U.S. LNG exports are forecast to more than double by 2030 from 2022 levels, with domestic natural gas consumption declining “only slightly” over the next 25 years, according to BP plc.
BP’s chief economist Spencer Dale explained the London-based supermajor’s projections to 2050 during a webcast on Wednesday. BP’s respected Energy Outlook 2024 is the 11th annual forecast about the world’s energy economy.
BP’s economist team tested projections for energy consumption using a Current Trajectory and Net Zero scenario to explore the range of possible outcomes to 2050. In both scenarios, natural gas consumption is seen rising.
“The prospects for natural gas are shaped by two significant but opposing trends,” Dale noted. The forecast portends to show “increasing demand in emerging economies as they grow and industrialize, offset by a shift away from natural gas to greater electrification and lower carbon fuels as the world decarbonizes.”
Questions remain about “how the energy system will evolve in the future,” Dale said. “But I think for most fuels and energy sectors, we at least have a pretty good idea about how the level of demand in 2050 will be relative to today.”
Oil and coal consumption worldwide is forecast to decline.
“But that’s not the case for natural gas,” he said. In the Current Trajectory, natural gas demand “increases over the whole of the outlook. It’s actually around 20% higher in 2050 relative to today’s level.”
Natural gas demand in the Net Zero scenario “increases in the near term, but then starts to fall away. So by 2050, it’s around half its current level. These contrasting outlooks reflect the impact of two competing forces.”
Rising Gas (And LNG) Demand
Dominating the gas outlook in the Current Trajectory is the increasing demand in emerging economies (excluding China), “which rises by a little over 50% by 2050, more than accounting for the entire growth in global gas demand over the outlook.”
The outlook for liquefied natural gas demand is dependent on European Union (EU) and UK consumption, Dale explained.
In the Current Trajectory, LNG demand in the EU and UK increases “out to 2030 as they continue to adjust to the loss of Russian pipeline imports. In contrast, in Net Zero, a greater shift to alternative energy sources combined with faster gains in energy efficiency means that by 2030, EU and UK LNG demand is below 2022 levels, although still above levels in 2021 prior to the war in Ukraine.”
The range of outcomes for LNG trade widens post-2030.
In the Current Trajectory, LNG consumption increases by more than 25% over the previous 20 years. This demand growth would require 300 billion cubic meters/year of additional liquefaction capacity to come online post-2030.
“In contrast, the gains in LNG demand out to 2030 in Net Zero are reversed over the following decade, and by 2050 global trade in LNG is around 40% below its 2022 level, implying that no additional liquefaction capacity beyond that already under construction is required,” Dale said.
“This widening range of outcomes adds to the uncertainty associated with investments in LNG facilities, which typically have an economic life of 15-20 years.”
Increasing U.S. Electricity Consumption
In keeping with their broad outline of how the economy impacts energy use, BP’s economists predicted that the U.S. economy would grow by 1.5% a year from 2022 to 2050. That’s down from 2.1% over the last 20 years.
“Similar to other developed economies, U.S. primary energy consumption declines in both scenarios, reflecting an increase in energy efficiency and transition to a low carbon system,” Dale said.
U.S. electricity consumption, which accounted for 22% of energy demand in 2022, is expected to hold a 38% share in the Current Trajectory and “roughly 60% in the Net Zero outlook.
“U.S. electricity load growth accelerates from 0.5% per year over the past decade to 2-3% per year from 2022 to 2035,” the BP team said. “Wind and solar’s share of power generation rises from 15% in 2022 to almost 70% in both scenarios in 2050.”
Meanwhile, domestic oil demand continues to decline in both scenarios.
“The wide range of factors that are likely to shape the transition of the global energy system over the next 25 years – for example, policy, technology, societal pressures, financing and geopolitics – mean it is not possible to make meaningful predictions of how the energy system will evolve,” according to Dale.
“Instead, the Energy Outlook uses scenarios that span a wide range of possible outcomes out to 2050. In doing so, the scenarios inform an understanding of which trends in the energy system are more likely to occur across most plausible outcomes and which ones are more dependent on the speed and shape of the energy transition.”
The scenarios considered a variety of possibilities. They include carbon emissions from energy production and use, as well as most nonenergy-related industrial processes. In addition, the experts analyzed natural gas flaring and methane emissions from the production, transportation and distribution of fossil fuels.
The uncertainty concerning the “possible speed and nature of the energy transition means the probability of any one of these scenarios materializing exactly as described is negligible,” according to Dale.
“Global developments and events in recent years have highlighted the considerable challenges facing the global energy system and those of us who work within it,” he said. “The challenge is to move – for the first time in history – from the current energy addition phase of the energy transition to an ‘energy substitution’ phase.”
