountriessuchastheUnitedleveragingthedispatchableStatesandChina,wherecoal-to-AcrossRystadEnergy'sdegreecharacteristicsofgas.InAfrica,gasswitchinghashelpedpreventscenarios(Figure75),thewhereelectricityaccessisscarce,fastergrowthinemissionssincesignificanceofnaturalgasineventheareaswiththebest2010,avoiding536milliontonnesthepowersectorremainsGlobalGasReport2023663/Naturalgasandlowcarbongasesintheenergytransitionpronounced,eveninhighenergyavailability.Inthelongconsiderthatnaturalgas-firedrenewableadoptionscenariosrun,thedeclineingas-firedpowerplantscanbedecarbonisedsuchasthe1.6and1.5-degreegenerationreflectsthepacewiththeuseofnewlowcarbonscenarios.Whileallscenariosofadoptionofrenewablesandgasesand/orretrofittingwithprojectadecreaseinnaturalgas-batteryenergystoragesystemscarboncapturetechnology.Thisfiredpowergenerationby2050,(BESS),whichisthefastestunderapproachwouldallowgas-firedthepaceandextentofthedeclinethe1.5-degreescenario.However,plantstooperateintothefuturediffersamongscenarios.Inthelong-termgas-firedgenerationaslow-emissionsourcesoffirm1.6,1.9and2.2-degreescenarios,remainsnecessaryfordispatchablecapacity,whilealsoenablinggas-firedpowergenerationisenergyandgridstability,duetotheexistinginfrastructuretobeexpectedtoincreaseintheshortenergy-limitednatureofbatteries,reused.Biomethaneisaonefortomediumterm,drivenbytheandgeography-limitedlargeronerenewablesubstituteforincreasedpaceofcoal-to-gascapacityformsofstorage,suchasnaturalgas,whileblendinglowswitchinginemergingeconomiespumpedhydro.carbonhydrogenandammoniainAsia.InregionssuchasAfrica,forco-firingwithnaturalgasisgasbecomesvitalinaddressingTheabovediscussiondoesnotanotherviablealternative.Casestudy:FutureroleofdispatchablesourcesinrenewablepowergridsFigure76:One-weekcomparisonofSouthAustralia’spowersupplytrend,energyinmegawattsbrokendownbyresourceinhourlyincrements(2023)MW6,0005,000Gassteppingintoprovidegridload4,000demandonseparateoccasionswheretheweatherwasrainyandcloudy3,0002,0001,000015-Aug16Aug16-Aug17Aug17-Aug18Aug18-Aug19Aug19-Aug20Aug20-Aug21Aug21-Aug1144-AAuugg15AugRenewablesBattery(Discharging)ImportsExportsGasSource:OpenNationalElectricityMarket;RystadEnergySouthAustraliaisrenownedfortofulfillocaldemand.Asof31addanadditional4,045MWhavingoneoftheworld'shigh-October2022,SouthAustraliaofstoragecapacity.Beingestrenewable-penetratedgrids,had221MWofexistingbatterycompletedin2023isthewithwindandsolaraccountingandvirtualpowerplant(VPP)TorrensIslandGridScalebatteryfor70%ofthecapacityneededstoragecapacitywithplanstoenergystoragesystem,whichGlobalGasReport2023673/Naturalgasandlowcarbongasesintheenergytransitionhas250MWcapacityandisFigure76demonstratesdispatchablesourcesdependscurrentlythesecondlargesthowgashaseffectivelyonregionalrenewableoperationalbatteryinAustralia.bolsteredgenerationduringcharacteristics,andinstalledThestate'sgridfrequentlyexpe-adverseweatherconditionsincapacity.RegionslackingriencessituationsinwhichwindSouthAustralia.Between20thsunnyorwindyconditionswillandsolargenerationreachesand21stAugust2023,experiencelonger,moresevere,andsurpasses100%ofdemand.renewablegenerationwasandfrequentperiodswhereThesurplusenergyisexportedinsufficienttomeetdailydispatchablesourcesintervenetoVictoriaviatransmissiongridsconsumption.Tocompensateasthegrid-firmingmechanism.andstoredintheHornsdaleforthat,importsandgasBatterieswillhelpoffsetPowerReservebattery,resourceswererampeduptosomeofthecallondispatchableprovidingimportantshort-meetdemand.Thisdisplaysthesources(e.g.,gas),butbatterytermbackuptothepowerimportanceofdispatchabilityeconomicswilldeteriorategrid.However,evenintheinenergysourcesforgridstogreatlyifthesystemisrenewables-governedpoweroperate,tappingonsuchdimensionedtofullymixofVictoria,gas-firedpowersourcesintimesofhighsystemaccommodateallpossibleplantshavebeenconsistentlyloadandlimitedrenewableweatherscenarios,furtheroperationalandessentialingeneration.However,thediscussedinthefollowingcaseavoidinginstability.shareofpowermetbystudy.Casestudy:TheusecasesforBESSsystemsFigure77:CapitalcostforselectedbatterystorageprojectsUSDperkWh(real)1,200MossLanding1,000(1.6GWh)800$260/kWh600400CostneededforBESStobecompetitive:150USD/kWh200201020152020Thankstotheirprecisionandservices,aswellasfor“firming”Source:RystadEnergyrapidreactiontime,batterynon-hydrorenewableenergyenergystoragesystems(BESS)integrationandprovidingcriticaltothepowergrid.Theyserveareasuperblyuniversaltoolshort-termancillaryserviceslikeasbackupresourcesbystoringforelectricgridreliabilityregulationandvoltagecontrolsurplusenergyduringhigh-generationperiodsanddischargingwhenrenewableGlobalGasReport2023683/Naturalgasandlowcarbongasesintheenergytransitionoutputislow(orwhendemandbatteryprojectcostdriverssuchgeneration'sLCOE.Assuch,spikes),providingamoreevenasmaterialsandequipmentthishighlightsanimportantpowersupply.Theoptimalexpenses,potentiallyincreasingfinancialconsiderationinbusinesscase,orthesweetBESSprojectcapitalcostsbyenergysystemplanning.Asspot,inwhichBESSvalueis15%to40%.Inaddition,BNEFtheenergylandscapemaximisedisintheshortreportsrisingbatterycostsoftransitionstowardsmoredurationreliabilityandfirming7%from2021to2022.Thus,renewablesources,costsoperations,asbothphysicaltomatchgasgenerationassociatedwithscalinguplimitationsofenergystoragecompetitiveness,RystadEnergyenergystoragecanbecapacityandtheeconomicsofsuggeststhatBESScapitalcostssignificantduetothelinearlessfrequentdischargesmakeitwouldneedtoapproach$150relationshipbetweenstoragelessfeasibleforbatteriestoUSD/kWh,assuminga$5USD/capacityandinvestment–withdeliverinlongerdurationMMBtugaspriceanda$100ahigherstorageneed,thebalancingzones.USD/tonneCO2carbonprice.capitalcostoftheBESSsystemwouldincrease.Incontrast,gas-BESScapitalcostshaveFigure78illustratesBESSasfiredgenerationcanprovidesignificantlydecreasedoveradvantageousovergasfordispatchablepowerwithoutthepastdecade,decliningstoragedurationsofuptofouraone-to-onecorrelationwithfrom$1,000USD/kWhin2010hoursandwithdailycycles.storagecapacity.Thishighlightsto$260USD/kWhforrecentYet,withexpandingstoragetheadvantageofgas(both2022projects(Figure77).Whileduration,themarginalnaturalgasandotherlowexpectationsoffurtherpriceutilisationofthesystemfallscarbongases)fromacostdeclinesremain,thesecouldbeandresultsinanincreasingperspective,accentuatingthecounteredbyinflationofLCOS,whichsurpassesgascaseforgas.Figure78:LCOSofbatteriesandLCOEofopen-cycledgasturbine23Balancingcost(USD/MWh)500flatestheuSnSiteccoondischargecycle450BESSinngesBEstoomfitchse400350Reducedutilizationnodftghreeatlychallea300250BatterystoragesystematAverage2022globalLCOEofgas:200USD120/kWh(capitalcost)USD95/MWh15010015%12%10%7%5%2%50017%DailycyclesEveryseconddaycycleEverythirddaycycle(e.g.4hdeficit,365timesperyear)(~180cyclesperyear)(~120cyclesperyear)Source:RystadEnergy23Assumingafour-hourbatterysystemwith250MWofcapacity,13USD/MWhchargingcost,capitalcostsof120USD/kWhand250MWopen-cyclegasturbine.ThefigureaboveassumescapitalcostsofBESStocontinuedecliningandillustratesacaseexampletoshowhowlowchargingandbatterycapitalcostsneedstobeforittobecompetitive.ForreferencetheaverageEuropeanpowerpricebetween2018and2020hasbeenbetween20and80EURO/MWh,significantlylowerthanthe2030forecastedchargingcostintheanalysisabove.GlobalGasReport2023693/NaturalgasandlowcarbongasesintheenergytransitionCapacityassurancemechanismsdemandedforenergystabilityandreliablepowergridsCapacitymechanisms,akintocross-jurisdictionauthoritywasInplaceslikeAfrica,whereinsuranceforgridstability,arecreatedtoenforcereliabilityandelectricityisscarce,capacitydesignedtoensureadequatereservecapacityplanningafterreserveistodayviewedasasupplybeingavailabletomeetthe2003Northeasterngridluxuryandpowerqualitymaximumdemandpeaks(ifacrosspartsofCanadaandtheproblemsandoutagesaredemandandsupplyarenotUnitedStatescollapsedintoafrequent.Forthesemarketsperfectlybalancedeveryhourprolongedblackout,duetoatohavetheabilitytoincreaseofeveryday,theelectricitycombinationofkeymonitoringrenewables-drivenelectrification,systemcancollapseintolengthysystemsgoingoffline,generatorscapacityplanningandinvestmentsblackouts).Capacitymechanismsnotrespondingasanticipated,includingnaturalgasgenerationcompensateelectricitygeneratorsandanoverloadedlineshort-willbepivotalfortheenergyforbeingavailabletobecalledcircuit,withinsufficientreservetransitiontosucceed.Nigeria’soninreserveeveniftheyarenotgeneration.Thenewlycreatedpowergrid,forexample,hasalwaysoperating.ThiscapacityNorthAmericanElectricReliabilitysufferedover200partialortotalcompensationisnecessarytoCorporation(NERC)implementedcollapsesinthelastdecade,andsecureinvestmentinandstrictrulesimposingreservethereisadirectnegativeimpactmaintenanceofcapacitybeyondrequirementstoavoidsimilarfromeachoftheseeventsonthewhatisneededforbaseloadandrisksinthefuture.economy.normaloperations.ThenatureofreservecapacityisthatitisInEurope,capacitymarginsareCapacitymechanismshavebeenoperatinglessthanbaseload,itstightening.Manyoldergenerationestablishedinmanydevelopedoperationalrevenuealonedoesfacilities,especiallyagingcoaleconomiestoensurethatpowernotprovideforacommercialandnuclearplantsarenearingsystemsareabletocopewiththebusinesscasewhencapacityistheendoftheiroperationalliveschangingnatureofgenerationnotpricedbythemarket.Thearebeingdecommissionedduetoanddemand.Marketsareemergenceofcapacitymarketsenvironmentalprotectionincreasinglylookingtonewgas-insomejurisdictionshasbeenapolicies.Additionally,thesefiredandnuclearplants,particularlywaytoaddressthatandensuremarketsarewitnessingasharpaspolicymakersturnawayfromsufficientreservecapacity.riseinthepenetrationofcoal-firedplantsinsearchoflessvariablerenewablepowercarbon-intensivegeneration.InCapacityplanningisalsoalong-sources.AsthegenerationmixEuropeforexample,therearetermelectricitysystemreliabilityevolves,systemoperatorsaretwobroadtypesofcapacityrequirementtoaddresstheevaluatingstrategiestoensuremechanisms:‘targeted’andlongleadtimefromcapitalsecurityandcapacitymargins.