LNG in Asia: A transitional step on the way to a greener future

LNG in Asia: A transitional step on the way to a greener future
/ Ian Simmonds - Unsplash
By bno - Taipei Office July 5, 2025

As the global push for decarbonisation intensifies, liquefied natural gas (LNG) is emerging as a pivotal player in Asia’s energy transformation. Widely regarded as a cleaner alternative to coal and oil, LNG is acting as a transitional fuel across the continent, bridging the gap between fossil-heavy energy systems and a future dominated by renewables.

As home to some of the world’s fastest-growing economies and largest energy consumers, Asia accounts for more than 70% of global LNG imports. The region’s energy demand continues to surge, particularly in countries like China, India and even Japan in addition to emerging Southeast Asian economies such as Vietnam, the Philippines and Thailand. For these countries, LNG offers a relatively lower-carbon solution while they ramp up investment in renewable energy infrastructure.

The role of LNG in energy security and transition

LNG’s primary appeal lies in its flexibility, lower emissions profile, and ability to complement intermittent renewables such as wind and solar. While not a zero-carbon energy source, LNG emits roughly 50-60% less carbon dioxide than coal when used for power generation. Moreover, LNG-fired plants can ramp up and down quickly, making them ideal partners for variable renewable energy sources and stabilising grid operations.

In the wake of Russia’s invasion of Ukraine and the ensuing disruption of pipeline gas supplies to Europe, global LNG markets have undergone a major reshuffle. Europe’s pivot towards LNG has had knock-on effects in Asia, driving up spot prices and prompting countries to secure long-term contracts. Despite these challenges, Asian governments remain committed to incorporating LNG into their broader energy mix, not just for reliability but also to meet international climate commitments.

Japan, South Korea and Taiwan – all long-established LNG consumers – are now being joined by newer markets such as Bangladesh, Pakistan and most botably Vietnam in the Southeast Asian sphere. These nations are rapidly building infrastructure to import, store, and regasify LNG, recognising it as a stopgap on the way to net zero.

Infrastructure development

To support the growing demand, Asia is naturally witnessing a boom in LNG infrastructure projects, from import terminals and floating storage regasification units (FSRUs) to pipeline networks and bunkering facilities for LNG-fuelled ships.

China, the world's largest LNG importer in 2023, continues to expand its receiving terminal capacity. The country’s state-owned giants including CNOOC, Sinopec, and PetroChina, are investing heavily in both onshore and offshore regasification terminals, particularly along the eastern seaboard. In 2024 alone, China brought online an additional 15mn tonnes per year (tpy) of receiving capacity, reinforcing its role as a cornerstone of global LNG demand.

India is another key growth market. The government’s target of raising the share of natural gas in the energy mix from 6% to 15% by 2030 has spurred investment in LNG import terminals. Gujarat and Maharashtra on the west coast are already major hubs, and new projects are being developed along the east coast to enhance geographic balance. The country is also investing in city gas distribution networks and LNG-fuelled transport options in the form of bus fleets as part of its decarbonisation strategy.

Southeast Asia, meanwhile, is seeing rapid LNG adoption, especially in nations phasing down coal. Vietnam recently approved several LNG power projects under its updated Power Development Plan (PDP8), with the aim of replacing ageing coal plants and addressing urban air quality concerns. The country’s first FSRU is due to begin operations in 2025, with more in the pipeline. Thailand and the Philippines are also expanding import capacity to support gas-fired generation and diversify away from volatile global coal markets.

Bangladesh too, after grappling with fuel shortages in recent years, is doubling down on LNG, with additional FSRUs planned near Chattogram and Payra on the Bay of Bengal. Likewise, Pakistan is seeking to stabilise its power sector by increasing LNG imports even though it first needs to offload excess supply. Financial constraints have posed challenges for Islamabad though.

LNG and the maritime sector

The maritime sector is also playing a role in LNG’s expansion across Asia. As the International Maritime Organization (IMO) tightens emissions regulations, more vessels are being built or retrofitted to run on LNG. Ports in Singapore, South Korea and Japan are investing in major bunkering facilities to help meet growing demand from the shipping industry.

Singapore, in particular, has become a regional hub for LNG bunkering to this end, with ambitions to lead in low-carbon marine fuels.

Challenges and the long-term outlook

Despite its advantages, LNG is not without its critics, however. Methane leakage during production and transport remains a key concern, given methane’s potency as a greenhouse gas. Some environmental groups argue that LNG use risks locking countries into long-term fossil fuel use at the expense of cleaner alternatives and that the motivation to invest in renewables is reduced. To address this, several Asian nations are opting to incorporate carbon capture and storage (CCS) into their LNG project plans and are exploring so-called “blue LNG” derived from gas with CO₂ abatement.

Additionally, the economics of LNG are under scrutiny. High spot prices and currency volatility have made LNG unaffordable for some developing Asian countries in recent years. Long-term contracts offer price stability but can reduce flexibility in adapting to renewables later. To mitigate this, hybrid strategies are emerging – using LNG for baseload power while prioritising solar, wind, and hydro development where viable.

Japan and South Korea, while historically LNG-heavy, are now cautiously reducing dependence. Japan’s latest Green Transformation (GX) plan promotes hydrogen and ammonia as future fuels, while South Korea is gradually increasing investment in offshore wind and battery storage. Both have also seen a significant return to nuclear output in recent months.

LNG as a bridge, not a destination

LNG’s future in Asia is that of a “bridge fuel” – a facilitator rather than a final destination. Its role will be significant over the next two decades, especially in enabling the retirement of coal-fired power plants and supporting grid stability amid the influx of renewables. But for LNG to remain compatible with climate goals, its use must be paired with strategies to cut methane emissions, improve energy efficiency, and scale up clean alternatives.

What remains clear is that LNG is no longer simply a commodity – it is a geopolitical tool, a development enabler, and a cornerstone of Asia’s energy transition. As the region advances towards a greener future, LNG will continue to serve as both an engine of growth and a buffer against the volatility of global energy markets, but its window as a transitional fuel is finite, and the race to replace it with truly clean sources is already under way.

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