SINGAPORE–(BUSINESS WIRE)–#energy–Coal use and emissions from power generation in Asia will surge in coming decades unless there is significant new supply of U.S. liquefied natural gas (LNG), a new study by data and analytics company Wood Mackenzie has shown.
The study, commissioned by the Asia Natural Gas & Energy Association (ANGEA), models energy demand, power generation and the implications for gas demand for nations across Asia through to 2050.
The study found continued growth in LNG production from the U.S. – the world’s biggest exporter – was essential to balancing global markets and providing emerging Asia with an affordable and available alternative to the high-emitting coal that is currently the region’s dominant electricity source.
Wood Mackenzie forecasts LNG demand from Asia growing from 270 million tons per annum in 2024 to 510 million tons per annum in 2050, fueling economic and population growth across emerging economies, and supporting greenhouse gas emissions reduction, alongside investment in renewables.
Without the resources to be self-sufficient, Asia must rely on LNG imports to meet its natural gas needs.
“Wood Mackenzie has modelled two scenarios: one where the current halt to U.S. LNG export approvals to non-free trade agreement countries is lifted early in 2025 and another where this ‘pause’ stays in place longer-term,” ANGEA CEO Paul Everingham said.
“If the pause is lifted and approvals and development of export facilities resume, then U.S. LNG is expected to comprise a third of global supply by 2035.”
“But if it remains in place and planned and proposed U.S. LNG projects are not developed, there is a risk that LNG developments in other regions will fail to keep pace with anticipated demand growth,” Everingham said.
“The study demonstrates that although there is considerable LNG supply set to enter global markets through the second half of this decade, strong uncertainty exists about the 2030s and beyond and this is impacting energy planning in Asia.
“This aligns with ANGEA’s experience engaging with key energy decision makers around Asia, who are planning to make long-term investments in gas supply and infrastructure worth tens of billions of dollars. The most common question they ask us is ‘where is our gas supply for future decades going to come from?
“They want to know if the U.S. will be a reliable long-term supplier of the LNG they seek to replace coal in power generation. If it’s not from the U.S. or Australia, then this study shows gas would need to be sourced from less cost-competitive projects around the world and the likely outcome would be higher LNG prices than what many South Asian and Southeast Asian nations can afford.
“Nations like Bangladesh, Vietnam, the Philippines, Indonesia and Malaysia will not be able to realize their plans to transition to gas-fired power if LNG prices are high and coal use, which hit record levels in both 2022 and 2023, will keep growing. Without certainty of an affordable supply, their fallback position, quite understandably, is to stick with a fuel they are familiar with and which they know is likely to be inexpensive and plentiful: coal.
“If price increases were to result in 2035 LNG demand from the emerging Asian importing countries being 30% lower than Wood Mackenzie’s current projections, it’s estimated an additional 95 million tons of coal would be used in that year alone.
“With natural gas and LNG found to produce an average of 50% fewer emissions than coal when used to generate power, this outcome would result in around 100 million tons of additional annual CO2 emissions.
“This is roughly equivalent to the annual emissions of 20 million cars and will impact Asia’s progress towards climate objectives.”
Everingham said the Wood Mackenzie study was notable for the realistic approach it took to Asia’s energy transition, as emerging nations sought to maintain energy security and economic growth while reducing emissions.
Wood Mackenzie forecasts both LNG demand growth and a positive outlook for renewables developments in Asia – highlighting the complementary role of both sources in meeting rising energy demand.
“Rather than starting at net zero and working backwards to provide an unrealistic picture of the energy sources Asia will use over the next 25 years, Wood Mackenzie has carefully analyzed individual countries to project their most likely energy pathways, as they strive to reduce greenhouse gas emissions,” Everingham said.
“The rollout of renewable energy in Asia is a complex undertaking and we’ve already seen countries having to cut back on renewables targets. Natural gas and LNG provide an opportunity to reduce power-related emissions and coal use, while also ensuring energy security.”
Mangesh Patankar, Head of Asia Gas and LNG Consulting at Wood Mackenzie, said that the company forecasts growth in Asia’s LNG demand from the 2030s onwards would mostly come from South Asia and Southeast Asia.
“LNG will continue to play a strong role in the Japanese, South Korean and Taiwanese economies to 2050. However, demand from these countries will decline slowly as energy transition measures progress,” Patankar said.
“Growth in LNG demand from China will be strong until the early 2030s but is expected to be limited after that as piped gas projects from Russia are expected to enter operations and ramp up.
“By contrast, Southeast Asia and South Asia will experience rapid growth in LNG demand throughout the 2030s and beyond, as energy demand continues to grow at pace and LNG provides a low-cost and low-carbon solution, alongside renewables, to reduce dependence on coal-fired power amidst depleted and declining domestic gas resources.
“Meanwhile, LNG demand from India will grow strongly from 2027 through to 2050, largely via consumption in the non-power sector, including city gas, fertilizer and petrochemical manufacturing.”
Robert Liew, Wood Mackenzie’s Director for Asia Renewables Research, said analysis of Asia’s future energy landscape suggested power generation capacity from solar projects in China, India and Japan would be lower than the levels outlined in the International Energy Agency’s APS and STEPS scenarios.
The study indicates that a range of Asian economies – including India, Indonesia, Malaysia, Thailand and Vietnam – may have set net zero targets that were too ambitious.
“There are implementation challenges that will continue to impact renewable energy projects in Asia,” Liew said.
“These include grid challenges involving lack of battery storage to overcome intermittent generation, issues associated with land acquisitions required for renewables projects and unattractive tariff regimes in several countries.”
There are also country-specific challenges, Liew said.
“Bangladesh, for example is densely populated, which makes developing renewable projects difficult close to demand centers. Meanwhile, countries such as Thailand and Indonesia have limited ability to harness onshore wind power due to low wind speeds.”
To access an executive summary and learn more, please visit the Wood Mackenzie study page on the ANGEA website.
About ANGEA
Based in Singapore, ANGEA is an industry association with a membership that spans the full global gas value chain: from production, to transport, infrastructure, manufacturing, end users, and others. ANGEA works constructively with governments, society and industry throughout Asia, to build effective and integrated energy policies that meet each country’s climate objectives, while promoting national and regional economic sustainable growth. Visit angeassociation.com.
About Wood Mackenzie
Wood Mackenzie is the global insight business for renewables, energy and natural resources. Driven by data. Powered by people. In the middle of an energy revolution, businesses and governments need reliable and actionable insight to lead the transition to a sustainable future. That’s why we cover the entire supply chain with unparalleled breadth and depth, backed by over 50 years’ experience in natural resources. Today, our team of over 2,000 experts operate across 30 global locations, inspiring customers’ decisions through real-time analytics, consultancy, events and thought leadership. Together, we deliver the insight they need to separate risk from opportunity and make bold decisions when it matters most. For more information, visit woodmac.com.
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