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Money Talk

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Natural Gas Faces a Divided Future

As geopolitical conflict stifles supply and pushes prices to four-year highs, the global energy sector is fracturing. While renewables increasingly displace gas in power grids across Europe and Asia, industry leaders and major exporters insist that the AI boom and manufacturing needs will keep long-term demand growth on track.

Natural Gas Faces a Divided Future

The shift away from gas-fired electricity is no longer a localized trend. Data from the think tank Ember confirms that the share of gas in global power mixes declined for the fifth consecutive year in 2025. In nations like the UK, the Netherlands, and major Asian economies including China and Japan, renewables are rapidly sidelining gas as the primary backup fuel. With 61 of 124 gas-generating economies having already passed their generation peak, the traditional reliance on gas for electricity is visibly waning.

Yet, this decline in the power sector obscures a more complex reality. Natural gas remains an irreplaceable feedstock for cement, steel, and fertilizer production. Furthermore, the massive surge in power demand from data centers—driven by the AI boom—is forcing a recalculation. Proponents argue that renewables alone cannot sustain the energy-intensive requirements of these hubs. Shell, the world’s largest LNG trader, projects global demand will reach 700 million tons annually by 2050, a 65% increase from 2025 levels. For industry giants and the International Gas Union, LNG remains a essential shock absorber for the global economy, capable of adapting to geopolitical volatility even as its role in the electricity mix continues to shrink.

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