LNG’s role in energy transition: Key insights from Shell’s Outlook

As the world seeks reliable and lower-emission energy sources, liquefied natural gas (LNG) is poised to play a critical role in the global energy transition. Shell’s LNG Outlook 2025 highlights the increasing importance of LNG in decarbonising hard-to-electrify sectors, strengthening energy security, and enabling the shift towards net-zero emissions.

LNG demand continues to rise despite supply constraints

The global trade in LNG reached 407 million tonnes in 2024, growing by only 3 million tonnes from 2023—the slowest annual supply increase in a decade. Asian demand remained strong, with China and India increasing imports due to lower prices and high power demand during extreme summer temperatures. Meanwhile, Europe’s LNG imports fell by 19%, as renewable energy growth and reduced industrial gas consumption eased pressure on supply.

Shell’s forecast for 2040 projects continued LNG demand growth, driven by:

• The need for cleaner energy alternatives in heavy industry and transport.
• Economic expansion in Asia, particularly in China and India.
• The rising energy needs of the data and artificial intelligence (AI) sector.

However, LNG supply growth remains uncertain, with new production delayed by regulatory hurdles, project financing challenges, and geopolitical risks. More than 170 million tonnes of new LNG capacity is expected to enter the market by 2030, but the timeline for project completion remains unpredictable.

LNG as a bridge to net zero

One of LNG’s biggest advantages is its ability to reduce emissions in sectors that cannot easily electrify. According to Shell’s report, shipping, heavy-duty transport, and industrial applications will increasingly rely on LNG due to its lower carbon footprint compared to traditional fossil fuels.

Key developments in LNG’s role in the energy transition include:

• Expansion of LNG-fuelled transport: The shipping industry is shifting towards lower-carbon LNG-fuelled vessels to comply with global emissions regulations.
• Advancements in liquefied biomethane (bio-LNG): Shell’s report indicates that bio-LNG will gain traction in the transport sector, offering further emissions reductions.
• LNG infrastructure repurposing: Existing LNG infrastructure could eventually be adapted to import synthetic LNG or hydrogen, supporting long-term decarbonisation goals.

Europe’s evolving LNG market

While Asia remains the key growth driver for LNG, Europe’s market is undergoing significant changes. European LNG imports fell by 23 million tonnes in 2024, mainly due to increased renewable energy generation and reduced industrial demand. However, Europe will still require LNG to compensate for declining domestic gas production and meet winter energy demand.

Challenges facing Europe’s LNG market include:

• Fluctuations in demand as governments push for greater energy independence.
• Geopolitical uncertainty, particularly regarding Russian pipeline gas.
• Infrastructure constraints, with limited regasification capacity in some countries.

The United States and Qatar lead global LNG supply

With supply growth stagnating, the United States and Qatar remain the dominant LNG exporters. The US is projected to account for nearly 60% of global LNG supply growth by 2035, while Qatar continues expanding its LNG projects. However, the LNG industry remains vulnerable to regulatory challenges, supply chain disruptions, and cost inflation.

Investment is key to LNG’s future

Shell’s LNG Outlook 2025 highlights the need for greater investment in infrastructure and supply chains to meet rising demand. With China and India expanding regasification capacity and Europe balancing renewable energy growth with LNG imports, LNG will remain a key component of global energy security for the foreseeable future.

Key takeaways from Shell’s LNG Outlook 2025:

• LNG demand will continue to rise, especially in Asia and hard-to-electrify sectors.
• Limited supply growth in 2024 kept LNG prices high, with 170 million tonnes of new capacity expected by 2030.
• LNG is helping decarbonise the transport and shipping industries, with bio-LNG gaining momentum.
• Europe’s LNG demand is evolving, balancing renewable energy expansion with gas security needs.
• The United States and Qatar will dominate global LNG supply, but investment challenges remain.

As the world transitions to cleaner energy solutions, LNG will remain a critical bridge fuel, ensuring energy reliability while reducing emissions in key industries. The next decade will determine how LNG adapts to new regulatory, technological, and geopolitical shifts, shaping its role in the global energy mix.