City Gas Distribution Market - Growth, Trends, COVID-19 Impact, and Forecasts (2022 - 2027)

The global city gas distribution market is expected to grow at a CAGR of around 3.2%, during the forecast period. Growing urbanization across the globe, leads to the demand of natural gas in various sectors like industry, power, residential and commercial buildings, and transportation. During 2018, it has been estimated that nearly 82% of all gas consumed globally was in urban areas. Natural gas plays a significant role in energy generation for cities. With a lesser amount of greenhouse gas emissions than coal or oil (approximately 40% and 20%, respectively), it helps to maintain and to stabilize the carbon footprint around the world. Through city gas distribution pipeline network, one can have easy access to cleaner fuel like natural gas. The drivers for the market are the government initiatives to have access to cleaner energy, and thereby to reduce air pollution. As per World Health Organization (WHO), more than 80% of the people around the globe are exposed to the growing air pollution resulting in nearly seven million deaths per year. Inline initiatives to Paris Agreement such as C40 and the Global Covenant of Mayors for Climate Change are the prominent initiatives, with cleaner environment objective. However, the growing developments in renewable energy sector such as solar and wind is expected to act as a restraint for the market to grow during the forecasting period.

Key Highlights

• In 2018, power sector is the largest end-use sector for natural gas or city gas consumption, accounting for nearly 39% of global natural gas consumption. Power generation through gas-fired power plants has a significant market share. Natural gas, as a relatively clean fuel than coal in getting preference for power generation in several nations of the world. During 2018, electricity generation from natural gas has taken a y-o-y growth of around 4%.
• The rate of urbanization primarily drives the consumption of city gas. With the properties of emitting low carbon particles than coal and oil, city gas has a tremendous potential to reduce the growing carbon emission. It has been estimated that during the year 2018, nearly 76% of the coal and 63% of the oil consumed around the world is from the urban area. Moreover, it is estimated that the share of the urban population has increased from 30% in 1950 to nearly 55% in 2018, and by 2050, it is expected to reach 66%. Thus, the rapid growth in urbanization especially in the developing economies is expected to create an opportunity for the city gas distribution market in the near future.
• The Asia-Pacific is expected to dominate the city gas distribution market with a higher demand for natural gas in the region during the forecasting period. With rising urbanization, the demand for natural gas is expected to exceed 20% of global natural gas demand.

Key Market Trends

Power Sector to Dominate the Market

• Natural gas, as a cleaner fuel than coal and oil, has become a prevalent fuel for electricity generation. In the 1970s and 1980s, the popularity of coal-powered plants was higher due to its low operating cost and unavailability of an alternative source of power generation. However, due to economic and technological developments, the natural gas-fired powered plant has become popular since 1990.
• Globally, gas-fired power generation increased by nearly 4% in 2018, with the United States and China as the major contributors. In 2018, gas-fired power plant took significant turns of nearly 30% growth in China, decreased by 7% in Europe due to renewables generation, and it rose by 28% in South Korea.
• The United States electricity generation from natural gas has increased by nearly 13% in 2018, from 1295 billion kilowatt-hours in 2017 and is the largest source of electricity generation with 35% market share.
• Apart from existing natural gas power plants, India is planning to set up 24,000 MW of gas-based power plants, at an investment of INR 1 lakh crore. The addition of this project is expected to increase gas-based electricity generation in the country, and it would create an opportunity for the gas distribution company like GAIL, for natural gas supply.

Asia-Pacific to Dominate the Market

• Asia-Pacific region is more focusing on the cleaner version of fuels rather than just focusing on crude oil and its products. With the highest demand for natural gas in domestic and industrial uses, the market is most significant among all others.
• Asia-Pacific is expected to account for nearly 1000 billion cubic metres (bcm) of natural gas consumption by 2025, with the combination of high energy demand growth and low penetration of gas during 2018. With the consideration of urbanization trends, along with ongoing air pollution stability developments, Asia-Pacific is expected to have a dominant market during the forecasting period.
• China is expected to have increase in merger and acquisition activities in the gas sector, especially with oil major and energy companies. China new policy to develop its downstream gas business allows foreign players to participate in gas business of cities, with population more than 50,000. The inclusion of foreign players is expected to create stiff competition with the domestic players.
• India on the other hand, is developing it city gas distribution market tremendously. From its 35 geographical areas during early 2000s, India during 2019 have access to city gas in more than 90 geographical areas and is preparing to have access to more than 220 geographical areas by 2029, which is expected to include nearly 70% of India’s total population.

Competitive Landscape

The city gas distribution market is fragmented. The key players in the market include Southern Co., Enel SpA, Enbridge Inc., Dominion Energy Inc., TC Energy Corporation, Kinder Morgan Inc, and Sempra Energy.

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• The market estimate (ME) sheet in Excel format
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