WoodMac report highlights role of gas in the energy transition

A new Horizons report from Wood Mackenzie highlights the role of gas in the energy transition, supporting renewables and accelerating the shift away from coal

The report, titled "The bridge: Natural gas's crucial role as a transitional energy source" argues that despite the growth of renewable energy, natural gas remains fundamental to meeting global energy needs and reducing emissions in the medium term.

"Gas demand has surged by 80% over the past 25 years, now meeting almost a quarter of the world's energy needs," said Massimo Di Odoardo, vice president of gas and LNG research at Wood Mackenzie. "Its success lies in the scale of global resources, low production costs, ease of storage and dispatch, and comparative environmental advantages."

Despite growing electrification, increasingly delivered by renewable power sources, and the adoption of emerging low-carbon technologies, progress is currently too slow to achieve net-zero emissions by 2050. With coal still accounting for 30% of the world’s energy needs, shifting to gas as a transition fuel is a compelling option.

Key findings

Key findings from the report include:
• Gas produces only half the carbon dioxide of coal and 70% of oil when burned, and generates considerably less pollution, making it the cleanest fossil fuel option.
• Replacing coal with natural gas has already helped deliver substantial CO2 reduction and can help decarbonise markets across Asia which remain dependent on coal.
• Gas-fired plants are key to provide reliable and flexible supply supporting the integration of intermittent renewable energy sources.
• Natural gas can act as a catalyst for advancing other lower-carbon technologies, including carbon capture and storage (CCS) and low-carbon hydrogen.

Challenges 

The report also highlights challenges facing the gas industry, such as high LNG prices acting as a brake on adoption in Asia.

“In China and India, where gas usage is mainly used for peak shaving, gas demand is still expected to grow by almost 100 bcm through to 2050 in the power sector, offering the most practical option for ensuring flexibility as renewable investments surge,” said Di Odoardo. “Without a carbon price of around US$100/tonne, reducing China’s and India’s dependency on baseload coal looks like a massive ask. But the prize could be a reduction of more than 300 Mt of CO2 by 2035.”

Its CO2 and methane emissions also need to be addressed to ensure it remains attractive as a bridging fuels, although the reports points out that LNG has around 60% lower GHG intensity than coal.

The report concludes that natural gas, particularly LNG, will be critical in the shift to a lower-carbon future, bridging the gap as emerging low-carbon technologies strive to reach critical mass.