A recent study by Wood Mackenzie, commissioned by the Asia Natural Gas and Energy Association (ANGEA), has revealed that coal use and emissions from power generation across Asia will rise significantly in the coming decades unless the region secures substantial new supplies of liquefied natural gas from the United States.
The research models energy demand, power generation, and gas requirements for Asian nations through to 2050. It emphasises the importance of US LNG – currently the world’s largest LNG exporter – in balancing global markets and providing emerging Asian economies with an accessible and cost-effective alternative to coal, which remains the region’s dominant electricity source.
Rising LNG Demand in Asia
Wood Mackenzie forecasts Asia’s LNG demand to grow from 270 million tonnes per annum (mtpa) in 2024 to 510 mtpa by 2050, driven by economic and population growth. Alongside renewables, LNG is identified as a key contributor to reducing greenhouse gas emissions while meeting the region’s growing energy needs.
Emerging Asian economies, lacking sufficient domestic gas resources, will increasingly depend on LNG imports. However, uncertainty surrounding U.S. LNG export approvals poses a challenge. According to ANGEA CEO Paul Everingham, two scenarios were modelled: one where US export approvals to non-free trade agreement countries resume in early 2025, and another where the current pause remains.
“If the approvals resume, US LNG could account for a third of global supply by 2035,” Everingham stated. “If not, LNG projects elsewhere may struggle to meet demand, potentially driving up prices and limiting access for nations like Bangladesh, Vietnam, and the Philippines.”
Implications of Higher LNG Prices
The study warns that high LNG prices could hinder the transition to gas-fired power in South and Southeast Asia, where coal use reached record levels in 2022 and 2023. If LNG costs deter adoption, coal consumption could increase, with an additional 95 million tonnes used annually by 2035.
Such a scenario would lead to approximately 100 million tonnes of additional CO2 emissions annually – equivalent to the emissions of 20 million cars – threatening Asia’s climate objectives.
Balancing Renewables and LNG
Wood Mackenzie’s analysis projects LNG demand growth primarily in South and Southeast Asia from the 2030s onward, complementing renewables as part of a balanced energy strategy. While renewables are expanding, challenges such as insufficient battery storage, land acquisition issues, and grid limitations complicate their rollout.
“Natural gas and LNG provide a low-carbon, cost-effective solution to reduce coal dependence while ensuring energy security,” said Everingham.
Country-Specific Trends and Challenges
Southeast Asia and South Asia are expected to see rapid LNG demand growth, particularly as domestic gas resources decline. In contrast, China’s LNG demand will peak in the early 2030s due to increasing piped gas imports from Russia. Meanwhile, demand in Japan, South Korea, and Taiwan will gradually decline as these nations advance their energy transition measures.
India’s LNG consumption is projected to grow strongly from 2027, driven by demand in non-power sectors such as city gas distribution, fertilisers, and petrochemicals.
Renewables Outlook
While renewables are key to Asia’s energy future, Wood Mackenzie’s findings indicate that solar capacity in China, India, and Japan may fall short of International Energy Agency scenarios. Net-zero targets in nations such as India, Indonesia, Malaysia, Thailand, and Vietnam may be overly ambitious due to challenges like limited wind resources, land constraints, and unattractive tariff structures.
Conclusion
The study underscores the vital role of LNG in Asia’s energy transition. By addressing supply uncertainties and leveraging both renewables and LNG, the region can reduce emissions, enhance energy security, and mitigate its reliance on coal, ensuring sustainable economic growth.
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