International Gas Union Vice President: Natural Gas Will Be Long-Term Core Energy, China Market Has Enormous Potential

Ask AI · How does natural gas balance the volatility of renewable energy?

“The future of energy is not energy substitution but energy expansion. Natural gas will be the main energy source to meet low-carbon development.” At the 6th China Liquefied Natural Gas (LNG) Conference held on March 19, Li Yalan, Vice President of the International Gas Union, stated that according to different scenario forecasts, by 2035, the share of fossil fuels in the global energy system will still be above 70%. Oil is expected to peak around 2035, and natural gas will have a relatively long growth period.

Over the past decade, although global renewable energy has experienced explosive growth, the energy structure has long been dominated by fossil fuels. According to Li Yalan, the global share of fossil fuels decreased from 82% in 2015 to 80% in 2025, with oil and coal accounting for 29% and 26%, respectively. Natural gas is the only fossil fuel that has increased, rising from 22% to 25%. Global natural gas consumption has grown by 23% in the past ten years, reaching 4.3 trillion cubic meters by 2025.

She believes that in the future, natural gas will play an important role in replacing high-carbon energy sources, providing flexibility to the power grid, and ensuring energy security. It is reported that using natural gas in cities can reduce carbon emissions by 50% to 55%, in power generation by 40%, and replacing heavy trucks and maritime vessels can reduce emissions by 20%.

More importantly, “before large-scale, long-term, seasonal, and commercialized energy storage technologies mature, gas-fired power will be an inevitable choice to support the absorption of high proportions of renewable energy,” Li Yalan said. Renewable energy sources like wind and solar are highly volatile and intermittent. Last year, wind and solar accounted for 47% of installed capacity in the power system but only 22% of actual output. Despite rapid growth in new capacity, utilization hours for wind and solar equipment have decreased year by year, pushing the power system’s capacity to accommodate renewable energy to its limit. Meanwhile, new energy storage faces high costs, small scale, and short storage durations, unable to meet the large-scale absorption needs of wind and solar power.

Therefore, Li Yalan believes that natural gas will not only be a transitional energy but also a long-term core energy in the global energy system. She predicts that in the next ten years, global natural gas consumption will increase from 4.3 trillion cubic meters to nearly 4.8 trillion cubic meters, and LNG consumption will rise from 430 million tons to about 600 million tons by 2030. Asia remains the main driver of global natural gas demand growth.

For China, the outlook for natural gas demand is broad, especially in empowering the construction of a new energy system.

“The construction of a new energy system is not just a new power system but a low-carbon, green transformation of the entire energy system,” Li Yalan forecasted. By 2030, China’s total electricity consumption will reach 13 trillion kWh, with electricity accounting for 35% of terminal energy consumption. In the remaining 65% of sectors such as industry, construction, and shipping, where full electrification is not yet feasible, natural gas will play a vital role.

She estimates that if, based on the current energy structure, renewable energy replaces 10% of coal and natural gas replaces another 10% of coal, by 2040, China’s natural gas demand could reach at least 800 billion cubic meters—almost double the national natural gas consumption in 2025, indicating huge market potential.

Regarding price trends, under expectations of ample supply and demand, global natural gas is entering a buyer’s market, with LNG pricing power shifting to importing countries. Li Yalan pointed out that by 2030, global LNG liquefaction capacity could exceed 900 million tons, with export terminals increasing from fewer than 50 to over 70, ensuring sufficient supply and investment security. In this context, from 2027 to 2030, LNG prices are expected to gradually decline, led by buyers.

In the short term, due to the impact of Middle East tensions, global energy prices have surged significantly, but the timing of a decline is uncertain. However, Li Yalan noted that the long-term blockade of the Strait of Hormuz is unlikely, and Russia has already increased LNG supplies to the market. If the situation eases within the next two or three months, global LNG prices are expected to moderate in the second half of this year, with supply shifting from tight to ample.

Li Yalan also reminded that amid increasingly complex global geopolitical situations such as the Russia-Ukraine conflict and the US-Iran war, China should include the construction of strategic natural gas reserves in its agenda. She emphasized that natural gas is a crucial component of the new power system for ensuring grid security. Given that China’s dependence on foreign natural gas is about 40%, strategic reserves are necessary to stabilize supply and prices.

In recent years, China has continuously enhanced its capacity to secure natural gas supplies. Through the “Seven-Year Action Plan” for increasing storage and production, domestic natural gas output is expected to grow by over 6% year-on-year in 2025, reaching 261.89 billion cubic meters, with a continuous increase of over 10 billion cubic meters annually for nine consecutive years. Li Yalan predicts that during the 14th Five-Year Plan period, with ongoing exploration and development of conventional and unconventional gas resources both onshore and offshore, domestic gas production could surpass 310 billion cubic meters, and LNG receiving capacity could exceed 200 million tons per year.

(This article is from Yicai.)