Natural gas and renewables: How do they fit together in Asia’s energy systems?
Natural gas and renewable energy are often viewed as contrasting sources of electricity
production given the former is a fossil fuel and the latter does not produce carbon dioxide
emissions in its generation phase. However, gas-fired power and renewables are highly
complementary technologies that will be essential to the ability of nations in Asia to maintain
reliable electricity supply while reducing their reliance on coal (and reducing emissions).
What is natural gas and how is it used to generate power?
Natural gas – often simply described as ‘gas’ – is a fossil fuel that is widely used around the
world for a range of essential purposes. Formed from decomposed organic matter that has been
subjected to intense heat and pressure underground over millions of years, natural gas can be
used as a domestic fuel for cooking and heating, as a fuel to generate electricity and as a key
ingredient in chemical manufacturing processes (such as fertiliser and polymer production).
A lower emission alternative
Natural gas is highly valued as a fuel for power generation because it is reliable, flexible,
efficient and produces far fewer CO2 emissions than alternatives such as coal and oil. Gas
produces on average half the emissions of coal when used to generate electricity and about 30
per cent fewer emissions than oil. It also offers air quality benefits when replacing coal in power
generation. Generation of electricity from natural gas involves gas and compressed air being
combusted, creating a high-pressure and high-temperature mixture that is then used to spin
the blades of a turbine. The spinning blades drive a generator that converts energy into electricity.
What is renewable energy and what forms does it take?
Renewable energy is energy produced using natural resources that are constantly replaced and
never run out. Examples include solar and wind-generated power, hydropower and geothermal
energy. Energy carriers such as hydrogen can also be considered renewable when they are
produced by processes powered by renewable energy.
Benefits Of Renewable Energy
Renewable energy is a key plank of global efforts to decarbonise and make progress on
emissions reduction targets. While the combustion of fossil fuels releases carbon dioxide into
the atmosphere, renewable energy sources can provide power generation with little to no
carbon dioxide emissions during operations. Massive worldwide investment in renewable
energy is required if the world is to achieve net zero by 2050, with the World Economic Forum
saying the rate of transition will need to double to reach that target.
Challenges of renewable energy
There are a variety of challenges associated with renewable energy. While its generation
phase may largely be emission-free, lifecycle emissions associated with the production of solar
panels and wind turbines are usually significant. One of the biggest issues for renewable energy
is its intermittent nature. Solar and wind farms cannot generate power all the time and industrial-
scale battery storage technology that would “even out” such fluctuations is still under development
and remains expensive. Pumped hydro power storage is well proven at scale but
not feasible in many locations. Intermittency is problematic for large electricity grids where
many millions of people rely on consistent power supply as a basis of everyday life and
economic growth that improves their standards of living. Meanwhile, some countries face
geographical barriers around renewables, lacking suitable available land for solar or wind farms.
There are also cost and complexity challenges with integrating renewable energy into existing
electricity grids, particularly for emerging economies in Asia. Their grids are often outdated and
would require investments of many billions (and perhaps even trillions) of dollars to upgrade to
integrate vast amounts of renewable energy. For emerging nations, where decisions about
energy are highly cost-sensitive, this scale of investment is often not feasible.
Many nations in Asia have established ambitious renewable energy targets which will be
very difficult to meet.
How do gas-fired power and renewable energy work together?
It is sometimes erroneously suggested that nations in Asia are looking to use natural gas as an
alternative to investing in renewable energy. What they are actually seeking is an affordable and
dependable source of baseload power generation that enables them to reduce their use of coal
while pursuing a realistic expansion of renewable energy sources. No region of the world is
more coal-reliant than Asia, where more than 50 per cent of electricity is coal-fired.
Gas is a highly dispatchable source of power generation that can be used to counter
intermittency issues associated with renewables. When the sun isn’t shining or the wind isn’t
blowing, gas-fired power can be quickly ramped up to provide reliable energy supply to
communities and industries. Gas generation can be stood up or down in response to demand
faster than coal-fired power.
What do nations in Asia need to pair gas with renewable energy?
The key requirement for emerging nations in Asia to unlock the benefits of gas-fired power
through the energy transition is for sufficient supply to be available at an affordable price.
Because Asia lacks the regional gas resources required for self-sufficiency, this requires
ongoing supply (and continued growth of supply) from major exporters of liquefied natural gas
(LNG) such as the United States, Australia and Qatar.
A 2024 study by Berkley Research Group found that lifecycle greenhouse gas emissions for
LNG produced in the United States and exported for use in Asia were less than half of those
produced by coal. Notably, the study found combustion of US LNG produced nearly three times
fewer emissions than coal used in the focus countries.
Recent analysis by Wood Mackenzie, commissioned by the Asia Natural Gas & Energy
Association, forecast that LNG demand from Asia would nearly double to 2050, driven primarily
by strong demand increase from South and Southeast Asia through the 2030s and beyond. The
Wood Mackenzie study identified a positive outlook for renewable energy in Asia and
highlighted the complementary relationship with gas. But it also found that a range of nations in Asia
had been too ambitious with net zero targets and that rollout of renewable energy was
likely to be slower than some projections from the International Energy Agency.
The power of LNG and renewables working together
A 2025 study by S&P Global Commodity Insights identified a combination of increased use of
LNG and expansion of renewable energy as a viable pathway for nations in Asia to achieve
significant power sector decarbonisation over the next 10 years. Importantly, the analysis
found this could be achieved affordably.
The study found that LNG from Australia, the US and Qatar – the world’s biggest three
exporters – used for power generation in Japan, the Philippines and Vietnam had 47 per cent
lower average carbon intensity than coal. It also revealed how each of the three Asian
countries could employ the LNG-renewables combination to retire half their coal-fired
generation by 2035, reducing power sector emissions by 33-38 per cent while investing
only 8-16 per cent more in their energy systems.
