Natural Gas Key To Energy Transition, Demand Surges To 80%

Despite concerns over emissions and affordability, natural gas is expected to remain a key part of the energy mix for decades, particularly in power generation, industrial processes, and transport.

According to a new report from Wood Mackenzie, natural gas will play a critical role in the global energy transition, serving as a bridge fuel between coal and renewables.

WoodMac, also revealed in the report that natural gas demand has surged 80 per cent over the last 25 years, now accounting for nearly a quarter of global energy consumption.

While electrification and renewables are expanding, they alone won’t be enough to meet rising global energy demand, especially in Asia and Europe.

Gas provides flexibility, reliability, and a lower-carbon alternative to coal, which still powers 30 per cent of the world’s energy needs.

In Southeast Asia, countries like Vietnam, Indonesia, Malaysia, and the Philippines are expected to add up to 180 GW of new gas-fired power by 2050 to support economic growth. In China and India, natural gas demand is projected to rise 95 bcm by 2050, offering a practical path to reducing coal dependency. However, high LNG prices remain a key barrier to further adoption. Without a carbon price of $100/tonne, coal could remain the more attractive option for many Asian markets.

Beyond power generation, natural gas is also enabling low-carbon technologies, including carbon capture and storage (CCS) and blue hydrogen. While green hydrogen remains too expensive for large-scale deployment, blue hydrogen—produced from natural gas with CCS will help drive early adoption.

WoodMac forecasts 40 Mt of blue hydrogen capacity by 2050.

However, the report warns that gas is still a “dirty” word in climate discussions due to methane emissions and its fossil fuel status. Addressing LNG supply chain emissions and scaling up low-carbon alternatives like biomethane and e-methane will be critical to securing its long-term role.

WoodMac argues that governments must balance net-zero goals with energy security, ensuring that gas remains a viable option if renewables and emerging technologies fail to scale fast enough.

With the next wave of LNG supply expected in 2026, market dynamics could shift, making gas more affordable and reinforcing its position as an essential transition fuel.