China's natural gas demand to peak in 2040 at 605.9 Bcm: ETRI

China's natural gas demand is expected to peak in 2040 at around 605.9 Bcm, data from state-owned CNPC's Economics & Technology Research Institute showed Dec. 7.

The projection was made under a baseline scenario set by ETRI assuming a stable international environment and a state of moderate competition and cooperation between countries, Wu Mouyuan, vice president of ETRI, said at the 10th International Energy Executive Forum, jointly held by CNPC and S&P Global Commodity Insights.

However, China's natural gas demand could be as low as 558.5 Bcm in 2040 under ETRI's worst-case scenario when technology, global trade, investment and cooperation are hindered, and the gap in resources, technology and funds required for energy development widens.

ETRI's forecast for China's natural gas demand in 2040 was cut this year from the previous two years, when it forecast 615.5 Bcm in 2022 and 650 Bcm in 2021, according to the historical data.

ETRI still believes that natural gas will become an important energy source to support China's green transformation and continue to replace highly polluting fuels and support large-scale development of new energy.

China's natural gas consumption for power generation is expected to contribute 70% of the country's total gas demand growth by 2040, ETRI said.

The advantages of gas-fired power generation include rapid response to manage intermittency as it only takes 9-10 minutes to start up and reach full load, lesser land and water consumption, and short construction periods, according to ETRI.

However, the cost of gas feedstock is relatively high, and the core technology of gas turbines still lags behind international advanced levels, which have curbed its development to some extent in China, ETRI added.

ETRI said that oil and gas will remain China's dominant energy sources in the medium to long term, with the proportion of oil and gas in primary energy mix maintained at around 25% in 2040, of which oil accounts for about 13%-14% and natural gas accounts for about 11%-12%, slightly lower than the current 27%.

However, China's oil demand will reach a peak of 780-800 million mt before 2030 as transport fuel demand peaks, ETRI said, adding that the country's oil demand is expected to drop to about 480-530 million mt by 2040 with the rapid electrification of road transport.

The share of transportation in oil demand will fall drastically after the peak, while the portion of chemical demand will increase to around 66% in 2060, from about 30% in 2030.

In 2023, ETRI expects China's new energy vehicles sales to reach 9 million units, which will account for 30% of total car sales in the country.

Non-fossil energy

China's total energy consumption is expected to grow 2% to 5.5 billion mt of standard coal equivalent in 2023, according to ETRI's data.

The growth rate of non-fossil energy consumption is much higher than that of fossil energy, and its share is expected to reach 18.3% of the total energy mix in 2023, an year-on-year increase of 0.8 percentage point, ETRI said.

China's total energy output is expected to reach 4.8 billion mt of standard coal equivalent in 2023, and energy self-sufficiency rate will increase to 87%, up 0.9 percentage point on the year, ETRI said.

ETRI said that the increase in non-fossil energy supply before 2030 is expected to meet 80% growth of energy demand in China, and after 2030 it will begin to gradually replace fossil energy.

The accelerated development of new energy in China will increase the share of non-fossil energy in the energy mix, which is expected to exceed 50% in 2040-2045 under the baseline scenario, ETRI said.

China's total installed capacity of wind power and solar photovoltaic power are expected to exceed 1,000 GW in 2023, and power generation volume is expected to reach about 1,400 TWh in the same period, accounting for about 39% and 37% of the global share, respectively, ETRI's data showed.

China's hydrogen consumption will exceed 36 million mt in 2023, making it the world's largest producer and consumer for 13 consecutive years, ETRI said, adding that China's demand for hydrogen in 2060 is expected to reach about 70 million-120 million mt, of which hydrogen production from renewable electricity (green hydrogen) will account for 70%-85%.

In addition, ETRI believes that CCUS is a back-up technology for China to achieve carbon neutrality, and the country's use of CCUS technology to decarbonize is expected to reach about 1.4 billion-2.1 billion mt by 2060.

ETRI suggests that the integrated development of fossil energy and new energy is the only way to build China's new energy system.