‘market-wide’.‘Targeted’investmentstoenergysupplySomesystemsmayadoptmechanismssolelysupporttheavailabilitywhennewdemandstoragesystemsanddemand-sideextracapacityrequiredbytheemerges.Aswasdiscussedearlierresponses,whileotherscouldrelymarket,while‘market-wide’intheenergytrilemmasection,aonflexible,dispatchablesourcessupportsallparticipants(existinghighvoltagepowertransmissionsuchasgasfiredcapacity.andincumbents)asrequiredtolinecantakeaslongasadecadeHowever,inmanyjurisdictions,meetreliabilitystandards.Similartobebuilt,andassuchthissufficientnewconventionalactivitiesandmechanismsarebeinginfrastructureshouldbeplannedpowerplants(especiallygas-fired)rolledoutintheUnitedStates.aheadofanticipateddemandarenotbeingbuilt.ThisisdueTable7onpage71showsthegrowthtoavoidshortages.tochallengessuchaslowpowerdifferentapproachestocapacityprices,utilisation,andtheinabilitymechanismsusedandproposedinInNorthAmerica,arobusttoobtainfinancing.variouscountriesinEurope.GlobalGasReport2023703/NaturalgasandlowcarbongasesintheenergytransitionTable7:CapacitymechanismtypesandEuropeanexamplesTargetedTypeofcapacitymechanismDescriptionWhereusedorplanned?StrategicreserveSweden•AcertainamountofcapacityisheldoutsidethemarkettobecalleduponinGermanyTendersfornewcapacityemergencysituationsFinland•VolumebasedFrance•Supportisgrantedtonewinvestmentprojectstobringforwardidentifiedcapacityrequired.Mayruninthemarketorbesupportedbyapowerpurchaseagreement•VolumebasedTargetedcapacitypayments•AdministrativepaymentsaremadetoasubsetofcapacityinthemarketSpain•PricebasedPortugalMarket-wideCentralbuyer•Thetotalamountofrequiredcapacityissetcentrally,andprocuredbyacentralItalybuyerthroughacentralbiddingprocessinwhichpotentialcapacityprovidersGreeceIrelandcompetesothatthemarketdeterminesthepriceUnitedKingdom•VolumebasedIrelandPolandMarket-widecapacitypayments••APnricaedbmainseisdtrativepaymentisavailabletoallmarketparticipantsBelgiumSource:RystadEnergy;EuropeanCommission;SingleElectricityMarketOperatorPossibilitieswithrenewableandlowcarbongasesThissub-chapterexplorestheinFigure79.Presently,greenglobalhydrogensubsidieshavepathwayspresentedbylowhydrogenisaroundthreetimesbeenauthorisedviaataxcreditcarbonandgreengases.ThesemorecostlythanbluehydrogenforhydrogenproducersworthincludenaturalgaswithCCUS,inthehighlightedcountriesintheupto3USDperkilogramme.lowcarbonhydrogen(includingitsfigure.ThemaindriveroftheEvenwiththesubsidy,greencarriers,blueandgreenhighpriceofgreenhydrogenhydrogenislikelytoremaintheammonia),biomethaneandproductionisusuallyelectricitycostliestoption,whilebluee-methane,whichcaneitherfullycost,whichcouldcomprisemorehydrogenmaypotentiallybeonsubstitutenaturalgasdirectlyorthan70%ofcostforsomeparorbecomecheaperthangreybeblendedwithittoreducelocations.Assuch,accesstohydrogen.Additionally,onAugustemissionsinvarioussectors.low-costrenewableelectricityisa30th,2023,theEuropeanCom-Thesegasesofferaviable,primarywaytomakegreenmissionintroducedtheEuropeandirectreplacementoption(inhydrogenmorecompetitive,inHydrogenBankauction,offeringmanyapplications)asanadditiontocostimprovementsonafixedpremiumof4.5Eurosperalternativesourcetomeetthecapitalcostsofelectrolysers.kilogrammeofrenewableheating,reactantandfeedstockUnderRystadEnergy’sanalysis,hydrogen.Withthesubsidy,theneeds,providedtheyarethecostofgreenhydrogenisLCOH(levelisedcostofhydrogen)accessibleinsufficientquantitieslikelytobecomemorecompet-ofgreenhydrogeninGermanyandarecost-effective.itiveinthefuture,withpricesapproximatelyhalves.However,expectedtodropdownto,andinthecostofgreenhydrogenisstillThoughcostremainsakeysomecases,below2USD/kgH2.afarcryfromblueorgreychallengeforgreenhydrogenhydrogen.Thereisstillalongtoday(Figure79onpage72),Governmentsgloballyhavetrajectoryrequiredinthegreenscalingandgrowthindeploymentacknowledgedthecostchallengehydrogenspaceforcosttobeareexpectedtobringsignificantofhydrogenandareacting.Inthesignificantlyreducedtomeetitscostreductions,asillustratedUnitedStates,oneofthelargestbluecounterpart,andeventuallyGlobalGasReport2023713/NaturalgasandlowcarbongasesintheenergytransitionFigure79:Levelisedcostofhydrogen24forFigure80:Productioncostforecastofgreenselectedcountries(2023)25hydrogenintheUnitedStates26USD/kgH2Source:RystadEnergy98.487.6765.66.05.0EU5HydrogenBankauction43WithIRA2.02.52.6subsidies1.62.02.121.11.51.110.70GermanyAustraliaJapanSaudiArabiaUnitedStatesBlueH2GreenH2GreyH2Source:RystadEnergyascarbonpricesriseandcaterto3.5%ofglobalhydrogennaturalgasdemandinthebluerenewablecompetitivenessdemandandisanorderofmagni-hydrogendomain.Giventhegrows,greyhydrogen.tudeshortoftheprojectedglobalsubstantialsizeofthepre-FIDdemandforhydrogeninthepipelineandthegradualpaceofThecostspresentedinFigure80energytransition.Forexample,FIDdecisions,itisevidentthatisthecostofdeliveringhydrogentheEUtargetaloneis20milliontheprogressoflowcarbontothelocalmarket.Additionaltonnesby2030.Consideringhydrogenprojectshasbeencostswouldincurtoexportthesetoday’sprojectpipeline,morerelativelyslow.Thisspeakstovolumesandprofitmarginsde-than800kilo-tonnesofblueandthechallengeofscale,wheremandedbythedeveloperswouldgreenhydrogencapacityhasproductionandimplementationcomeinaddition.Theend-con-reachedFID,thesevolumesoflowcarbonhydrogenneedssumersofhydrogenarelikelytowillliftthetotaloperationaltorapidlygrowtosufficientlyseehighercommoditypriceswithproductionin2030toalmostreplaceexistingprocessesandcostadditionsalsorelatedtothe4.5milliontonnesperyearresources.Inadditiontothesup-infrastructureexport,importand(Figure81onpage73).Mostlowplygrowthrequirement,asepa-distributioninfrastructure.carbonhydrogenprojectsarerateparallelscalingeffortwouldbelocatedinChina,SaudiArabia,requiredtodeveloptheinfrastruc-AsofAugust2023,thereisandtheUnitedStatesofwhichturetodeliveritandtechnologies3.2milliontonnesofoperationalapproximately96%involvegreentoadaptenduseifhydrogenistolowcarbonhydrogenproductionhydrogen.Thepre-FIDprojectbeusedasdirectfuel.capacityglobally,withthemajoritypipelinecurrentlystandsatofthatcapacitycomingviabluealmost44milliontonnesofblueThereareseveralmeansofhydrogen.Incomparisontotheandgreenhydrogenby2030transportinghydrogenvia91milliontonnesofhydrogen(Figure82).One-thirdofthepipelines.Buildingnewhydrogenconsumedin2022,existingoper-pre-FIDpipelineisbluehydrogen,pipelinesisamethodthathasationalcleanhydrogencanonlywhichsignalsacallforfurtheralreadybeenadoptedinNorth24GreyH2usesnaturalgasasfeedstock,whileblueH2isthesameexceptthatallCO2emittediscaptured.Incontrast,greenH2isgeneratedviaelectrolysisofwater.25ResultsandcalculationsarebasedonRystadEnergyassumptionsextractedfromtheRystadEnergyDynamixcostdashboards,withthecapacityfactorsusedrangingfrom12%to30%,CCScosts(transportandstorage)being12USD/tonneofCO2,andfeedstockcostsusedrangingfrom30USD/MWhto120USD/MWh.26CostreductionofgreenH2isdependentonlocationofproduction(i.e.,renewableconditionsandrelevantrenewablepowersource),sizeofplantandtechnologyandcostdevelopmentofelectrolyser.Lowerpricescanbeachievedinfavourablemarkets.TheHenryHub2022averagenaturalgaspricewasapproximately22USDperMWh,comparedtothegreenhydrogenpriceat95USDperMWhin2023.GlobalGasReport2023723/NaturalgasandlowcarbongasesintheenergytransitionFigure81:CleanhydrogencumulativecapacityFigure82:Cleanhydrogencumulativecapacitybypost-FIDprojectsonly(2010–2030)status,includingpre-FIDprojects(2010–2030MilliontonnesofBlue/GreenH2MilliontonnesofBlue/GreenH25.0504.5454.0403.5353.0302.520152020202520302520152020202520302.0BlueGreen20Operational1.5151.0100.50.05020102010FID/UnderConstructionPre-FIDSource:RystadEnergySource:RystadEnergyAmerica(2,700kilometres)andWhilethenaturalgasinfrastructurehydrogeninnaturalgasisEurope(1,700kilometres).isvaluableasanalreadyexistingestimatedtoreduceemissionsHowever,establishingnewbackboneforintegrationofthebyaround7%whiledeliveringapipelinescancostuptofournewlowcarbongaseousenergy,fixedamountofenergyoutputtimesmorethanrepurposinghydrogentransportwouldrequirefortheenduser.Figure83onexistingones,accordingtoexistingnaturalgasinfrastructurepage74showstherelationRystadEnergy’sresearch.toberepurposed.ThisisanareabetweenthereductioninExtensiveresearchisongoingforthatrequirescontinuedworkmethanecontentandhencepipelineretrofitting,particularlyinfromtheindustrialandemissions,andtheincreaseinareaswithwell-developedclassificationdomains,asthetotalvolumeoftheblendedgas.naturalgaspipelinenetworks.businesscaseandlevelofGermanyservesasanotablehydrogeninthegasdistributionThetechnicalchallengesofhigherexample,onlyrequiring30networkcouldcallforretrofittingshareofblendingneedtobebillioneurostorepurposeitsandimprovementstobemadeaddressed.Firstly,wheninjectedgasgridofmorethan550,000(coating,leakdetection,etc.),intosteelpipes,hydrogencankilometresthathasbeenfundeddependingonthejurisdictionandacceleratepipelinesteelbyaround300billioneurosinthestateofinfrastructure.degradationandcausepast.Thisistheresultofastudyembrittlement,necessitatingtheonthesteelpipelinesinBlendingofhydrogenwithnaturalinstallationofcoatingsforGermany’sgasgrid,whichgasisemergingasamiddle-groundprotection,albeitatanincreasedconcludedthatthepipelinessolutiontoscalehydrogenuserefurbishmentcost.Additionally,arehydrogenready.Severalwhilewaitingforthereadinessofhydrogentransportthroughcompaniesarealsolookingtosupplyandpurpose-builtinfrastruc-formernaturalgaspipelinesmayrepurposetheirpipelines,withtureinthemid-anddownstreamrequireadditionalcompressors,Snamhavingalreadymodifiedsegments.Blendinghydrogenwithapproximatelythreetimestheitspipelinesystem–thelargestnaturalgasisapotentialmeansofcompressionpowercomparedtonaturalgastransmissiondecarbonisingnaturalgas,whilenaturalgas,owingtohydrogen'snetworkinEuropeof42,000utilisingexistinginfrastructurewith-lowerenergydensity.kilometresofpipelines–andoutlargemodifications.Currenthasannouncedthemtobe70%pilotprojectssuggest20%blendingToputthingsintoperspective,hydrogen-readywithnoortobeachievableinmostcaseswith-RystadEnergyconductedanlimitedreductionsonmaxoutalteringinfrastructure.How-analysisof2022sustainedgasoperatingpressure(uptoever,ashydrogenhasconsiderablydemandtowards2030in99%withmoresubstantiallowerenergydensitythannaturalhydrogenequivalenttermscompressionrevisions).gas,avolumetricblendof20%againsttheexistingcleanGlobalGasReport2023733/Naturalgasandlowcarbongasesintheenergytransitionhydrogenprojectpipeline,bothFigure83:Volumetricmethanecontentandcorrespondingvolumeincludingandexcludingpre-FIDofblendedsubstancevolumes,alongsidetheREPow-erEUtargetof20milliontonnesVolumetricpercentageofmethaneinblend(%)Increasedvolume(%)ofrenewablehydrogenby2030(Figure84).OperationalandFID100%cleanhydrogenprojectscouldonlyfulfil0.3%of2022natural90%300%gasdemandin2030,whilethe93%250%REPowerEUtargetwouldfulfil1.7%ofexistinggasdemand.80%Evenwiththeinclusionofpre-FIDvolumes,ameagre4.1%.Tofully70%Volumeincreasereplacenaturalgasby2030,asofblendprojectedinthe1.5-degreeand1.9-degreescenarios,thehydro-(Rightaxis)genprojectswouldneedtoscaleupby20timesandbymorethan60%20%hydrogenblendresultsina16%28timesrespectively,similarlythecapacityneededtomeet202250%volumetricincreaseoftheblenddemandwouldneedtoincreasebymorethan20.Thishighlightscomparedtopuremethanetodeliverthesignificantchallengeinscalinglowcarbonhydrogenproductionthesameenergyattheoutlet.andwhilethisanalysisisatheoret-icalillustrationtoemphasiseon40%Hydrogenhavelowervolumetric200%insufficientscale,hydrogenisuna-bletoreplacegasonaone-to-oneenergydensitythanmethanebasisinallregionsandsectors.Althoughhydrogenoffersprom-30%Reduceemissionsisingdecarbonisationroutesfor/methanecontentdiversesectors,substantialefforts20%150%arerequiredintermsofgovern-(Leftaxis)mentpoliciesandresearchanddevelopmenttofacilitateitsscal-10%116%0%100%0%10%20%30%40%50%60%70%80%90%100%%volhydrogenat1barpressureand15°CSource:RystadEnergyabilityandcost-effectivenessandistheircapabilitytosubstituteputitonaparwithnaturalgas.naturalgasonaone-to-onebasis,enablingtheutilisationofexistingOtherlowcarbongasessuchasinfrastructureacrossthepowerbiomethaneande-methaneoffergeneration,industrialandbuildingadditionaldecarbonisationop-sectors.Biomethaneisamaturetions.Theirmainvaluepropositioncommercialtechnology,whichFigure84:Cumulativeblueandgreenhydrogencapacity(rightaxis)againstnaturalgasdemandexpressedinhydrogenequivalent(leftaxis)Source:RystadEnergyGlobalGasReport2023743/NaturalgasandlowcarbongasesintheenergytransitionFigure85:CCUScaptureprojectspipelineFigure86:CCUScaptureprojectspipelineagainst(Operational,FID,pre-FID)27expectedCCUScapacityacrossvariousscenariosMilliontonnesperannumofCO2capacity(MTPA)Mtpa6007,0005006,0005,0004004,0005,9663002003,0003,4022,0001001,0000201520202025203002010Others20202021202220232024202520262027202820292030IndustryPowergenerationDirectaircaptureIndustryPowergenerationOthersDirectaircaptureRE1.5DGRE1.9DGSource:RystadEnergySource:RystadEnergyhasbeeninextensiveuseCarbonCapture,Utilizationby2030(Figure85).Thisislargelyacrossseveralmarkets,whileandStorage,orCCUSisdrivenbytheindustrialsector,e-methaneismorenascent,anotherkeydecarbonisationwhichisexpectedtoaccountforandcommercialisationisbeingtoolandacrucialtechnologyfor65%ofCCUScapacityby2030.activelypursued.InresponsetoachievingenergytransitionCCUSprojectsinthepowertheenergycrisisin2022,goalsacrossallscenarios.ThesectorisexpectedtoincreaseREPowerEUhasalreadyscaleofadoptionandtechnologyfrom1.6MTPAin2022to146.5triggeredincrementaltractiondevelopmentmustgrowMTPAin2030,drivenbycoalandpositionedEuropeansignificantlyfromcurrentlevelsasandgas-firedgenerationbiomethaneproductionforCCUSisanessentialcomponentofprojects,with78.7MTPAand35Bcmby2030,fromaroundthedecarbonisednaturalgas(and70.9MTPAofcapturecapacity4Bcmin2022.Globally,estimatedenergy)mix,thatisembeddedasbeingdevelopedandplanned,biomethaneproductionstoodatkeyassumptionsintherespectively.around7Bcmin2022,cateringdecarbonisationscenarios.toaround0.2%ofglobalgasNaturalgaswithCCSisaveryTheeffectsofgovernmentdemandthatyear,illustratingtheattractivewayofdecarbonisingsupportandcommitmenthaveneedtoacceleratedevelopmentconsumptionwheretherearebeenseenintherecentyearsandgrowscaleaggressively.Asfewalternatives,suchascement,andencourageddeveloperstofore-methane,developmentssteel,glass,hydrogen,refiningacceleratetheireffortsinCCUSarestillinearlystages,withandgasprocessing.developments.However,industrialplayerssuchasaccordingtoRystadEnergy’sSantos,TokyoGas,OsakaGas,Sofar(September2023),theanalysis,CCUSwillneedtoTohoGas,andMitsubishideploymentofCCUShashadscaleupbyanother3,402CorporationrollingoutslowprogressbutprojectsareMTPAand5,966MTPAtobedemonstrationprojectstotestquicklyemerging.Animportantalignedwithdecarbonisationthetechnology.Ifbreakthroughsfacilitatorfortheincreasedeffortsinthe1.9-degreeandtoreducecostscanbeachieved,adoptionofCCUSispolicy1.5-degreescenarios,respectivelye-methanecouldprovetobeasupport,eitherthrough(Figure86).Thiscallsforgreatermajortechnologyfordecarbonis-investmentincentivesortaxprivateinvestments,regulatoryingthenaturalgassupply.credits.Movingforward,totalsupport,andpartnershipsacrossAdditionaldetailsonlowcarboncapturecapacity(operational,industrialhubstoovercomegasesandstateofsupplyareFIDandpre-FID)willgrowfromchallengesofcost,scale,anddiscussedinChapter1.40MTPAin2022to528MTPAregulations.27Includesoperational,FID,andannouncedprojects.GlobalGasReport2023753/NaturalgasandlowcarbongasesintheenergytransitionReutilisingnaturalgas-firedpowergenerationinfrastructureforlowcarbongasesOneofthemainconsumersofwhichcanhandlehydrogenInJanuary2023,GEandIHIsignednaturalgasisthepowersectorcontentsofmorethan75%.aMemorandumofUnderstandingandgasturbinescurrentlyplay(MoU)todevelopgasturbinesanimportantroleintheglobalTheneedtoupgradeexistingthatcanoperateon100%energymixprovidingreliableturbinesdependsontheammonia.IHICorporationisaelectricity,withoutcreatingairhydrogencontentinthetargetedheavyindustrymanufacturerinpollutionandatabouthalfoffuel.LowamountsofhydrogenJapanandisaimingtodeveloptheemissionsofcoalpowerblendedwithnaturalgasisammoniacombustiontechnologiesgeneration(Table3).Gas-firedfeasibleformostapplicationsincollaborationwithGEtopowergenerationarecheapertodecarbonisethegasstream.decarboniseheavydutygasandfastertobuildthancoal-firedConvertingtohigherand100%turbinesassociatedwithitsgeneration.Naturalgashashydrogencontent,however,operations.Thetwocompaniesbeeninstrumentalinloweringwouldpotentiallyentailsignificanthavecommittedtodefineaelectricityemissionsbyreplacingchangesincludingnumeroustechnologyroadmaptodevelopcoalandliquid-firedpowerplantscomponentsinthegasturbinegasturbinetechnologythatcan(seeFigure86).system.Insomecases,theeventuallymaketwoofGE’ssystemswouldhavetobeexistinggasturbinesabletorunGasturbinesalsohaveanotablecompletelyupdatedandupgrad-on100%ammonia.Inaddition,advantageintheirabilitytoedtoallowforthis.Theviabilityofotherlargegasturbineplayersoperateonhydrogen.ThisconvertingexistinggasturbinessuchasMANarelookingtoincludesbothnewgasturbinesmustbeevaluatedbasedondevelopgasturbinesthatcanandunitsalreadyinoperationspecificturbinedesign.Further-operateonammoniaforheavywhichcanberetrofittedtomore,theuseofgasturbinesindustriessuchassteelproduction.operateonhighH2fuelcontent.operatingonfuelscontaininghy-MANhasalsoexpressedaninterestFormanyyears,severallargedrogenisoftenseenatindustrialindevelopingthesefurtherforturbinemanufacturerssuchassiteswherehydrogenisavailableusebyutilities.WiththesegasSiemensandGEhaveoperatedasoff-gasesfromotherindustrialturbinestechnologiesreachinggasturbinesthatcanhandleprocesses.Currentlythelong-haulcommerciality,retrofittinggasvaryinghydrogencontent.Inthetransportationofhydrogeneitherturbinetorunonammoniaiscasesofburningahydrogenandasaliquidorthroughacarrierisexpectedtobeaviablewayofnaturalgasblend,themostusedfarfromcommercialandthesedecarbonisinggas-firedpowerturbinetechnologiesarethelaterpowergenerationmethodsareproduction.However,thegenerationsoftheDryLowdependentonlocallysuppliedorcommercialityofthesetechnologiesEmission(DLE)burnerdesign,pipedimportsofhydrogen.isnotexpectedbefore2030.CriticalroleofgasinheavyindustriesGashashistoricallyheldanfeedstocktoproducehydrogenwithrisingpopulationandimportantpositionwithinthefortherefiningandchemicaleconomicdevelopment,asindustrialsector,comprisingindustries.Secondly,gasservesdemandforfoodandconsumeraround27%ofglobalgasasafeedstockforammoniaandgoodsincreases.Lastly,gasisconsumptionin2022.Gasservesmethanolproduction,crucialfortypicallyusedinheatprocessesasareactant,feedstock,andvitalfertiliserandotherindustrialvalueandisevensuitableforprocessessourceofprocessheatwithinchains.Theseproductsarerequiringtemperaturesofmoreindustries.Firstly,gasisthekeyexpectedtobeofhighdemandthan1,000degreesCelsiusdueGlobalGasReport2023763/NaturalgasandlowcarbongasesintheenergytransitionFigure87:ProcesstemperaturebyindustrialsectorFoodandbeverage30200ProcessesthatwillstillrequiregasinthemediumtolongtermAgriculture,forestryandfishing50250250Waterandsewerage150250Textile150600250900Chemicals250800Non-ferrousmetals1501,200300550000Approx7im0a0teProcessT9em00perature°C11001,200Bricksandceramics1300Cement,lime1501,4001,500Glass1,500Ironandsteel1500-100100Source:AustralianRenewableEnergyAgency;RystadEnergytoitshighenergydensityandimproveairqualityandthelocalequipment,gaswillcontinuetocontrollablecombustioncharacter-environmentandsignificantlycutbenecessary.istics,asseeninFigure87.Intheemissions.comingdecade,industrialprocessesInstallingCCUSunitsatindustrialdemandinghightemperaturesForindustrialprocessesthataresitesisanotheroptiontodecar-wouldlikelyremaingas-driven,lessheatintensive(upto500de-bonisehard-to-abateindustrialparticularlywithinthemetals,glass,greesCelsius)suchasfooddryingprocessesincementproductionammonia,andceramicssectors.andbeverageprocesses,electri-andsteelmanufacturing.ForWhilethesesectorsalsohavelowerfiedheatingisaviabledecarbon-example,theLongshipprojectheatingrequirementsthatcouldisationoptionthatwouldlikelycaptures800,000tonnesofCO2betackledbyelectrification,thereducethedemandfornaturalannuallyfromHeidelbergMateri-largestshareofgasconsumptiongas.Forprocesseswithhigheral'scementfactoryandHafslundisdirectedatthehighesttempera-heatrequirements(upto1,000OsloCelsio'swasteincinerationturepartsoftheprocesses.degreesCelsius),electricfurnacesfacility,tobestoredingeologicalcouldbeused,buttechnologiesformationsbeneaththeNorthMovingforward,naturalgaswilllikethesearestillindevelopment.Sea.AlthoughthenumberofcontinuetoplayanimportantroleForexample,BASFisdevelopingCCUSprojectsisgrowingglobally,intheindustrialsector,thoughelectricpetrochemicalcrackingchallengessuchaslimitedaccesslowcarbonalternatives–electrifi-furnacesthatcanreach850de-tofundingandalackofsupport-cationofprocesses,greengases,greesCelsius,plannedforfullscaleivepoliciesarerecognisedastheandusingCCUSunits–areoperationsby2030.However,mainbarriershinderinglarge-scaleavailabletodecarbonisesomeelectrifiedequipmentwouldfareCCSdevelopments.Intermsofindustrialprocesses,iftheycanbeworsethangaswhenitcomesCCUSpolicies,thoughapositiveproducedatsufficientscaleandtoheat-intensiveprocessesthatshifthasbeenwitnessedin2023competitivecosts.ItisimportantrequirereliableheatgenerationforthroughpoliciesliketheUnitedtonotethatcoaliscurrentlyanextendedperiodoftime.Elec-States'IRA,EU'sNetZeroIndustrythemainindustrialfuelsource,trifyingtheheavyindustrialloadAct,andJapan'slong-termCCSparticularlyinAsia,accountingforwouldalsoplacesignificantstrainroadmaps,governmentswould37.7%ofglobaltotalindustrialontheelectricalgrid.Additionally,needtoassistdevelopersinenergyusein2022andproducinggas-firedheatprocessesaremorecreatingafavourablefinancingveryhighgreenhousegascostcompetitivethanelectrifiedandregulatoryenvironmentforemissions(nearly40%oftotalprocessesduetotheavailabilityofCCSdevelopmentstoproceed.energy-relatedgreenhousegasnaturalgasandmaturetechnolo-emissions)andairpollution.gies.Assuch,unlesstechnologicalTheusageoflowcarbongaseswillThisleavesalotofroomforadvancesreachmaturityandcostsbeanessentialpartoftheeffortfuelswitchingtonaturalgastobecomecomparabletoconventionaltoreducetheemissionsfromtheGlobalGasReport2023773/NaturalgasandlowcarbongasesintheenergytransitionFigure88:Industrialgasconsumptioninvaryingdegree-scenariosBcm2015202020252030203520402045RystadEnergy1,8002.2-degrees1,600RystadEnergy1,4001.9-degrees1,2001,000RystadEnergy1.6-degrees800600RystadEnergy4001.5-degrees200205002010Source:RystadEnergyindustrialsector.DecarbonisationFromtheaboveassessment,itisvaryingdegree-scenarios(Figureenabledbylowcarbonhydrogenclearthatgaswillcontinuetoplay88).Theroleofgasremainsandammoniaisparticularlyappli-animportantroleintheenergysignificant,eveninthe1.5andcabletoprocessesthatcurrentlytransition,andthisbringsbackthe1.6-degreescenarios,duetousegreyhydrogenorammoniaquestionofplanningforsufficientlimitedalternatives.Intheasfeedstock,andprocessesthatsupplytobeavailableforbothhigherdegreescenarios,therelyonfossilfuelstoreachhighnaturalgasandtheincominglowindustrialsectorincreasesgastemperatures(>1,000degreescarbongases.Thistakesintoconsumption,duetoanuptickinCelsius).Biomethaneoffersaaccountthedemandaugmenta-industrialactivityandbecauseone-to-onedirectsubstitutiontionfromadoptionofalternativegasisusedtoreplaceotherofnaturalgas,requiringnoneedtechnologiesintheindustrialfossilfuels,followedbyaforinfrastructuremodification.sectorswhereitispossibleandgradualdeclinepost-2035.Althoughlowcarbongasesshowaffordabletoaccomplish.However,thedeclineisslowedpromiseinvariousapplications,bynewCCUSfacilitiesandthechallengesrelatedtoscalabilityRystadEnergyshowthepathwaysretrofittingofexistingfacilitiesandcostremain.ofindustrialgasdemandthroughwithCCUS.TransitionofthebuildingsectorThebuildingssector(residentialvation.Towards2050,naturalgasheat,enhancinginsulation,andandcommercial)consumeddisplacementcanbeexpectedusingefficientdemandresponseapproximately21%ofnaturalgasacrossdifferentregions,basedonmeasures.Numerouspoliciesin2022,amountingtoaroundtheadoptionoflowcarbongasesacrossEurope(REPowerEU)and991Bcm.Naturalgasiscommonlyandelectrification.NorthAmerica(IRA)haveunder-usedasafuelforheating,scoredenergyefficiencyasakeycooking,andprovidingpowerforAhighlyscalableapproachtomeasureforreducingemissionsappliancesandutilitiesinthedecarbonisingbuildingsinvolvesandeventuallyattainingnet-buildingssector.Towards2030leveragingenergyefficiencyandzeroemissiongoals.InAsia,Japanandbeyond,gaswillcontinueconservationmeasures.Energyimmediatelycomestomind,toplayanimportantroleinthisefficiencystandsasareadilyhavingoneofthelowestenergysector,withthelargestdecarbon-accessiblemethodforcurtailingintensitiesintheworld.Thiswasisationeffortslikelycomingfromenergyusagebyretrofittingachievedviapoliciessuchastheincreasedefficiencyandconser-appliances,repurposingsurplus“RationalUseofEnergyAct”thatGlobalGasReport2023783/Naturalgasandlowcarbongasesintheenergytransitionthatcameintoplacein1979toFigure89:Emissionsfromresidentialgasversuspowersectorbypromoteperiodicreportingoncountry28energyconsumptionandreductionefforts,andtoKgCO2perMWhencouragecompetitionamong800companiesinenergyefficiency.700Itsmostrecentpolicy–“NewStrategicEnergyPlan”–aimsto600takeenergyefficiencyimprove-500mentsfurther,settinga40%energyefficiencyimprovement400targetfrom2013to2030.Infact,theIEAhashighlightedthat300comprehensiveenergyefficiencyrenovationsarekeyfordecar-200bonisation,potentiallyimproving100energyintensitypersquaremetrebymorethan50%.0Anotherbuildingsdecarbonisation1990199520002005201020152020202520302035204020452050pathwayinvolvestheintegrationoflowcarbonChina-PowerJapan-PowerUK-Powergases,suchashydrogenandbiomethane,intothegasUS-PowerResidentialgasboilersupply.ThiscaneitherbedonethroughpartialblendingorfullSource:RystadEnergysubstitution.Partialblendingisatransitionaryalternativetowardsemissions,electrifyingbuildingstheyconsume.Governmentsloweremissionsfromthewouldhavetheoppositeeffect.ItacrossEurope,NorthAmerica,buildingssegmentwithoutdoingisimportanttohighlightthatandAsiahavebeenprovidinglargeoverhaulsofresidentialelectrificationofbuildingswillgrantstoincentivisetheinfrastructure,andwithcreatesignificantadditionalinstallationofheatpumps.Forbiomethanefullsubstitutiondoesdemandforelectricity,requiringexample,theUnitedKingdomnotrequireanyretrofitting.Lowadditionallowcarbonpowergovernmenthassetoutplanstocarbongasescansignificantlygeneration,transmission,andoffer5,000Poundsgranttohelpreducethecarbonintensityofdistributiondevelopment.Astudy90,000householdsinstallheatenergyconsumptioninbuildings,conductedby“TheCenteronpumpsbetween2022and2024).whileleveragingexistinggasGlobalEnergyPolicy”seeJapansubsidisesheatpumpsasinfrastructure.However,thereelectricitydemandtopotentiallyanenergysavingprojectinareseveralbarrierspertainingtogrowfrom3.9PWhtomorethanresidential,industrial,andcom-costandscalewhichneedtobe15PWhintheUnitedStateswithmercialsectors.Itisimportanttoovercomebeforewiderscaleandlargescaleelectrification.notethatdecarbonisationthroughadoptioncanoccur.electrifiedappliancesdependsElectricheatpumpsareapopularonthegrid’scarbonfootprint.ToElectrificationhasbeenoneofsolutionfortheelectrificationofachievelowornet-zeroemissions,themaindecarbonisationheatingastheyenableefficientthepowergridmustbeimprovedpathwaysinmanynet-zerotransferofheatfromthetoprovidecleanerelectricityforstrategiesinrecentyears.Someenvironment(air,ground,ortheseappliances.countriesalreadyhavelowwater)intobuildingswiththepowergridemissions,andhelpofarefrigerantfluid.ItsAdditionally,despitepolicyelectrificationinthesecaseswillefficiencycanreachmorethanshiftsfavouringelectrification,resultinreducedemissions,while300%,meaningheatpumpscansignificantswitchingcostsremaininthecaseswhereelectricitygeneratethreetofourtimestheachallenge.Thisisexemplifiedemissionsishigherthanbuildingsheatcomparedtotheelectricitythroughthedelayedgasboiler28Powermixaccordingto2-degreescenario,assumed90%efficiencyforresidentialgasboilers,powermixcarbonintensitywiththeIPCCreferencesfromchapter1andRystadEnergy’sviewonfuturepowermixdistribution.ThepowerresultsshowtheemissionsperMWhifelectricityisutilisedforheating.GlobalGasReport2023793/NaturalgasandlowcarbongasesintheenergytransitionbaninGermanyfrom2024Inconclusion,whileelectrificationimportantpathway,itisnottheto2028duetopublicoutcrywillmakesenseincertainpartsonlyroutetodecarbonisation,againsthighswitchingcoststoofthebuildingsegment,similarlyandthepolicyfocusshouldfallheatpumps.Forcomparison,thetoindustry,itwillnotworkcostonfindingsolutionsthatprovideupfrontcostofagasboilerinGer-andenvironmentallyefficientlythehighestemissionsreductionmanyisbetween1,000Eurosandeverywhere.Theeconomicsofreturnoninvestment.To3,000Euros,whiletheinstallationswitchingwillplayanimportantdecarbonisethebuildingssector,ofaheatpumpsystemcostsrole,andinmanycases,gaswillgovernmentsshouldfirstupwardsof10,000Euros,afterremainaviableoptionandprioritiseenergyconservationsubsidiesandgrants.Moreover,continuetoplayanimportantinandefficiencymeasurestogiventhehistoricalcosteffective-thebuildingsector,particularlymanageconsumption.Thiscannessofresidentialgascomparedwiththedirectdecarbonisationbridgethelonger-termpathwaystoelectricity,thisfurtherenhanc-optionsvialowcarbongases.oftransitioningtowardslowesthecaseforgasboilers.Whileelectrificationisancarbongasesandelectrification.MethaneemissionreductioninitiativesMitigatingmethaneemissionsnotattheexpenseofacontinuedispoisedtoplayakeyroleinthisplaysamajorpartinmeetingthestep-upinCO2mitigation–respect,butemissionreductionParisgreenhousegas(GHG)whichhasmoresignificantiscrucialfornaturalgasandLNGreductiongoals.Methaneisthecompoundingeffectonlong-termtoremainrelevantasanenergysecondlargestGHGaftercarbonglobalwarming.Evenamidansourceinthelongterm.dioxide(CO2).Itswarmingeffectexpectedramp-upofrenewableishoweversignificantlystrongerenergysupply,therecurringManyinitiativeshavebeenintheshort-term,whichmakesitprospectofintermittencycausinglaunchedtoabatemethaneamorepotentnear-termclimateshortfallsofsolarPVandwindemissionsfromthenaturalgasforcerthanCO2.Therefore,powercreatesaneedforvaluechain,themostprominentmethaneemissionsmitigationiscomplementaryenergysourcesofwhichistheGlobalMethaneanurgentmatter,aslongasitistoalwaysbeavailable.NaturalgasPledge(GMP),launchedattheTable8:ProminentindustryinitiativesinreducingmethaneemissionsSource:GlobalMethanePledge;OilandGasClimateInitiative;OilandGasMethanePartnership2.0;MethaneGuidingPrinciples;Jera;KogasGlobalGasReport2023803/NaturalgasandlowcarbongasesintheenergytransitionCOP26summitinNovemberTherearealsoseveralotheractiveandthegovernmentsofJapan,2021.ItisledbytheUnitedindustryinitiativestacklingSouthKorea,Australia,andtheStatesandtheEUandhasbeenmethaneemissions,namelytheUnitedStates,andwaslaunchedjoinedbymorethan100Oil&GasMethanePartnershiprecentlytofacilitatethecountries,representingabout2.0(OGMP2.0)-referredtoasmonitoringandabatementof50%ofglobalemissions,andthegoldstandardofmethanemethanethroughouttheLNGmorethantwo-thirdsoftheemissionsreportingwithintheoilvaluechain.TheinitiativebringsglobalGDP.Theaimoftheandgasindustry,theOilandtogetherLNGbuyersandinitiativeistoreduceglobalGasClimateinitiative,MethaneproducerstocollectivelymitigateanthropogenicmethaneemissionsGuidingPrinciples,andthemethaneemissionsinLNGtoacrossallsectorsbyatleast30%CoalitionforLNGEmissionboostitsallureasatransitionfuel.by2030,comparedto2020AbatementtowardNet-zerolevels.Furthermore,theIGU(CLEAN).Table8showsaMethaneemissionscanoccurhasbeenaprominentproponentsummaryofthemostprominentthroughtheentirenaturalgasandofongoingeffortstomeasure,industryinitiativesinplacetoLNGvaluechain,andLNGbutarerecord,andminimisemethanereducemethaneemissionsacrossmostprevalentduringgasemissionsamongitsmembersandtheoilandgasindustry.productionandshipping.Inbeyond,acommitmentgeneral,therearethreewaysthatdatestoatleast2016whenFortheLNGsectorspecifically,methanegetsemittedinthetheIGUGroupofExpertsonCLEANisaprivate-publicinitiativenaturalgasvaluechain:throughMethaneEmissionswasinitiallyamongJapan’sJera,SouthKorea’sfugitiveemissions,flaring,andestablished.Kogas,theEuropeanCommission,ventingofmethane.GlobalGasReport2023814/LNGasaCriticalConduitforanOrderlyEnergyTransition4/LNGasaCriticalConduitforanOrderlyEnergyTransitionLiquefiednaturalgas(LNG)technologyhasanddistributionwithintheenergytransition,introducedanunmatchedscalabilityandflexibilityandthepotentialfutureroleofnaturalgastonaturalgasasanenergysource.ThischapterinfrastructureasanenablerandcarrieroflowexplorestheroleofLNGinprovidingflexibleandcarbongases.Thisisanimportantpartofmakingresilientenergysupply.Italsoinvestigatestheinvestmentsinnaturalgasrelatedinfrastructurepathwaysforthedecarbonisationofitsproductionfutureproof.Highlights•ConversionofnaturalgastoLNGintroducesunmatchedscalabilityandflexibility,oftenreplacinghigh-emittingsourceslikecoalandfueloil.ThedynamicdistributionofLNGallowsforthecreationof“virtualpipelines”thatcanenableaccesstoenergyfordevelopingregionsandremoteareaswherepipedgasisnotaviableoption.In2022,LNGtradeconnected“exportingmarkets”tomarketswithimportingcapabilities,expandingaccesstoareaswherepipelinescouldnotreach.TheflexibilityofLNGhasbeenaffirmedonnumerousoccasionsinrecentyears,mostrecentlyduringthewarinUkrainewithincreasedimportstoEurope,butalsoaftertheFukushimanucleardisasterinJapanin2011,andtheexperienceofEuropelastyearhasdemonstratedtheremarkablespeedwithwhichaccesstoLNGcanbeenabled,usingFSRUtechnology.Inlessthanayear,GermanywasabletobeginimportofLNGforthefirsttimetooffsetitslossesofRussianpipelinegasimports.•FloatingregasificationunitshavebeenessentialforEuropetoquicklyreplacepipedgasimportsfollowingtheoutsetoftheRussia-Ukrainewar,withtheregionseeinganincreaseinregasificationcapacityofaround60%fromyearend2022toAugust2023.ThisdisplaystheflexibilitythatfloatingliquefactionandregasificationfacilitiesintroducewithintheLNGvaluechain.Floatingfacilitiestypicallyhavelowercapitalcostandshorterleadtimeandcanbemovedandreusedinnewlocationsifneeded.Furthermore,thelocationofthefacilityisnotconstrainedbytypicalonshoreinfrastructurechallengesandregulations.•Small-scaleLNG(ssLNG)isuniquelypositionedtoprovidereliableandcost-efficientenergyinareassuchassmall,remotesettlementsorislands,andindevelopingregions.Often,thealternativesarehighemissionenergysourceslikecoal,diesel,andtraditionalbiomass.Forinstance,Sub-SaharanAfricareliesheavilyonoiltosupportitsdecentralisedpowergeneration,withdistributeddieselcapacityaloneestimatedtosomewherebetween45GWand100GW29.Moreover,ssLNGisanattractivefueloption,especiallyviableinshippingandlong-haulheavy-dutyroadtransport,offeringacompetitiveandmoreenvironmentallyfriendlyalternativetooilanddiesel.LNGemitszerosulphuroxides(SOx)andparticulatematter(PM)and90%lessnitrogenoxides(NOx)comparedtocombustionofheavyfueloil30.•Bio-methaneande-methanehavethesamecompositionasnaturalgas,meaningthattheycanutiliseexistingLNGinfrastructurewithoutadjustments,whichcouldmakethemattractiveandcompetitiveoptionsfordecarbonisation.Further,thepotentialofutilisingexistingLNGinfrastructureforliquidhydrogencarrierslikeliquidhydrogenandammoniaisgainingtractioninseveralpartsoftheworld,leadingtoincreasedinvestmentsandR&Defforts.