Big Gains for Global Gas, 2017 Emissions Up Too: BP
Natural gas was the largest source of energy growth worldwide last year, boosted by China, according to UK major BP. But coal consumption increased for the first time in four years, led by growing demand in India and China.
Carbon emissions too are estimated to have increased after three years of little to no growth, as carbon intensity per unit of gross domestic product was higher, which took some of the shine off the figures - published June 13. Earlier the same day, the Dutch prime minister called for the EU to set itself a higher target for cutting emissions, to "play our part in keeping global warming below two degrees."
Launching the 2018 edition of the BP Statistical Review of World Energy, CEO Bob Dudley said the power system "must decarbonise. We continue to believe that gains in the power sector are the most efficient way to drive down carbon emissions in coming decades. 2017 was a year where structural forces in the energy market continued to push forward the transition to a lower carbon economy, but where cyclical factors have reversed or slowed some of the gains from prior years. These factors, combined with rising demand for energy, has resulted in a material increase in carbon emissions following three years of little or no growth.”
Gas production globally was up 4% (up 131bn m³) while demand globally increased by 3% (up 96bn m³) - the fastest growth rates since immediately following the global financial crisis - taking global gas production to 3.68 trillion m³ in 2017 and world gas consumption to 3.67 trillion m³ (355bn ft3/d). The single biggest factor was the surge in Chinese gas demand, up by over 15%, driven by government environmental policies encouraging coal-to-gas switching.
China accounted for about a third of the global demand growth, taking 31bn m³ more, leading to severe strains in China. Prices there rose sharply and industrial users were rationed. This surge continued into the first part of the year, but it is unlikely to be repeated in 2019, said chief economist Spencer Dale.
Other increases in gas demand came from the Middle East (28bn m³) and Europe (26bn m³). Consumption in the US fell by 1.2%, or 11bn m³. On the production side Russian output grew most at 46bn m³, followed by Iran (21bn m³). Gas trade expanded by 63bn m³, or 6.2%, with growth in LNG outpacing growth in pipeline trade. The increase in gas exports was driven largely by Australian and US LNG (up by 17 and 13bn m³ respectively), and Russian pipeline exports (15bn m³).
Dale said the relationship between prices in the Pacific and Atlantic basins became closer. The growing correlation showed that US exporters of LNG were happy to cover their operating costs, meaning that plants kept producing rather than idling, he said.
Overall energy demand grew by 2.2%, above its 10-year average of 1.7%, driven by stronger economic growth in the developed world and the European Union in particular, but output was at the expense of higher emissions per unit of gross domestic product relative to 2016, it said.
Demand for oil grew by 1.8% while growth in production was below average for the second consecutive year. Production from Opec and the 10 other countries that agreed cuts decreased, while producing countries outside of that group, particularly the US driven by tight oil, saw increases. Consumption of oil exceeded production for much of 2017, explaining the rise in prices.