Originally published on Forbes.com on July 21, 2022

The proclamations that natural gas would be a bridge to future renewable energies have come true. And right now it looks like a pretty sturdy bridge.

Today’s news includes the threat that Russia will continue the recent cuts in gas supplies that Gazprom, the state gas company, has imposed. Moscow may not fully reconnect the Nord Stream 1 pipeline that carries gas under the Baltic Sea to Germany at the end of scheduled maintenance today.

Gas from Russia is down to a third of what it was a year ago. The European Commission President Ursula von der Leyen said she anticipated a full disruption of gas supply from Russia. The President issued warnings for the EU to prepare for gas rationing to deal with these cuts. Her proposal is “for countries to cut gas demand by 15 percent from August until March next year.”

Part of the solution is for the EU to replace Russian gas with LNG (liquefied natural gas). This is already happening but more LNG import terminals need to be built and this takes time and money.

Decades-old predictions by the oil and gas industry about the future of natural gas suddenly seem prescient, and it’s insightful to examine the source and motivation behind these old proclamations.

Big-Oil proclamations.

A few years after the beginning of shale gas in 2003, the oil and gas industry realized there was enough natural gas in underground shales in the USA to last 100 years.

The industry also realized gas as a fuel burns much cleaner than oil or coal, emitting only about half of the greenhouse gases (GHG) that warm the atmosphere.

This led to the concept that natural gas could be a halfway house in the transition from fossil fuels to renewable energies. It made sense to the industry, but not to climate scientists who felt the need was urgent to stop burning all fossil fuels because they provide 73% of global GHG.

I attended countless industry meetings where the gas halfway house concept was quoted. But it seemed to be used as a pacifier to environmental critics, rather than a serious proposal to limit the production of oil and coal and their GHG.

More than a decade later, in 2020, the oil giant bp took a deep dive into historical energy data, including renewables, and projected what the future would look like under three different scenarios. In the most likely scenario, bp said that by 2050 coal would be only 4%, oil would be 14%, natural gas would be 21% and renewables would be 43% of global primary energy.

According to bp, oil and gas usage will still be significant in 2050, with natural gas more prominent, while renewable energies are almost 50% of the global supply.

As Daniel Yergin said, oil and gas are not going away.

The rapid rise of LNG.  

The world chugged along, with voices on the right insisting it needed cheap and reliable fossil energy to lift millions of people up into the middle class, and for continued energy security. Energy security is the opposite of what you feel like if the lights go off and the refrigerator and air-conditioner suddenly stop working when you are sitting under a heat wave.

Meanwhile, voices on the left argued that continued production of oil and gas, from the top ten producing countries, led to a “production gap” where resulting GHG emissions far exceeded goals set by the Paris agreement of 2016.

But since 2020, the world of oil and gas has changed, and indisputably led to greater prominence for natural gas, especially LNG (liquefied natural gas).

Worldwide shortages arising from the pandemic and supply chain mess-ups instigated a surge in demand for natural gas and a surge in prices.

More locally, the war in Ukraine started in February 2022 and exacerbated the gas shortages as the West and Russia tussled over sanctions which included Russia cutting its gas supplies to Poland, Bulgaria, the Netherlands, Denmark, and Finland.

Europe had previously planned to limit pipeline gas imports from Russia but to expand their imports of LNG from countries not aligned with Russia. Countries such as Australia, US, and Qatar – the top three LNG exporters. Australia is the largest but the US is not far behind – both countries recently boosted their LNG liquefaction facilities.

The burgeoning LNG trade is due, first, to countries threatened by energy security, and second, worldwide motivation to decarbonize economies away from oil and coal.

As of April this year, there were 19 LNG exporting markets connected to 40 LNG importing markets. China, Japan, and Europe were the largest importers of LNG, in that order.

The US wasn’t permitted to export natural gas before 2016, but the hugely successful shale gas revolution changed that. Gas production in the US will reach a new record of 100 Bcfd by the end of 2022, Rystad Energy predicts. The US is the world’s top gas producer. Within just the past six years, the US has grown to become the second largest LNG exporter.  

Since the war in Ukraine, about 20 import LNG terminals have been initiated across the globe, including Germany and China.

LNG export terminals are being constructed. Cheniere Energy approved a terminal expansion in Texas. In Qatar, Exxon Mobil and Shell are involved with projects to grow LNG exports that add up to $29 billion.

But a reality check: LNG imports could meet 40% of Europe’s needs, according to Bloomberg, by 2026. While this is twice as much as in 2021, it falls far short of current gas imports from Russia.

Is natural gas green enough?

Of course, natural gas is greener than oil or coal. But there are mitigating factors. While countries like the US have demonstrated large emission reductions when switching from coal-fired to gas-fired power plants, the gains are less clear when methane leaks from wellheads through pipelines to gas processor stations are evaluated. If the leaks can be found and plugged, then natural gas can indeed be a bridge to a carbon-free future.

But cleaner gas does exist. One form is renewable natural gas, RNG, which is essentially biogas obtained from manure, food waste, and landfills.

The latest twist is stamping LNG with a label called RSG (responsibly-sourced gas). RSG is gas that has been produced with a low carbon footprint by keeping methane leaks in wells and pipelines and tanks to a minimum, or even zero. This is part of a new movement.

Carbon-neutral or carbon-offset LNG means using carbon credits to offset carbon emissions released from well production to LNG unloading terminal. The carbon credits can be used to finance renewable energy projects, planting forests, etc. bp is shipping such LNG cargoes to Southeast Asia.

In Europe, given the energy hole, some countries have fallen in by shunning fossil fuels too fast, some have chosen to walk this back and redefine gas as green so long as it provides a “bridge” to renewable energies.

On the other hand, some mighty big banks, the World Bank, Asian Development Bank, and European Investment Bank, have turned away from financing or investing in natural gas because gas is not green enough.

In summary, the pendulum has swung away from climate action to natural gas action (LNG).

One can argue that the shale revolution, discovered and developed in the US, saved the US by taking the country from a net importer of oil and gas to a net exporter of oil and gas in just 20 years.

And the shale revolution is now providing LNG to help save Europe from Russian energy exploitation.

The proclamations that natural gas would be a bridge to future renewable energies have come true. And right now it looks like a pretty sturdy bridge.