•Newinfrastructureinvestmentsshouldbedevelopedwiththecompatibilityoflowcarbonandrenewablegasesinmind.ThisisanimportantpartoffutureproofinginvestmentsingasandLNGinfrastructuretokeeptheenergysourcerelevantandfinanciallyviableatcurrentlevels,andtoreducetheriskofbecomingstrandedwiththeinevitabledevelopmenttowardslowcarbongases.Aswiththerestofthesupplychain,itispivotaltobuildontheaggressiveeliminationofmethaneemissionstopreservetheenvironmentalvalueofgasfortheenergytransitionandbeyond.29IGU“GasforAfrica2023”30Sea-LNG“LNGasamaritimefuel–Theinvestmentopportunity”GlobalGasReport2023834/LNGasaCriticalConduitforanOrderlyEnergyTransitionTheroleofLNGinfutureenergysystemsAsdiscussedinthepreviousworldwhereelectrificationmaytingsourceslikecoalanddiesel.sections,therequiredmassivenotbetherightsolutiontoTheflexibilityofLNGhasbeensurgeintheshareofrenewabledecarbonise,eitherduetodisplayedonnumerousoccasionsenergythroughtheenergytechnicallimitations,ordueto-particularlyduringthewarintransition,willintensifytheneedcost.Intheseinstances,theUkraine,whentheUnitedStatesforresponsivedispatchableavailabilityofaffordable,reliable,increaseditsexportstoEuropebybalancingsourcesofenergytoandefficientlowcarbongaseous159%from2021to2022,shift-ensurethatenergydemandisenergywillbecriticaltomaintainingtraditionalLNGtradeflowcontinuouslymet.Whilebatteriesstableandsufficientenergysupply.patternsfromAsiatoEurope,asareexpectedtofulfilmostofthepreviouslydiscussedinChapter1.balancingneedsforshorterInadditiontothedispatchableThe2011Fukushimaperiodsofpeakandintermittencycharacteristicsofnaturalgas,itsnucleardisasterinJapanwasevents,naturalgasandlowconversiontoLNGintroducesanotherdemonstrationofthecarbongaseswillplayanessentialunmatchedscalabilityandcriticalityandflexibilitythatroleasareliableandcost-efficientflexibility.ThedynamicLNGoffers.Japan’sgasimportsenergysourcetosecurereliabledistributionmodesofLNG,thatsurgedfrom91Bcmin2010tosupplyduringlongergapperiods.includeprimarilyshipping,but118Bcmin2012,asLNGarrivedatThisassumptionisincludedinallalsoincreasinglytruckintherescue,offsettingthesuddendemandscenariosevaluatedinsmaller-scale,functionas"virtuallossofkeypower-generationthisreport,signifyingthecrucialpipelines",supplyingdevelopingresourcewhentheFukushimarolenaturalgasandlowcarbonregionsandremoteareaswhereDaiichinuclearplantwasgasesplaysinfutureelectricitypipedgasisnotaviableoption.destroyed.Thisinturnmadesystems.InadditiontopowerThisoftenreducesemissionsJapanthelargestLNGimportersupply,therewillremainareasofandimprovesairqualityduetointheworldbyasignificanttheeconomiesandregionsofthethereplacementofhigh-emit-margin.Small-scaleLNGforincreasedenergyaccessibilityTheflexibilityofLNGstemslargelyinfrastructure,small-scaleLNGemissions,andahigh-costenergyfromitsscalability.LNGcanbe(ssLNG)isuniquelypositionedresource.Furthermore,increasedprovidedfromlargeliquefactiontoprovidereliableandcost-demandforlong-durationandregasificationfacilitieseffectiveenergy.Often,thebalancinginthefutureelectricityfeedingintothepipelinenetworkalternativesarehigher-emissionsystemscallsfordispatchableoflargecitiesandregions,oritenergysourceslikedieselgensets,energysources,suchasgas.cancomefromsmall-scaleandtraditionalbiomass.ForHowever,consumptionislikelytoterminalsprovidingenergytoinstance,Sub-SaharanAfricabesmallerinabsolutequantities,remotesettlements,trucks,orreliesheavilyonoiltosupportitsmorevolatileandmorewidelyships.Inareassuchassmall,decentralisedpowergeneration,distributedcomparedtocurrentremotesettlementsorislands,withdistributeddieselcapacitynorms,giventheuptickofwithlimitedgasdemandandaloneestimatedtobeanywhererenewables,micro-grids,andoff-challengingconditionsforlarge-between45GWand100GW31.gridsolutions,furtherexemplifyingscaledistributionandtraditionalDieselishighlypollutingwithhightherelevanceofssLNG.31IGU“GasforAfrica2023”GlobalGasReport2023844/LNGasaCriticalConduitforanOrderlyEnergyTransitionFurthermore,ssLNGtypicallypollutionlargecities,asnaturalitsdomesticproductionofnaturalrequireslowerinvestmentsandgasdoesnotemitsoot,dust,orgas,drivenbythegovernment’sshorterleadtimesthantraditionalPMduringcombustion.ForthepromotionofgastoreplacemoreLNG,thusboostingitspopularityinheavy-dutytrucksegment,LNGisemissionintensiveenergysources,developingregionswheresatelliteexpectedtoremainthemostandtoimproveenergyaccessibilityterminalscanbesetup.Asmoreeffectivefuelintermsofinthecountry.Thegrowthinthemarginalgasresourcesbecomeemissionsinthemediumterm,domesticmarkethasnotablyavailableandsmallerdemandgiventhechallengesfacingbeenenabledthroughsmall-scalecentresemerge,ssLNGbecomesalternativesolutions.Electrificationapplications.ThishasfurthercrucialinincreasingLNGofthetruckfleetisacomplexboostedtheprivatesectorproductionandusagegoingoptionhinderedbystrictbatteryinvestmentsinssLNG,whichaimsforward.Forexample,thePortrequirementspertainingtototakeadvantageofthecleanerEdwardLNGprojectinCanadaisdurabilityandperformance,andcheaperalternativetodiesel.plannedtaketwoyearstowhereassyntheticfuelsarenotForinstance,in2016,privateconstructandcost300millionfinanciallyfeasibleatpresent.playerGreenvilleLNGCAD,andwhencomparedtocommissioneda450millionUSDlargerLNGfacilitieslikeLNGInmarinetransport,dramaticmini-LNGandgasprocessingCanadathatisonlyabout85%changesinregulations–thefacilityinRumuji,RiversState,completedafter5yearsofInternationalMaritimeincludingthreeliquefactionconstructionandcosts100timesOrganisation’sfueloilSulphurtrains,boastingacombinedLNGmoreincapitalcost,thelimitwastightenedfrom3.5%toproductioncapacityof2,250advantagesofssLNGareclear.0.5%in2020–haveallowedLNGtonnesperday.Fromthisfacility,ThePortEdwardLNGplantaimstogaintractionasafuel,LNGisdistributedthroughouttosupplyLNGforexportandforparticularlyduetotheconsiderablyNigeriausingLNG-poweredtrucksdomesticcustomersinremoteloweremissionsofSOxandNOx.equippedwithcryogenictanks,communitieslookingtoswitchtoIn2022,globalLNGbunkeringeachwithacarryingcapacityofcleanerfuelssuchasthoseinactivitydecreasedasoil-based23tonnesofLNG.Notably,forestrycampsandminingfuelstradedatsignificantNigeriahasmanagedtomonetisefacilities,whichwouldotherwisediscountstoglobalLNGprices.theassociatedgasfromitsoilnotbeservedbylargerLNGHowever,asofearly2023,LNGproduction,becomingthekeyfacilitieslikeLNGCanada.priceshaveonceagainbecomeexporterofLNGonthecontinent.Moreover,ssLNGisanattractivecompetitivewithfueloil,furtherOtherwell-establishedgasfueloption,bothonlandandatencouragingarapidlyexpandingcompanies,includingAxxelaandsea.LNGoffersacompetitiveandLNG-fuelledorderbookandGreenfuels,arenowfocusingonmoreenvironmentallyfriendlyensuringcontinuitywiththemini-LNGfacilitiestodiversifyalternativetooilanddiesel,accelerationofdecarbonisationtheiroffering.Axxelahassignedareducingemissionsandmostmeasures.Indeed,morethan50%contractforengineering,importantlyeliminatingharmfuloftoday’sordersforalternativeprocurement,andconstructionairpollution.Duringcombustion,fuelledshipsareLNG-ready.Itisofamini-LNGplantinAjaokuta,LNGemitszerosulphuroxidescurrentlytheonlytechnologicallyaimedtosupplythenorthern(SOx)andparticulatematter(PM)maturealternativetooil-basedstateswithgasthroughand90%lessnitrogenoxidesmarinefuels:othercarbontruck-baseddistribution.The(NOx)comparedtoheavyfuelneutralfuels,suchashydrogen,developmentofssLNGinoil32.Itisparticularlyviableingreenammonia,ormethanol,Nigeriahaseffectivelyshippingandheavyroadarestillfacingtechnological,democratisedgasbyincreasingtransport.InChina,LNG-fuelledinfrastructural,economic,andtheavailabilityofenergytoheavy-dutytrucksandbuseshaveregulatoryissues,andarenotthepublic,inturnfacilitatingseenmassivegrowthovertheexpectedtobecomewidelyeconomicgrowth.Thisstrategypastdecade.Thisdevelopmentavailableintheverynearfuture.couldinturnbemirroredinhaslargelybeendrivenbyneighbouringcountriestobolstergovernmentpoliciesandNigeria,Africa'slargestexporterofindustrialactivityandeconomicregulationstoaddresslocalairLNG,hasrecentlybeenincreasinggrowth.32Sea-LNG“LNGasamaritimefuel–Theinvestmentopportunity”GlobalGasReport2023854/LNGasaCriticalConduitforanOrderlyEnergyTransitionFlexibleLNGtobalanceouttroughsFigure90:InstalledFLNGcapacityperregionMilliontonnesLNG50485453AsiaMiddle4013EastAustralia35NorthAmerica302514Africa2015121050NorthAmericaAsiaMiddleEast20302022Source:RystadEnergyAfricaThesuccessofthetraditionalcomparativelylowcapitalcostinstallationsin2022.ThenewLNGvaluechainisdependentonandshortleadtimecanenableprojectsaddedintheregionlasteconomiesofscale,drivenbyprofitableoperationsevenonyearincludeCoralSouthFLNGinconsiderableinvestmentmarginalfieldswithmodestMozambiqueandtheCameroonrequirementsininfrastructure.productioncapacity,partlyduetoFLNGproject.MozambiquehasTheintroductionoffloatingnoexportpipelinesbeingneeded.struggledtodevelopitsLNGfacilitiessuchasfloatingLNGFurthermore,thecostofFLNGhascapacityduetosafetyissues(FLNG),floatingstorageandfalleninrecentyears,partlydrivenrelatedtothecivilunrestthatregasificationunits(FSRU),bythestandardisationofnewerstartedinthenorthernpartsfloatingregasificationunitsFLNGvessels.Ratherthanbeingofthecountryin2017.FLNG(FRU),andfloatingstorageunitscustomisedforusageinaspecificfacilitiescanreduceriskwhile(FSU)hasunlockedanewdegreefield,thesevesselsaredesignedstillofferingeconomicallyofflexibilitywithintheLNGandtohavegreaterflexibilityincompetitivewaystomonetisebroaderenergyvaluechain,asthedeploymentwithreducedleadotherwisestrandedgasresourc-locationofthefacilityisnottime,offeringsignificantcostes.FLNGscanalsoserveasanconstrainedbytypicalonshoresavings.Inaddition,FLNGsofferintermediatesolutionforlargerinfrastructurechallengesandvariousadvantagesoveronshorefields,providingearlycashflowregulations.Furthermore,floatingprojects,whichoftenfaceuntilonshoreliquefactiontrainsfacilitiescanberedeployedtolandconstraintsandcomplexcomeonline.newlocationsifneeded.environmentalapprovalprocesses.NorthAmericaisexpectedtotakeFLNGoffersthepossibilitytoTheWestAfricanregionishometheleadintermsofnewinstalledcost-effectivelycommercialisetomanymarginalgasfieldswithFLNGcapacityinthecomingyears,smallorstrandedgasreserves,strandedreservesandlimiteddrivenbydevelopmentintheespeciallyinareaswherethereexistinginfrastructure.ThisisUnitedStates.FLNGisapartofarelimitedornoexistingreflectedinAfrica’smarketsharethecountry’sstrategytoquicklyinfrastructure.Thetechnology’sof46%ofglobalFLNGcapacityaccessgasresourcesforoverseasGlobalGasReport2023864/LNGasaCriticalConduitforanOrderlyEnergyTransitionexport,supplementingtherisingcarriersareretrofitted,flexibilityonlymonthsafterprojectsuppliesfromonshoreLNGinuse,andlowerriskasFSRUsapprovalduetothegeopoliticalfacilities.Thefirstupcomingcanbeleased.Historically,SouthrisksandgassupplyshortagesprojectintheUnitedStates,America,theMiddleEast,andAsiathatemergedafterthestartfittinglynamedFastLNG,ishavebeenthelargestmarketsoftheRussia-Ukrainecrisisinexpectedtocomeonlinein2025forFSRUsmeasuredininstalledFebruary2022.TheEemshavenwithaliquefactioncapacityof2.8capacity.SouthAmericatopsprojectconsistsoftwovessels–MTPA.TheAltamiraFLNGprojecttherankingyear-to-datewith46onebuiltasanFSRUin2017andinMexicoisanotherexampleofmilliontonnesofregasificationtheotherbuiltasanLNGtankerresponsivenewsupply,initiatedincapacity,correspondingto30%in2014beforebeingconvertedJune2022andexpectedonlinebyoftheglobalmarket.Asiaandin2022.ThisisthefirstFSRUtheendof2023,introducing2.8theMiddleEasteachhadaroundprojectintheNetherlandsanditMTPAofLNGtothemarket.22%ofthemarket,at33millionunderscorestheuniqueflexibilitytonnesand32milliontonnesoftheconceptcanoffer.FSRUsarerelativelynewcapacity,respectively.EuropecomparedtotheironshorehasincreaseditscapacitybyTheother16approvedEuropeancounterparts,withthefirstunitaround60%fromyearend2022projectsin2022areexpectedtobeingdeployedintheUnitedtoyear-to-date2023andisthecomeonlinebetween2023andStatesin2005.Sincethen,thefourthlargestregionwith302025–fourarealreadyoperationalnumberofFSRUshassurged,milliontonnesofcapacityandawhilethreeareunderconstruction.representingaround15%ofmarketshareof20%.Thisrepresentsleadtimesofglobalregasificationcapacityasonetotwoyears,furtherofAugust2023.ThisisexpectedAtthattrajectory,Europeisunderpinningtheflexibilityandtoincreasebytheendof2023expectedtosurpassbothSouthscalabilityFSRUsbringtothewithnewFSRUsexpectedtoenterAmericaandtheMiddleEastbyglobalgasmarket.themarket,especiallyinEurope.2024ininstalledregasificationFSRUsplayedakeyroleincapacity.During2022,17newFSRUinfrastructurehasbeenEurope’sresponsetotheFSRUprojectswereapprovedininvaluableinrestoringEurope’senergycrisisescalatedbytheEurope,amountingtoaboutenergysecurity,asitopensforRussia-Ukrainewarandtheloss65milliontonnesofcapacitynewgatewaystoreceiveofRussiangasvolumes.Theifrealised.Inparticular,LNGandaddressesexistingadvantagesofFSRUsarelikeNetherland'sEemshavenFRSUinter-regionalinfrastructurethoseofFLNGvessels:lowerprojectstartedoperationsinbottleneckstofacilitateeasiercapitalcosts,shorterleadrecordtime.Itcommencedmovementofgastoconsumers.timesespeciallyifexistingLNGoperationsinSeptember2022,However,itisimportanttobeFigure91:InstalledFSRUcapacityperregionFigure92:EuropeaninstalledFSRUcapacitylifecycleMilliontonnesLNGMilliontonnesLNG1204504001003503008025060200150401002050002020202120222023202420252026202720282029203020202021202220232024202520262027202820292030AsiaSouthAmericaEuropeMiddleEastOperationalUnderConstructionPre-FIDAfricaNorthAmericaAustraliaRussiaSource:RystadEnergySource:RystadEnergyGlobalGasReport2023874/LNGasaCriticalConduitforanOrderlyEnergyTransitionmindfulthatwhileleadtimesforintheutilisationofexistingLNGmanyoftheregasificationLNGreceivinginfrastructurecanfacilitiescomesintoplay.facilitiesinEuroperanatabovebelessthantwoyears,theLiquefactionplantsintheUnited100%capacity.ThisfirstlyproductionofnewvolumestoStatespostedautilisationrateofemphasestheresponsivenessdeliverthesupplyistypically103%in2021duetotightnessinandscalabilityofLNGlonger.Furthermore,thethegasmarket.In2022,plantsininfrastructure,withacriticaldevelopmentofLNGexportandQatar,theUnitedStatesandtheroleinsafeguardingenergyimportfacilitiesareinvestmentsUAEallproducedatmorethansecurity,andsecondly,itthatrequirelong-termplanning100%utilisation,exportingLNGhighlightstheurgencyforfortheenergysystemandisabovetheirnameplatecapacitiesrebalancingthemarketwithhencenotasresponsiveintheim-duetoshortagescausedbytheadditionalsupplyandsufficientmediateterm.Here,theflexibilityRussia-Ukrainecrisis.Similarly,infrastructure.RepurposingexistingLNGinfrastructureforcleanandlowcarbonalternativesThereareseveralwaysofgases.Thiscouldeitherbepartialinfrastructureusedfornaturaldecarbonisingandfuture-proofingdecarbonisationwithnaturalgasgasandLNG.BothmethodsaretheLNGvaluechain,asLNGblendedwithlowcarbongasessupportedbytheEUaspartofitsinfrastructurecanplayanimportantlikehydrogen(seefurtherdetailspushtodecarbonisegasandroleinfutureenergysystemsinChapter3),orthroughatotalincreaseinvestmentsintogreenasinfrastructureforlowcarbonrefurbishmentofequipmentandprojects.ThepossibilitiesofusingLNGinfrastructureasacarrierofhydrogenandotherlowcarbongasesThefutureproofingofLNGnaturalgasconsumptionthroughwhichlowcarbongaswillbeinfrastructureisbasedonthee-methaneandhassettargetsforthepreferredenergytransitionpossibilitiesforre-utilisationtosyntheticmethaneuptakeingaseousenergycarrier,orprocesslowcarbongases.existinginfrastructureof1%bywhetherseverallowcarbonExamplesareliquefiedbio-or2030and90%by2050.Thegaseswillbeusedinparalleltoe-methane,orhydrogencarriersJapanesegascompanyOsakafacilitateforthetransitiontolowerlikeliquidhydrogen,liquidGashaspartneredwithcompaniescarbongasconsumption.Twoorganiccarriers,orliquidinbothPeruandAustraliaotherprominentsolutionsforammonia.Bothbio-methaneinvestigatingthepossibilitiesofre-utilisationofgasinfrastructureande-methaneareespeciallyusingsurplussupplyofrenewableareeitherthroughliquefiedinteresting,astheyhavethesameenergy,e.g.,solarPVinPeru,tohydrogen(LH2)orconvertingcompositionasnaturalgas,producegreenhydrogenandhydrogentoammonia,inmeaningthatcurrentLNGcombinethiswitheithercarbonwhichbothmethodsincludeinfrastructureis100%compatiblefromdirectaircapture(DAC)orliquefaction.However,hydrogenwiththeselowcarbonliquefiedcarboncapturefromindustrialandnaturalgasaretwodifferentgases.Thefactthatbio-andsitestomakee-methane.Themolecules.Liquifyinghydrogene-methanecanutiliseexistingaimisthatthisinturncanberequirestemperaturesaslowasinfrastructure,couldmakethemtransportedtoJapanase-LNG-253degreesCelsius,comparedattractiveandcompetitiveusingtheexistingLNGinfrastruc-to-163degreesCelsiusformeasurestodecarbonisenaturalture,likeships,terminalsandLNG.Duetothisdifference,gas.Forinstance,Japaniseyeingregasificationfacilities.Thereare,refurbishingLNGinfrastructureapossibilitytodecarbonisetheirhowever,largeuncertaintiesinwouldrequirelarge-scaleGlobalGasReport2023884/LNGasaCriticalConduitforanOrderlyEnergyTransitioninvestmentininsultationupgrades.hydrogenvaluechainpresentsThesetypesofsolutionsAccordingtosomeestimates,substantialchallengesinviewincreasedtheflexibilityandwidertanksathydrogenliquefactionofhighcostsinthecurrentaccessibilityofLNGdistributionandregasificationterminalswouldtechnologyenvironment.Theconsiderably,especiallythroughrequireinsulationwith10timesareaofrefurbishmentofLNGtheirsuitabilityforrelocationandthethermalresistanceinfrastructureforhydrogenis,servingsmallergasresourcesandcomparedtotanksforLNG.however,gainingattention,anddemandcentres.WithsufficientWithcurrenttechnologyatafurthertechnologydevelopmentfocusandresource,innovationtypicalLNGterminal,thetanksispossibleandexpected.Forcanopennewunknownhorizonsaccountforabout50%oftheinstance,Germanyisinvestingforliquefiedlowcarbongases.investmentcosts,meaningthat3.8millioneurostostudyandthecapitalexpenditureinvolvedenabletheutilisationofLNGImportandexportinfrastructureinsuchretrofittingisexpectedtoterminalsforvarioustypesofforammoniaalreadyexiststoday,besignificant,whichinmosthydrogenanditsderivatives.typicallyusingammoniaspecificcasesisexpectedtomakeitFurthermore,giventherelevantvesselsorliquefiedpetroleumgasmoreviabletobuildnewskillsandexpertisedeveloped(LPG)vessels.However,thestoragetanks.Additionally,duewithintheLNGsector,andthequantityoftradedammoniaistothesmallsizeofthehydrogenimpressivetechnologyinnovationstillrelativelysmall.Therefurbish-molecule,theprocessesaroundandcostreductionexperienceformentofLNGinfrastructureforliquefactionandregasificationnaturalgas,theseareexamplesofuseintheammoniavaluechainiscouldbemorepronetoleakages.challengesthatthegasindustrygainingtraction.InEurope,thisisThiswouldrequirehydrogen-hasbeensolvingfordecades.Forinpartdrivenbytheincreasedspecificcomponentssuchasinstance,thefloatingliquefactiongreenfieldinvestmentsinLNGvalves,pipes,pumps,andtanks,andregasificationfacilitiesinfrastructureseenafterthewhicharenotcompatiblewithintroducedinthemid-2010sandonsetoftheRussia-UkrainewarinthoseusedforLNGtoday.early2000srespectively,setstrict2022.Forinstance,theStadeLNGTherefore,retrofittingofLNGrequirementstobothweightandterminalinGermany,asdisplayedinfrastructureforuseinthesizeofthetraditionalequipment.inFigure93below,whichisFigure93:HanseaticEnergyHub'splannedStadeLNGimportterminalinGermany,eventuallyhandlingcarbon-freefuelsSource:HanseaticEnergyHubGlobalGasReport2023894/LNGasaCriticalConduitforanOrderlyEnergyTransitioncurrentlysettobecomethegasturbinesthatcanrunoncomefromrenewableenergylocationforanFSRUbytheendof100%ammonia.Furthermore,atoensurethattheprocessisthisyear,isplannedtocommencechallengerelatedtotheuseofemission-free.Duetothis,anoperationsasanammonia-readyammoniaasahydrogencarrierisimportantsteptoenablethefacility.Thefacilityoperator,thatwhilemethodsforproducinguptakeofammoniainnewsectorsTheHanseaticEnergyHub,plansammoniafromhydrogenarewellwouldbetodevelopofftakeonreceivingbio-LNGandknownandestablishedthroughtechnologiesthatareabletosyntheticLNGattheterminal,theHaber-Boschprocess,theoperateonammoniainsteadofbeforeswitchingtoammonia.Inreversereactiontoseparatethehydrogen,orcommercialisationAsia,Japan’sIHIislookingintohighpurity(fuelcellgrade)ofammoniacracking.AsofH1possibleconversionsofLNGhydrogenfromthenitrogen2023,fewdirectsynergiesexistreceivingandstorageterminals,moleculesinammoniaisinthebetweentheammoniaandthataresituatedclosetogasearlystagesofdevelopment.naturalgasvaluechains–fuelledpowerplants,intoLargeamountsofenergyarehowever,expectationsareforammonia-basedfacilities.Thisisneededforthisprocess,uptothistodevelopgoingforward,inconjunctiontotheir30%oftheenergycontentinthewithpowerbeinganareaofpartnershipwithGEtodevelopammonia,whichwouldhavetoprobability.FutureroleofexistinginfrastructureInsummary,theLNGinfrastructurelargedevelopmentsgoingshortterm,whiletheEUisbio-ande-methaneready,forward.taxonomyfurtherillustratesthemeaningthatthedeploymentimportanceofinvestmentsingasofsyntheticandbiofuelstoAsaresult,theprocessofinfrastructurewiththeabilitytodecarbonisenaturalgasandtransitioningtolowcarbongasesswitchtolowcarbonfuelsinLNG,doesnotrequireanyisexpectedtobeastepwiseordertoreduceemissionsininvestmentsinrefurbishmentprocess.However,withtargetssetthelongerterm.TheLNGvalueofexistinginfrastructure.ThisabytheEUandothernationsandchainenhancestheuniqueconsiderableadvantageoforganisations,thedecarbonisa-dispatchability,seasonalstoragebio-andsyntheticmethanetionofgasisinevitabledespitepossibilities,andflexibilityofcomparedtootherlowcarbonlargeuncertaintiestiedtothenaturalgas,lowcarbon,andgases.However,asdiscussedinoptimalsolutiontoreachoverallrenewablegases.Hence,theyareChapter3,bothbio-andtargets.TechnologyandongoingexpectedtoremainrelevantandsyntheticmethaneisdependentandfutureR&Ddevelopmentsimportantasameansofbalancingontechnologicaldevelopmentwilldeterminethepreferredinthefuturepowermix,whichbothtoreduceproductionsolutionoflowcarbongases,orwillbecharacterisedbyacostsandscaleofsupply,totheoptimalcombinationofthemsignificantrelianceonintermittentenablewideradoption.Whenitinthefutureenergymix.Intherenewableenergysources.LNGcomestothetransitionfromlongterm,LNGassetswillbeusedhasproventobeacriticaltoolinLNGtobothliquefiedhydrogenforlowcarbongases,blendedprovidingflexibleenergytotheandammonia,utilisingthesamegases,andtraditionalnaturalgasworld.Thisflexibilitywillcontinueinfrastructureforstorageandaccordingtodifferentregionaltobecomemorevaluableasthedistribution,isfarfromseamlessvaluechainsanddecarbonisationenergytransitionunfolds.withsizeabletechnicalpathways.Greatervariabilityinsupplyandchallengesanduncertaintydemandconditions,stemmingassociatedwithit.ThetechnicalThereisalsolargeuncertaintytiedfromincreasesextremeweatherchallengesarealsoexpectedtotothefuturedemandofnaturaleventsandscalingofintermittentdrivecostswhichwillimpactgas,asoutlinedintherangeofrenewablegeneration,willcallforthecompetitivenessofhydrogenoutcomesdescribedinthegreaterenergysecurityassuranceandammoniathroughdifferentdegreescenarios.resources.LNGisanidealrefurbishment.Also,renewableEffortstodecarbonisethecurrentassurance,anditisimportanthydrogenandammoniaareintheproductionanddistributionofthatinvestmentsinLNGearlystageswhenitcomestogasandLNG,suchastheGlobalinfrastructureandsupplykeepsupply,andbothcostandscalingMethanePledge,willcontributepacewiththeanticipatedsystempossibilitiesareexpectedtoseetolowerglobalemissionsintheneeds.GlobalGasReport202390RystadEnergy/InternationalGasUnion/SnamCopyright©IGUandSnam2023Thispublicationmaybereproducedinwholeorinpartinanyformforeducationalornon-profitpurposeswithoutspecialpermissionfromthecopyrightholder,aslongasprovidedacknowledgementofthesourceismade.NouseofthispublicationmaybemadeforresaleorforanyothercommercialpurposewhatsoeverwithoutpriorpermissioninwritingfromIGUandSnam.DisclaimerThisreporthasbeenpreparedbyRystadEnergy(the“Company”).TheinformationcontainedinthisdocumentisbasedontheCompany’sglobalenergydatabasesandtools,publicinformation,industryreports,andothergeneralresearchandknowledgeheldbytheCompany.TheCompanydoesnotwarrant,eitherexpresslyorimplied,theaccuracy,completenessortimelinessoftheinformationcontainedinthisreport.Thedocumentissubjecttorevisions.TheCompanydisclaimsanyresponsibilityforcontenterror.TheCompanyisnotresponsibleforanyactionstakenbythe“Recipient”oranythird-partybasedoninformationcontainedinthisdocument.Thispresentationmaycontain“forward-lookinginformation”,including“futureorientedfinancialinformation”and“financialoutlook”,underapplicablesecuritieslaws(collectivelyreferredtohereinasforward-lookingstatements).Forward-lookingstatementsinclude,butarenotlimitedto,(i)projectedfinancialperformanceoftheRecipientorotherorganizations;(ii)theexpecteddevelopmentoftheRecipient’sorotherorganizations’business,projectsandjointventures;(iii)executionoftheRecipient’sorotherorganizations’visionandgrowthstrategy,includingfutureM&Aactivityandglobalgrowth;(iv)sourcesandavailabilityofthird-partyfinancingfortheRecipient’sorotherorganizations’projects;(v)completionoftheRecipient’sorotherorganizations’projectsthatarecurrentlyunderway,underdevelopmentorotherwiseunderconsideration;(vi)renewaloftheRecipient’sorotherorganizations’currentcustomer,supplierandothermaterialagreements;and(vii)futureliquidity,workingcapital,andcapitalrequirements.Forward-lookingstatementsareprovidedtoallowstakeholderstheopportunitytounderstandtheCompany’sbeliefsandopinionsinrespectofthefuturesothattheymayusesuchbeliefsandopinionsasafactorintheirassessment,e.g.whenevaluatinganinvestment.Thesestatementsarenotguaranteesoffutureperformanceandunduerelianceshouldnotbeplacedonthem.Suchforward-lookingstatementsnecessarilyinvolveknownandunknownrisksanduncertainties,whichmaycauseactualperformanceandfinancialresultsinfutureperiodstodiffermateriallyfromanyprojectionsoffutureperformanceorresultexpressedorimpliedbysuchforward-lookingstatements.Allforward-lookingstatementsaresubjecttoanumberofuncertainties,risksandothersourcesofinfluence,manyofwhichareoutsidethecontroloftheCompanyandcannotbepredictedwithanydegreeofaccuracy.Inlightofthesignificantuncertaintiesinherentinsuchforward-lookingstatementsmadeinthispresentation,theinclusionofsuchstatementsshouldnotberegardedasarepresentationbytheCompanyoranyotherpersonthattheforward-lookingstatementswillbeachieved.TheCompanyundertakesnoobligationtoupdateforward-lookingstatementsifcircumstanceschange,exceptasrequiredbyapplicablesecuritieslaws.Thereaderiscautionednottoplaceunduerelianceonforward-lookingstatements.UndernocircumstancesshalltheCompany,oritsaffiliates,beliableforanyindirect,incidental,consequential,specialorexemplarydamagesarisingoutoforinconnectionwithaccesstotheinformationcontainedinthispresentation,whetherornotthedamageswereforeseeableandwhetherornottheCompanywasadvisedofthepossibilityofsuchdamages.GlobalGasReport202392

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