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Wood Mackenzie: Renewables, green hydrogen to limit growth of global LNG market

December 14, 2020

Natural Gas Intelligence:

More than 75% of new liquefied natural gas (LNG) global supply could be at risk because of quickly expanding renewable energy resources, according to an analysis by Wood Mackenzie.

In a forecast issued [last] Wednesday, the consultancy said its scenario for worldwide gas demand is going to come under pressure as power sector investments increase in renewables and energy storage. More gas consumption also would be sapped by efficiency improvements and as new technologies are adopted beyond the power sector. 

The scenario laid out by the Wood Mackenzie team is tied to greenhouse gas reduction goals set by the United Nations, which have been adopted by most developed nations. The basic goal is to keep global temperatures from rising above 2 degrees C to reduce the impacts from climate change.

Among the alternative options, look for hydrogen to play a bigger role in the world’s energy mix, which also would pressure gas demand. Green hydrogen could become a “gamechanger in the long term, emerging as a key competitor to gas consumption toward the end of 2040 and achieving a 10% share in the total primary energy demand by 2050,” researchers said.

“With weaker global gas demand, the space for new developments will be limited,” said Wood Mackenzie principal analyst Kateryna Filippenko. “This is a significant challenge” as companies consider final investment decisions (FID) for potential projects.

Using the 2 degree scenario, “only about 145 billion cubic meters/annum (bcma) of additional LNG supply is needed in 2040 compared to 450 bcma in our base-case outlook,” Filippenko said. “And if we consider imminent FID for Qatar North Field East expansion, the space for new projects shrinks to 104 bcma, down 77% from our base case.” 

[Carolyn Davis]

More: Global LNG prospects seen dwindling as renewables, efficiencies expand

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