Coal's future in Asia hinges on US LNG supply

LNG demand in Asia is seen to reach 510 million tons per annum in 2050.

Asia's coal use and power sector emissions are expected to soar unless the US ramps up its liquefied natural gas (LNG) exports to the region, according to a new Wood Mackenzie study.

According to the study commissioned by the Asia Natural Gas and Energy Association (ANGEA), Asian LNG demand is set to double from 270 million tonnes per annum to 510 million tonnes per annum by 2050. This will be driven by economic growth, population increase, and a push for cleaner energy sources like renewables.

Thus, the continued growth of US LNG production is crucial in balancing global markets and providing Asia with a cleaner, more affordable alternative to coal, the study said.

“Wood Mackenzie has modelled two scenarios: one where the current halt to U.S. LNG export approvals to non-free trade agreement countries is lifted early in 2025 and another where this ‘pause’ stays in place longer-term,” ANGEA CEO Paul Everingham said.

If the pause is lifted and approvals and development of export facilities resume, US LNG is expected to comprise a third of global supply by 2035. Otherwise, there is a risk that LNG developments in other regions will fail to keep pace with anticipated demand growth, he warned.

Everingham said countries such as Bangladesh, Vietnam, the Philippines, Indonesia and Malaysia will not be able to realise their plans to transition to gas-fired power if LNG prices are high and coal use, which hit record levels in both 2022 and 2023, will keep growing.

“Without certainty of an affordable supply, their fallback position, quite understandably, is to stick with a fuel they are familiar with and which they know is likely to be inexpensive and plentiful: coal,” he said.