Our message on energy security and supply for the G7

by Paul Everingham

Last month, following the G7 Ministerial Meetings on Climate, Energy and Environment, we thanked participating countries for acknowledging the importance of natural gas to the energy transition in Asia. 

It’s vital that countries in Asia are able to continue energy transition journeys that allow them to sustain strong economic growth while making progress on climate goals. 

Gas is a fuel that can help underpin this complex balance. 

We also believe there is potential for one of the world’s most influential political forums to make a stronger statement about the role of natural gas in enabling both global energy security and the world’s energy transition. 

This is why the Asia Natural Gas and Energy Association (ANGEA) wrote to the Leaders of the G7 nations, as well as the presidents of the Asian Development Bank and The World Bank, ahead of the G7 Leaders Summit in Hiroshima. 

At the heart of our letters is a desire to grow global understanding of the energy circumstances in Asia and how natural gas and LNG can help address those issues, and also the consequences of not doing so. 

As the letter states: 

“Most countries in Asia are net importers of energy. Large-scale energy infrastructure investments across the energy chain require policy certainty in the medium and longer term. Failure to recognise this fundamental point risks placing developing nations across Asia in a state of energy poverty and will stall energy transition efforts. 

“The global nature of energy markets means that the effects of the conflict in Ukraine are felt around the world. Europe is now relying on increased imported LNG, which means that emerging Asia is priced out of existing supply and turning once again to increased coal use. 

“Southeast Asian countries responded to the recent commodity price rises by prioritising short-term economic concerns at the cost of long-term decarbonisation efforts. According to the International Energy Agency, even with commodity prices now moderating, economies in the region are set to increase coal use to help power their long-term economic growth, even as they add more renewables.” 

Put simply, without new gas projects coming online around the world over the next 20 years to increase supply and lower cost, developing economies in Asia are likely to continue to fall back on coal because of its affordability and availability. 

The G7 Summit occurred just as a major new piece of research into the importance of natural gas to Asia was released. 

Authored by independent specialists Rystad Energy, Asian Energy Security has been co-sponsored by ANGEA and the American Petroleum Institute, and identifies the cost of inaction today on future gas supply.  

For instance, the experience of Europe after Russia invaded Ukraine has been that the cost of securing alternative energy supplies has risen to 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, which focusses on the energy landscapes of Thailand, Vietnam and Indonesia, assesses a range of energy options – natural gas, piped gas, oil, coal, renewables and nuclear – against the variables of availability, affordability and acceptability. 

It finds that natural gas is the best energy source to support credible energy transition in Asia but facilitating this requires policy measures to stabilise and balance the global gas market, along with the promotion of progressive decarbonisation of energy demand. Meeting the latter involves the delivery of large volumes of renewable and lower carbon energy, including natural gas, ammonia and hydrogen as soon as feasible. 

Gas can reduce C02 emissions by up to 60 per cent in electricity generation compared to coal. Its production, transport and use as a fuel can be further decarbonised by carbon capture and storage. 

But bringing on sufficient natural gas supply to meet Asia’s growing demand will depend on policy settings elsewhere in the world that encourage investment, as well as institutional public funding being made available. 

Already in 2023 we’ve seen both the Net Zero America and Net Zero Australia studies highlight the critical importance of gas to energy transition as a natural complement to intermittent renewable energy. 

There is an opportunity for the G7 to do likewise, helping give countries, industries and companies the confidence they need to make major investments in flexible infrastructure such as LNG to hydrogen facilities. 

ANGEA is a committed partner in efforts to expeditiously reduce global greenhouse gas emissions and we look forward to continuing to work with G7 nations to implement their vision for a successful energy transition that will improve quality of life – in Asia and around the world. 

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.

Main photo by Alex Rerh on Unsplash