Global LNG Demand to Surge 50% by 2040 as World Shifts to Cleaner Fuel, says Shell
In its latest annual LNG outlook, Shell has predicted a 50% surge in global liquefied natural gas (LNG) demand by 2040 as the world transitions to cleaner fuel. This growth is slightly lower than last year’s predictions but still reflects a strong rise in LNG demand as economies worldwide target net-zero carbon emissions by 2050.
The increasing demand for LNG is driven by China and developing Asian nations, which are shifting from dirtier coal to the comparatively cleaner fuel. As these countries prioritize industrial decarbonization, the global LNG market is expected to continue growing into the 2040s.
LNG has gained importance since Russia’s invasion of Ukraine, which led to a reduction in pipeline gas supplies to Europe. In response, the region turned to LNG as a replacement for the lost volumes. Shell, the world’s largest private LNG trader, sees natural gas as a transition fuel in the decarbonization process. While natural gas is cleaner than other fossil fuel alternatives, it still releases significant amounts of carbon dioxide when burned. Additionally, natural gas is composed mostly of methane, which has a more potent warming effect than carbon dioxide but dissipates more quickly.
Scientists consider reducing methane emissions as one of the most cost-effective and efficient ways to combat global climate change. Shell acknowledges that demand for natural gas has peaked in some regions and expects global demand to peak after 2040.
According to Shell’s forecast, LNG demand is expected to reach 625 million to 685 million tonnes in 2040, compared to 404 million tonnes in 2023. China is likely to dominate LNG demand growth in this decade, while south Asia and southeast Asia will drive sales in the following decade as they increasingly rely on gas-fired power plants.
Shell also highlights the vital role of LNG in Europe’s energy security, particularly in the aftermath of Russia’s war in Ukraine. Despite an overall decline in gas demand in the region, LNG imports remained at similar levels to the record highs in 2022.
The global gas market continues to face structural tightness due to the lack of Russian pipeline gas supply to Europe. As a result, LNG plays a crucial role in meeting Europe’s energy needs and ensuring security of supply.
In conclusion, Shell’s latest annual LNG outlook predicts a significant surge in global LNG demand as the world transitions to cleaner fuel. While the growth forecast is slightly lower than last year’s predictions, it still reflects the strong momentum towards decarbonization and the shift away from coal. China, along with developing Asian nations, will be key drivers of LNG demand growth in the coming decades. As the world aims for net-zero carbon emissions by 2050, LNG will continue to play a vital role in meeting energy needs and ensuring energy security.
