Above, Matt Randolph aka Mr Global, called my attention to a recent article in Reuters which kind of reinforced a number of things I’ve been thinking about, with regard to fossil gas.
The Trump administration’s moves make a lot of sense if you understand the motivation to lock in as much permanent fossil gas infrastructure, both here in the US (by blackmailing New England to build new pipelines by blocking offshore wind) and abroad, (with tariffs as a threat) as possible.
But renewable energy is steadily eating gas’s lunch, particularly with the advent of super cheap solar panels and battery storage.
“So the danger is building a 30 year infrastructure project for a demand curve that may peak and decline much sooner than they initially thought,” says Randolph.
“The global energy system is changing more rapidly than we thought – even if it’s not happening in the United States, it’s happening around the world.”
Solar, wind power and batteries are set to make life a misery for the liquefied natural gas market. Some fossil fuel executives already think the push by incumbents like Exxon Mobil , Shell and Woodside Energy to hike global production by some 50% by 2030, per the International Energy Agency, is creating a bubble. But renewable energy’s advantages will make the pop even worse.
On the surface, the LNG expansion might look rational. Europe’s share of imports of liquid methane has doubled to 30% since Russia’s 2022 invasion of Ukraine, per Capital Economics, and the rise of artificial intelligence has created a boom in power-hungry data centres. Meanwhile, President Donald Trump is trying to force purchases of more U.S. fossil gas into trade agreements with the EU, Vietnam and others. And the industry argues LNG is the transition fuel to wean the world off coal power – especially Asia, which already accounts for 65% of global LNG imports.
TotalEnergies CEO Patrick Pouyanné, though, told the audience at the Gastech conference in Milan in September that the sector is “building too much”. Vivek Chandra, boss of Gulfstream LNG in Louisiana, summed up the otherwise upbeat mood at the confab as “irrational exuberance”.
That’s likely to be an understatement. Gas turbines have in price since 2021 to $2,400 per megawatt-hour, per U.S. utility NextEra Energy. With battery costs falling – by 40% in 2024 alone – all-in renewable generation and storage in 2030 could be up to 56% cheaper than gas, estimates Wood Mackenzie.
It’s already having an impact on the world’s biggest LNG importer, China, which is rapidly expanding its wind, solar and hydroelectric generation. By October, Beijing’s LNG imports had fallen 11 months in a row year-on-year, per data provider Kpler. The People’s Republic is also likely to increase purchases from Russia rather than from the U.S. and Qatar, which are responsible for most of the planned expansion of global supply.
Renewables have another factor in their favour: they’re quicker to install, with major projects taking around a year on average, compared to five years for a gas-fired power plant. And that’s assuming the equipment is readily available. But turbine makers GE Vernova (GEV.N), opens new tab, Siemens Energy (ENR1n.DE), opens new tab and Mitsubishi Heavy Industries (7011.T), opens new tab, which account for 90% of the market, have warned customers they face having to wait as long as eight years for delivery, according, opens new tab to the Institute for Energy Economics and Financial Analysis. That effectively nixes any chance of new gas plants replacing coal-fired power stations in Asian countries from Vietnam to the Philippines.
Excess fuel supplies, a hardware backlog and a more competitive alternative bode ill for LNG market incumbents. A crash is looming.
Gemini tells me:
The rapid growth of solar and wind energy is already actively cutting into expected LNG demand in the developing world, particularly in South and Southeast Asia.
While lower LNG prices from the upcoming 2026 supply glut may stimulate some short-term buying, the structural shift toward cheaper, domestic renewable energy is weakening the long-term case for LNG as a “bridge fuel” in these markets.
1. Evidence of Demand Destruction in Key Markets
Developing nations, previously viewed as the primary growth engine for future LNG demand, are increasingly pivoting to renewables due to cost and energy security concerns.
- Pakistan: Once considered a major future market for LNG, the country is now seeing demand plummet. An unprecedented boom in rooftop solar has caused LNG demand to fall by 14% in 2025, leading the government to deprioritize LNG in its national strategy.
- India: Despite a growing economy, LNG imports for the power sector are facing headwinds. Rising output from renewables has reduced the need for gas-fired generation, contributing to a projected 8% fall in LNG purchases in 2025.
- Thailand: As the largest LNG buyer in Southeast Asia, Thailand is seeing imports shrink by roughly 13%, partly due to a 58% surge in solar capacity through mid-2025.
- China: While still a massive importer, the “upside” for LNG growth is severely limited. Renewables and nuclear are expanding so fast that they are absorbing the vast majority of new electricity demand, leaving less room for gas to displace coal.
2. Why Renewables are Winning
- Cost Competitiveness: In many developing regions, solar and wind combined with storage are now routinely cheaper than building new gas infrastructure and importing fuel.
- Price Volatility: The energy crisis of 2022–2023 taught price-sensitive developing nations that LNG is unreliable and unaffordable during global shortages. This accelerated the shift toward domestic renewables to ensure energy security.
- Infrastructure Delays: In Southeast Asia (e.g., Vietnam, Philippines), complex and delayed LNG infrastructure projects are struggling to compete with the faster deployment timelines of solar and wind.
3. The Counter-Force: The “Price Trap”
While renewables are cutting structural demand (long-term reliance), the massive oversupply of LNG expected between 2026 and 2030 will drive prices down.
- This could temporarily boost LNG consumption in price-sensitive sectors (like industry or fertilizers) in India and Southeast Asia.
- However, analysts warn that this “cheap gas” might not be enough to reverse the momentum of renewables, as governments are wary of getting locked into volatile import markets again.
I worry about the “Price Trap” item. Here in New Hampshire, power prices are now a bit high, though not so high as in 2022. For owners of solar systems, who can displace power purchases by home solar generation, this has been a really good time. And the current prices make it pretty compelling to move on installing solar. But if natural gas prices drop again, solar investments will make a far less compelling case. Electricity rates will drop and solar systems will take a lot longer to pay for themselves (plus of course the IRA incentives will be gone).
This natural gas price trap is similar to the preference of Americans for fuel efficient vehicles, and its tendency to disappear really fast when gasoline prices drop.
In these scenarios, decreasing fossil gas or oil demand in effect contains the seeds of its own destruction, via the market and producers responding with very low fuel prices. This causes demand to bounce back, putting the brakes on progress from a climate perspective.
The solution to this is a policy of putting a price on carbon, one that increases steadily over time. Citizens’ Climate Lobby has been bravely advocating for such a policy for more than a decade. It’s been a tough sell, though there has been some real impact and accomplishment. In the long term we will hopefully get more consensus on the need to reduce GH emissions, and this may clear the way for such a strong and effective policy.
Yes we’ve made some real progress in transitioning to renewables and other non-emitting energy sources. I will be waiting hopefully to see if the next cycle of price bust discussed in the Reuters piece really does result in downsizing the fossil fuel industry, more meaningfully than past price busts.