By Clyde Russell
SINGAPORE- The liquefied natural gas (LNG) industry has changed its tune from saying it is a transition fuel on the path to net-zero emissions, to believing it is an integral part of the solution and will be necessary for decades to come.
This optimism over LNG’s future was very much in evidence at Gastech, the industry’s largest global gathering, held this week in Singapore.
LNG sees its future largely in Asia, the top-energy importing and consuming region and the likely driver of global demand up to 2050, the target date that many countries and companies have for achieving net-zero carbon emissions.
“Natural gas will continue to play a critical role as a bridging and destination fuel for the energy transition,” was how Lorenzo Simonelli, chairman and CEO of service company Baker Hughes put it at Gastech on Sept. 4.
The key word Simonelli used is “destination,” as it implies that LNG and natural gas are in the energy mix for a long time to come.
In effect, the producers of LNG and the service companies that help them make and transport the super-chilled fuel are making some pretty big bets, some of which will be difficult to win.
The safest bet is that demand for energy, especially in Asia, is going to increase rapidly, most likely doubling by 2050 from current levels.
Following on from that, the LNG producers assume that renewable energies and new fuels won’t be able to meet this demand.
This means Asia won’t be able to afford to transition to renewable electricity such as wind and solar, backed by battery storage, and thus won’t be able to switch to all-electric vehicle fleets.
While there is the potential for new fuels such as hydrogen and its derivatives to come into the market, the LNG industry feels these will be too expensive and difficult to scale up in Asia, where countries are more concerned with expanding energy availability while keeping costs low.
The second bet is that the LNG industry will be able to convince government policymakers, companies and consumers that their fuel is better than the dirtier alternative of coal-fired generation.
At Gastech there was much talk of displacing coal from the power-generation mix, especially in countries such as Vietnam that have rapidly growing energy demand but want cheap solutions.
The problem for the idea of LNG displacing coal is that this hasn’t really been happening, with Asia’s coal burn at record highs, although this is mainly a result of increased consumption in countries like China and India, which have vast domestic coal mining sectors.
