New study highlights critical role of gas in Asia’s energy transition

by Paul Everingham

One of the major reasons why the Asia Natural Gas and Energy Association (ANGEA) was formed in 2021 was to help lead important conversations about energy transition in Asia.

We want there to be practical, pragmatic and forward-thinking discussions about what the energy transition over the next few decades will look like – between countries, industries and companies across Asia, and also among the billions of people whose lives will be impacted by energy policy decisions.

It’s a critical conversation for Asia’s future and one we hope will be added to by the results of a new and comprehensive study on energy security.

Undertaken by leading independent firm Rystad Energy and commissioned by ANGEA in collaboration with the American Petroleum Institute, the study focusses on the important energy landscapes of Thailand, Vietnam and Indonesia.

Each of these countries was selected because of the critical juncture they are at in their energy transition journeys, seeking to sustain significant economic and population growth while also striving to meet emission reduction targets.

Rystad assessed a range of energy options available to the three nations – natural gas, piped gas, oil, coal, renewables and nuclear – against the variables of availability, affordability and acceptability (other knowsn as “The 3 A’s”).

What they found was that natural gas was the best energy source to support credible energy transition in Asia

Gas is far cleaner than coal, which currently provides the majority of electricity generation in many countries throughout our region.

It can be cheaper than nuclear energy and doesn’t carry the same community concerns around safety and waste.

It’s also a much more reliable source of electricity generation than renewables, which still face limitations around intermittency, battery technology and supply chain constraints.  Renewable energy is a growing part of the energy mix and natural gas can be the perfect partner to support it.

But there are challenges around natural gas as well.

The production, transport and consumption of gas comes with an emissions profile that needs to be managed. One way of addressing this is through carbon capture, utilisation and storage (CCUS), a technology we are going to hear much more about over the next 20 years and in which ANGEA’s members are at the forefront of global research, development and implementation.

Of perhaps greater relevance to the Rystad Energy study is the affordability and availability of natural gas and, by extension LNG.  [For many nations in Asia, LNG imports are the only way they can access gas].

Theoretically natural gas should be both available and affordable but the reality is more complex than that.

The Ukraine war has caused European nations to seek urgent new sources of gas. No longer able to rely on piped gas from Russia, Europe turned to LNG and this sudden and strong competition for supply has driven prices up significantly.

For some developing Asian economies, this means gas is no longer affordable.

An obvious counter to that supply/affordability issue would be to develop and produce more gas elsewhere in the world.

But again, the practicalities are challenging.  As the Rystad Study points out, solutions will require government policy support for new projects, financial support from public investment institutions (like the World Bank and the Asian Development Bank) and greater contract flexibility in LNG sales.

It also requires a greater global understanding of the predicament in which many Asian countries find themselves.

Much-anticipated economic growth can bring hundreds of millions of people out of poverty.  Natural gas is the obvious transition fuel to facilitate this growth while also helping countries meet climate targets.

But unless gas is both affordable and available, the very real and unfortunate risk is that these nations will fall back on a fuel that is: Coal.

Indeed, this is the one of key recommendations of the Rystad Study, that global producers of gas better realise the vital role the commodity can have in decarbonising Asia.

The study acknowledges that no single form of energy rates perfectly against “The 3 A’s” on which each is assessed.  It recommends, for instance, that Thailand, Vietnam and Indonesia not only look to natural gas and LNG but also must ramp up their renewables capabilities, upgrade transmission grids, increase energy efficiency and decarbonise fossil fuel use with CCS.

However, what the Rystad team also makes clear is that unless the world acts now on gas supply, an opportunity to drive sustainable energy transition in Asia will be lost.

Major gas projects and import/export facilities take many years to come to fruition, it’s not just a case of suddenly being able to turn the tap on when you want it.  Decisions for the future are needed today.

The costs of inaction are considerable. Following Russia’s invasion of Ukraine, countries in Europe have spent an estimated USD $1 trillion to secure new energy supplies and keep the cost of energy affordable for households and industry. This is not a cost most Asian nations will be able to afford. 

The Rystad study presents a set of circumstances many Asian jurisdictions – indeed, many around the world – will recognise.

Fast-growing economies mean significantly growing energy demand. With growth essential to raising standards of living over coming decades, that energy will need to come from somewhere.

ANGEA strongly believes that gas is a big part of the solution.

Paul Everingham is the inaugural CEO of the Asia Natural Gas and Energy Association (ANGEA), which works with governments, society and industry throughout Asia to build effective and integrated energy policies that meet each country’s climate objectives.