Gas exporting countries group push back against IEA report
20 May 2021
Group represents 19 of the world’s leading gas producers
The Gas Exporting Countries Forum (GECF), as an intergovernmental coalition of 19 of the world’s leading gas producers, released a statement opposing some key recommendations in the International Energy Agency (IEA)’s recent report ‘Net Zero by 2050.’
The group, which represents 70% of the proven natural gas reserves, 52% of gas pipeline, and 51% of LNG exports, said it is convinced that natural gas, “as an abundant, affordable and clean hydrocarbon source, has a central role to play in the energy transition.” The IEA’s report calls for no further investment in new fossil fuel supply projects among 400 recommendations.
However, based on the latest estimates in the GECF’s Reference Case Scenario (RCS), global primary energy demand is projected to increase by 24% over the next three decades, boosted by cumulative economic and population growth drivers.
“The only approach to achieve energy market stability, responsible and inclusive economic growth, as well as sustainable development goals is to consider natural gas as a destination fuel that will always be an essential element in achieving a lower-carbon energy system,” the group said.
According to the GECF, the energy mix is becoming more diversified thanks to the expansion of renewables. However, fossil fuels are projected to remain dominant, accounting for 71% in 2050. According to the latest GECF estimates natural gas will become the leading source in the global energy mix by mid-century, increasing its share from 23% today to 28%.
“The GECF believes in the right of countries, particularly the developing economies, to have access to abundant, affordable and clean source of energy. We don’t condone restriction of policies on upstream development and directing investment resources instead towards expensive decarbonization options and technologies, some of which are yet to be proven.
“For the time being, it is widely recognized that the net-zero pathways rely on technologies which are not currently available in the market. This technology challenge is further exacerbated when considering the developing countries that have no access to technologies and financial resources,” the group said.
The move away from investment in upstream gas resources can substantially affect the security of supply and prevent countries from accessing competitive and clean energy sources, such as natural gas, which is compatible with sustainable development.
Prior to 2020, historical upstream investment between 2010 and 2019 was US$571 billion worldwide, indicating a tremendous accumulative increase of 79% compared to the investment volume during the 2000s. Furthermore, US$472 billion investment was made in gas transportation and trade infrastructure between 2010 and 2019, showing an increase of 67% compared to the investment made between 2000 and 2009.
“Regardless of any financing structural changes due to market ambiguities, the level of investment is expected to grow in the long-term. It is estimated that total gas investment, including upstream and midstream activities between 2020 and 2050 will reach about US$10 trillion, representing a compound annual growth of 1.26% from a total of US$258 billion in 2020 to US$375 billion in 2050.