Global Gas Report 2022: Natural, low- and zero-carbon gases and gas infrastructure are key to an achievable transition toward a sustainable and secure energy future for all

The International Gas Union (IGU), Snam and knowledge partner Rystad Energy, are releasing the Global Gas Report 2022 (GGR), on the occasion of the 28 ^th IGU World Gas Conference held in Daegu, Korea.

This edition of the Global Gas Report covers two very turbulent years in the global gas industry and the wider global energy markets. The COVID-19 pandemic lockdowns, with a brief period of excess supply and very low prices, gave way to tight markets, extreme price volatility, and a compounding geopolitical challenge to energy security, due to the armed conflict between Russia and Ukraine.

In order to limit global warming to 1.5 ^oC and fulfil net zero ambitions by 2050, greenhouse gas emissions will need to peak before 2025. Within the limited time available, governments, policymakers and industry will need to develop realistic and achievable strategies to curb emissions across all sectors. Natural gas, together with decarbonised and low or zero-carbon gases, will play a critical role in supporting these decarbonisation initiatives.

Emissions have resumed their upward trend since 2020, particularly in the power sector, where there has been a post-COVID19 surge in demand and increased gas-to-coal switching, as gas prices have outpaced those for coal. The situation has been exacerbated by global energy supply tightness, and the 2022 Russia-Ukraine conflict. More focus on gas availability, emissions pricing and CO2 and pollution policies will be required to shift from coal to gas.

The Russia-Ukraine conflict has brought the issue of energy security to the forefront and highlighted the value of diversifying supply. Additional infrastructure, including import and storage facilities, can increase energy security. Extreme weather over the past two years has also put energy security to the test, but during this time natural gas has proven to be a reliable source of electricity generation that can offset shortfalls from other sources.

The future of the gas industry will be closely linked to sustainability. With its low-carbon profile, natural gas can achieve immediate cuts in emissions. Progressively, the gas industry will be an enabler of low- and zero-carbon gas technologies such as hydrogen, biomethane and CCUS, through its supply of feedstock, infrastructure and expertise. Today, blue and green hydrogen account for less than 1% of hydrogen demand, while biomethane is just 1% of gas production, but interest in these gases is gathering pace, with more and more countries committing to targets and funding. The EU's "RePowerEU" envisages 35 bcm of biomethane and 20Mt (approx. 70 bcm equivalent) of clean hydrogen demand in Europe by 2030, together accounting for around 25% of the EU natural gas market today.

Commenting on the report's findings, IGU President Joe Kang notes:

"It is clear that gas infrastructure investment remains critical for meeting global energy demand. It became more urgent than ever to help resolve the energy crisis the world is suffering today. Importantly however, this investment and future growth of the gas sector comes with a responsibility to be compatible with the goals of the energy transition and Paris Agreement. New infrastructure investments should be future proofed to assure investors in their long-term environmental and economic value. Technological innovation to raise efficiency and minimise emissions all through the value chain must be at the core of these investments".

Stefano Venier, CEO of Snam, comments:

"The gas market is currently characterised by tight conditions, high prices and supply security concerns. Gas infrastructure will play a critical role to support supply diversification, creating connected and liquid markets. Investment in hydrogen-ready assets will also enable the large-scale development of decarbonised gas, which will be necessary to achieve a sustainable and inclusive energy transition".