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Mumbai: Asia is expected to drive nearly 75% of demand for Liquefied Natural Gas (LNG) by 2040 as domestic gas production declines and LNG substitutes higher emission energy sources, tackling air quality concerns and meeting emissions targets, says Shell’s LNG Outlook 2021.

Natural gas emits between 45% and 55% fewer greenhouse gas emissions and less than one-tenth of the air pollutants than coal when used to generate electricity.

According to the outlook, as demand grows, a supply-demand gap is expected to open in the middle of the current decade with less new production coming on-stream than previously projected.

“Just 3 million tonnes in new LNG production capacity was announced in 2020, down from an expected 60 million tonnes," the outlook said, adding that over half of future LNG demand will come from countries with net-zero emissions targets.

Post the outbreak of the pandemic, China and India led the recovery in demand for LNG. China increased its LNG imports by 7 million tonnes to 67 million tonnes, an 11% increase for the year.

Additionally, China’s announcement of a target to become carbon neutral by 2060 is expected to continue driving up its LNG demand through the key role gas can play in decarbonising hard-to-abate sectors, namely buildings, heavy industry, shipping and heavy-duty road transport.

India also increased imports by 11% in 2020 as it took advantage of lower-priced LNG to supplement its domestic gas production.

"Two other major Asian LNG-importing countries – Japan and South Korea – also announced net-zero emissions targets in 2020. To meet its net-zero target, South Korea aims to switch 24 coal-fired power plants to cleaner-burning LNG by 2034," the outlook added.

Globally, the demand in Europe, alongside flexible US supply, helped to balance the LNG market in the first half of 2020. However, supply outages in other basins, structural constraints and extreme weather later in the year resulted in higher prices.

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