Surging Asian demand for gas means the world will miss its climate targets despite Western countries spending billions on the shift to net zero, data in a report from Shell suggests.
Demand for liquefied natural gas (LNG) is likely to continue to grow until at least 2040, according to the latest projections from the energy company.
This increase is incompatible with the decline in emissions needed to keep global temperature rises below the 2C target agreed in UN climate accords.
It means that efforts by the UK and other Western countries to cut CO2 are being outpaced by the surging demand for fossil fuels from China and countries across south-east Asia.
In its LNG Outlook for 2024, Shell said: “Demand for natural gas has peaked in some regions but globally is set to peak after 2040.
Global trade in LNG reached 404 million tonnes in 2023, up from 397 million tonnes in 2022, with tight supplies of LNG constraining growth while maintaining prices and price volatility above historic averages.
Demand for natural gas has already peaked in some regions but continues to rise globally, with LNG demand expected to reach around 625-685 million tonnes a year in 2040, according to the latest industry estimates.
“China is likely to dominate LNG demand growth this decade as its industry seeks to cut carbon emissions by switching from coal to gas,” said Steve Hill, Executive Vice President for Shell Energy.
“With China’s coal-based steel sector accounting for more emissions than the total emissions of the UK, Germany and Turkey combined, gas has an essential role to play in tackling one of the world’s biggest sources of carbon emissions and local air pollution."
Over the following decade, declining domestic gas production in parts of South Asia and South-east Asia could drive a surge in demand for LNG as these economies increasingly need fuel for gas-fired power plants or industry. However, countries in South Asia and South-east Asia would need significant investments in gas import infrastructure.
The Shell LNG Outlook 2024 shows that gas complements wind and solar power in countries with high levels of renewables in their power generation mix, providing short-term flexibility and long-term security of supply.
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