Natural gas crucial for a low-carbon future

As energy demand grows around the world, gas and LNG will be critical in the shift to a lower-carbon future. Electrification can only move so fast, and the adoption of emerging low-carbon technologies, such as hydrogen, is currently too slow to achieve net zero emissions by 2050. With coal still accounting for 30% of the world’s energy needs, shifting to gas as a transition fuel is a compelling option.

Of course, gas has its critics. Some dismiss its value as a transition fuel, denouncing it as just another fossil fuel driving the climate crisis. What’s more, gas, and LNG in particular, is not cheap and it’s uncompetitive against coal without a carbon price. Add to that that as Russia’s war on Ukraine has demonstrated, an over-reliance on gas imports from a single source does not constitute a robust energy security strategy.

Faced with these challenges, gas needs to demonstrate its true value - as a reliable, affordable and flexible fuel of the future and as a lower-carbon solution that will help deliver, not hinder, the energy transition as alternative technologies strive to reach critical mass.

The case for gas

The environmental credentials of natural gas are compelling. Emitting half the carbon dioxide of coal and 30% less than oil when burned, it has already driven substantial emissions reductions in major economies. Beijing’s 45% reduction in air pollution over the last decade stands as a testament to gas’s potential in improving urban air quality, positioning gas as a key ally in the fight against climate change and air pollution.

The evolving energy landscape presents new opportunities for natural gas. In the US, gas’s reliability is seen as key as the AI revolution and industrial reshoring are transforming electricity markets, boosting power demand by up to 3% a year. This trend, which could be replicated globally as data centers become national security assets, offers significant upside for gas demand. Europe’s energy strategy further underscores gas’s importance. While investing heavily in renewables, European governments are also supporting gas-fired plants to ensure grid stability and manage seasonal demand fluctuations. This balanced approach highlights gas’s role in complementing renewable energy growth.

Driving advancements in lower-carbon technologies

In Southeast Asia, LNG is viewed as the key baseload option for meeting surging electricity demand without increasing coal dependence. Plans for up to 180 GW of new gas-fired plants by 2050 in countries like Vietnam, Indonesia, Malaysia, and the Philippines underscore the global potential for gas in emerging markets seeking cleaner energy solutions, complementing the surge in renewable power investments.

Natural gas is also driving advancements in lower-carbon technologies. When paired with carbon capture and storage (CCS), gas offers a compelling approach to reducing emissions in hard-to-abate industries and the power sector. Blue hydrogen, produced using natural gas and CCS, will be instrumental in early low-carbon hydrogen developments. With the right policies and incentives, up to 2.2 billion tonnes of CCS could be developed across sectors globally by 2050.

Gas’s role in the energy transition

To cement its role in the energy transition, the gas industry must address several key challenges. Tackling methane emissions throughout the value chain is crucial. New gas and LNG developments must position themselves as the least carbon-intensive options available. The industry must step up its efforts to communicate gas’s environmental credentials, reliability, and flexibility as a transition fuel. Ensuring LNG remains competitive is vital. While high prices may boost short-term profitability, they risk stunting future demand growth. The next wave of LNG volumes coming onstream from 2026 will help lower prices, but additional supply will be needed as soon as 2030 to meet anticipated demand growth.

Policymakers have a crucial role to play. Impactful carbon pricing, greater access to finance, and government incentives for CCS and low-carbon gases can help reduce emissions. But Governments need to do a better job of balancing net-zero aspirations with security of supply. Japan’s recent energy plan, which prompts domestic players to secure more LNG as other low-carbon technologies may fail to deliver on increasingly ambitious emissions targets, offers a pragmatic approach to energy planning that other governments should consider.

In a world seeking greater access to clean, reliable and affordable energy, making the case for gas has never been more pressing. But only by addressing emissions, maintaining competitiveness, and communicating effectively can the gas industry secure its role in a low-carbon future.