Gas consumption will contract slightly this year due to high prices and reduced volumes of Russian gas to Europe, and will see only slow growth in the coming years as consumers switch to alternative energy sources.

In its latest quarterly report on gas markets, the International Energy Agency (IEA) cut its forecast for global gas demand in half.

It now expects growth of just 3.4% to 2025, an increase of 140 bcm from 2021 levels, less than the 175 bcm surge in demand recorded only in 2021

"The consequences of Russia's incursion into Ukraine on global natural gas prices and supply pressures, as well as its impact on the long-term economic outlook, are changing the outlook for natural gas," the IEA said.

“Today's record prices and supply disruptions are damaging natural gas's reputation as a reliable and affordable energy source, raising uncertainty about its prospects, particularly in developing countries where it was expected to play an increasing role in meeting growing demand of energy and to achieve the goals of the energy transition.”

When Russia cut supplies to Europe and European countries pledged to cut off Russian gas, the impact quickly spread around the world.

European countries are trying to make up for the shortfall by importing more liquefied natural gas (LNG) delivered by tankers, which the IEA says is putting pressure on supply and reducing demand in other markets.

It warned that the fight over LNG risks not only causing economic harm to other more price-sensitive importers but also raising prices and thereby contributing to additional revenue for Russia.

“In this context, the accelerated phase-out of Russian gas should focus primarily on reducing gas demand and increasing domestic production of low-carbon gases, such as biogas, biomethane and green hydrogen”, the IEA said.

In its new forecast for lower growth in gas demand, the IEA, which advises energy-importing countries on their policies, said only a fifth of the reduction came from expected efficiency gains and the replacement of gas with renewables.

"The lower gas demand growth in our forecast compared to last year does not guarantee an accelerated transition to net-zero emissions. Most of the revision comes from lower GDP and fuel switching, not faster conversion of gas to electricity and increasing efficiency," the report said.

The IEA said the additional green energy transition measures, in addition to their long-term impact on reducing emissions, would ease pressure on global gas prices by reducing supply pressures, while also leading to short-term improvements in air quality through accelerating the phase-out of coal.

"The most sustainable response to today's global energy crisis is greater efforts and policies to use energy more efficiently and to accelerate the transition to clean energy," said IEA Director of Energy Markets and Security Keisuke Sadamori.

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