A new study by Wood Mackenzie, commissioned by the Asia Natural Gas and Energy Association (ANGEA), reveals that coal use and emissions from power generation in Asia are set to surge in the coming decades unless significant new supplies of US liquefied natural gas (LNG) become available.
The study, which models energy demand and power generation across Asia through 2050, highlights the critical role of US LNG in balancing global markets and providing emerging Asian economies with an affordable alternative to coal, currently the dominant electricity source in the region.
Wood Mackenzie forecasts that LNG demand from Asia will nearly double, growing from 270 million tonnes per annum in 2024 to 510 million tonnes per annum by 2050.
This growth is expected to fuel economic and population expansion across emerging economies while supporting greenhouse gas emissions reduction efforts.
ANGEA CEO Paul Everingham highlighted the importance of lifting the current pause on US LNG export approvals to non-free trade agreement countries.
“If the pause is lifted and approvals and development of export facilities resume, then US LNG is expected to comprise a third of global supply by 2035,” Everingham stated.
The study presents two scenarios: one where the US LNG export pause is lifted in early 2025, and another where it remains in place long-term.
Everingham warned that if the pause continues, “there is a risk that LNG developments in other regions will fail to keep pace with anticipated demand growth”.
The uncertainty surrounding LNG supply in the 2030s and beyond is significantly impacting energy planning in Asia.
Many Asian countries are planning long-term investments in gas supply and infrastructure worth tens of billions of dollars.
Everingham noted that without affordable LNG supply, countries like Bangladesh, Vietnam, the Philippines, Indonesia, and Malaysia might struggle to transition to gas-fired power and instead continue relying on coal.
The study estimates that if LNG prices increase, resulting in 30 per cent lower demand from emerging Asian countries in 2035, an additional 95 million tonnes of coal could be used that year alone, leading to approximately 100 million tonnes of additional annual CO2 emissions.
The Wood Mackenzie study takes a pragmatic approach to Asia’s energy transition, considering the need for energy security and economic growth alongside emissions reduction efforts.
It forecasts growth in both LNG demand and renewables development in Asia, highlighting their complementary roles in meeting rising energy demand.
Mangesh Patankar, Head of Asia Gas and LNG Consulting at Wood Mackenzie, predicted that growth in Asia’s LNG demand from the 2030s onwards would primarily come from South and Southeast Asia.
He noted that while LNG demand from China is expected to grow strongly until the early 2030s, it may be limited thereafter due to increased piped gas from Russia.
The study underscores the complex challenges facing renewable energy projects in Asia, including grid issues, land acquisition problems, and unattractive tariff regimes in several countries.
These factors contribute to the continued importance of LNG in Asia’s energy mix as countries strive to balance economic growth, energy security, and emissions reduction goals.