There is a huge opportunity for the US to export LNG to India and China in the next five years as they push to replace coal, the head of the International Energy Agency has said as he highlighted the growing importance of the two nations in the energy market.

Fatih Birol, executive director for the agency, said both India and China use gas at a minimum level. Globally, the share of gas in the global energy mix is about 25 per cent, and in both these countries, it is less than or around 5 per cent only. “So, there’s a big gap between the world average and them,” Birol told US lawmakers during a hearing on domestic and global energy outlook held by Senate Committee on Energy and natural Resources.

Primary destination

“And both of them are facing major challenges in terms of environment, namely, local pollution in the cities. And this is an issue for both of these countries and others—a reason for social unrest, in fact,” he said, insisting that there is a huge opportunity to export Liquefied natural gas (LNG) to India and China in the next five years. “I am sure Asian region will be the primary destination for the US LNG,” he said.

China, Birol said, will overtake the US as the largest oil consumer around 2030. “But stringent fuel-efficiency measures for cars and trucks, and a shift which sees one-in-four cars being electric by 2040, means that China is no longer the main driving force behind global oil use, demand growth is larger in India post-2025,” he said.

Focus on India

“In fact, India is the largest contributor to demand growth to 2040—almost 30 per cent of total growth—as its share of global energy use rises to 11 per cent,” Birol said. India, he said, is pushing natural gas strongly to replace coal. “But coal is also growing because, in India, as people having no access to electricity in India,” he said.

India has to build some power plants from coal, but also more and more natural gas, renewable energy and nuclear, he said. “India is also very important, because their economic growth is very strong and they have a very, in my view, wise, sound energy policy,” Birol said. “To be very frank, the Modi government is pursuing an energy policy which is very good for their people because, in a very short period of time, almost 11 years, they are bringing electricity to about 500 million people. That’s a big, big, big achievement,” he said.

“And they are using gas, they are using coal, they are using renewables—all of these technologies—much more diverse. And I expect the share of gas will increase significantly in India in the next years to come,” Birol said.

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