Asia’s energy demand will more than double by 2050. How will Western nations ensure the fast-growing countries of emerging Asia shift from their heavy reliance on coal?
As the nations of Asia debate how to ensure their energy security while also meeting their climate goals, many are overlooking the transition fuel that could help meet the important objective of an energy source that is accessible, affordable and acceptable to the public.
Natural gas has come a long way in recent years as a critical fuel source as Asia transitions away from coal and the environmental challenges it poses toward cleaner fuels and ultimately to renewables.
Asia’s gross domestic product is expected to quadruple by 2050 while the region’s energy demand more than doubles.
As economies grow, they demand more electricity. Governments in Asia are thus increasingly challenged with balancing their energy needs against environmental priorities, including meeting emissions reduction commitments under the 2015 Paris Agreement.
In practical terms, energy security means keeping the lights on with energy available to, and accessible by, the public at affordable prices. It is not yet scientifically possible for any country to implement an energy solution that relies entirely on renewable energy due to issues such as high cost and intermittent output.
A mix of natural gas and renewables can be a complement that works for most Asian countries. In terms of fuels for generating power, natural gas can reduce carbon dioxide emissions by up to 60% compared to coal.
It is therefore incumbent to ensure that natural gas — an available, affordable and acceptable lower-carbon energy source — is part of every country’s energy mix.
Consider the following conundrum.
The domestic energy resources of most southeast Asian nations are dwindling. Gas production in Vietnam, Thailand and Indonesia is expected to drop an average of 11% a year between 2031 and 2040. Meanwhile, gas demand just in Vietnam is projected to rise at a compound annual growth rate of 4.7% between 2022 and 2050.
Asia is a net importer of energy, but many countries are getting priced out of liquefied natural gas import markets because of Europe’s increased reliance on LNG since the eruption of the Ukraine crisis. Europe has spent around $1 trillion to secure affordable alternative energy supplies and subsidize industries and consumers since Russia’s invasion; most Asian countries simply cannot match this spending.
As such, like some of their European peers, some Asian nations are increasing use of coal, prioritizing short-term economic concerns at the cost of their long-term decarbonization efforts.
Research findings from a study conducted by Rystad Energy and commissioned by the Asia Natural Gas and Energy Association have put a spotlight on the risk of placing developing Asian nations into a state of “energy poverty” and stalling energy transition efforts.