Natural gas is helping to progress a net-zero emissions world

Over the last year, energy supply has been in sharp focus in many parts of the world due to soaring prices of gas and liquefied natural gas, as communities have strived to get back on track following the difficulties caused by COVID-19.

Last year the LNG industry grew by 6% as many countries rebounded following the end of pandemic lockdowns. And by the end of 2021, prices hit record highs. The causes were numerous: strong Asian demand, prolonged winter temperatures, less than expected wind power generation, a decline in domestic gas production, lower gas storage inventories. And in Europe they all combined, showing just how interdependent our energy system is.

These are the themes explored by Shell’s LNG Outlook 2022 which I’m proud to launch today.

The report explores key trends in the global LNG industry over the previous 12 months and longer-term patterns that are emerging. It is exciting to see real progress in renewable energy generation around the world. And as this year’s LNG Outlook shows, the world still needs gas to power hard-to-abate sectors and back up renewable supply.

This outlines the need for a more strategic approach in securing sufficient gas and LNG supply, to avoid future exposure to price spikes.

And what about the future? According to some forecasts, demand for LNG could nearly double by 2040, especially in Asia, driven by energy security, economic growth and continued coal-to-gas switching. For instance, in the power sector switching just 20% of coal-fired power to gas in Asia can potentially help reduce CO2 emissions by 680 million tonnes, equivalent to all emissions produced in Germany during 2021.

Crucially, as countries develop lower-carbon energy systems and pursue net-zero emissions goals, focusing on cleaner forms of gas and decarbonisation measures will help LNG to remain a reliable and flexible energy source for years to come.