Global LNG growth forecast survives a shifting power mix

By Olivia Hart

Global liquefied natural gas (LNG) demand could reach nearly 700 million tons annually by 2050, Shell said, up 65% from 422 million tons in 2025. The long-range forecast survived this year's supply shock, although demand growth has stalled. The latest shock is the second gas crisis in four years, following the 2022-2023 energy crisis.

What has the Iran conflict changed?

The war involving Iran has disrupted Middle East LNG supply and upended near-term gas-demand forecasts. Import costs have risen as gas prices reached four-year highs, contributing to a global consumption decline this year.

Europe and Asia leaned more heavily on renewables and coal as gas deliveries fell. Governments again placed energy security first, revisiting energy policies after the 2022-2023 crisis.

The structural shift spans Europe and Asia. Think tank Ember's data, cited by Reuters columnist Gavin Maguire, show falling gas shares in electricity generation across:

• United Kingdom
• Netherlands
• Turkey
• China
• Japan
• South Korea

Across this year and the previous four years, gas lost share in these key power markets. Power systems designed around gas still depend on it for reliable electricity.

Europe's renewable rollout accelerated as gas prices spiked. It took off after Russia's 2022 invasion of Ukraine and the resulting cutoff of pipeline gas to most of Europe. Renewable shares surged in the EU and UK, gradually sidelining gas as a reliable backup rather than the fuel meeting growing electricity demand.

Takeaway: The immediate shock cut consumption, while governments again placed energy security first.

Is gas losing its global power role?

Ember said in a report released earlier this year: “Gas is losing its share in the global power mix as renewables increasingly meet rising electricity demand.” The analysis found gas's share of global electricity generation declined for a fifth consecutive year in 2025, despite a small rise in absolute gas generation.

Solar and wind led clean-power growth and met around 68% of global electricity-demand growth over the five years to 2025. That contribution reduced the need for a significant increase in gas-fired generation.

Sixty-one of 124 economies that generate electricity from gas had passed their gas-generation peak. They accounted for around one-fifth of global gas-fired electricity generation in 2025. The smaller group of large gas-generating economies had not reached that peak.

The large emerging economies of China, India and Brazil met rapidly rising electricity demand without turning to gas, Ember said. China's gas share remained close to 3% of its electricity mix in 2025. Gas generation plays only a limited balancing role in India and Brazil.

Ember Senior Electricity Analyst Malgorzata Wiatros-Motyka said economics and energy security increasingly point in the same direction. She added that renewables lower costs and reduce exposure to fuel-price shocks and geopolitical disruptions. This weakens gas's former advantage as the default fuel for power-system growth.

Takeaway: Gas generation can still rise, but renewables now capture most incremental electricity demand.

Can industry and data centers sustain LNG growth?

Gas cannot yet be replaced in many industrial processes. It serves as:

• A feedstock in cement and steel manufacturing.
• A chemical feedstock for fertilizer.
• The starting point for supply chains producing plastics, paints, synthetic fabrics and medicine.

Those industrial roles remain difficult to replace. Gas-fired plants also retain a reliability role in power systems designed around them.

The AI boom adds a larger power-demand argument. Data centers will drive a large part of the projected global electricity-demand increase, which returned to growth in the U.S. and Europe after roughly a decade of stagnation.

The demand outlook assumes renewable energy alone will not meet that surge. Gas is positioned to play a key role in America and most of Asia, where countries are positioning themselves as AI and data-center hubs.

LNG producers, exporters and traders remain upbeat on long-term gas-demand growth. Their confidence survives this year's supply shock, which cut consumption amid a price spike.

Takeaway: Industrial feedstocks and data-center load support a long-term LNG growth case despite near-term contraction.

What does Shell's 2050 forecast require?

Shell, the world's biggest LNG trader, presented the forecast in its annual 2026 LNG Outlook, released this summer. Surging gas demand in South and Southeast Asia would drive the projected 65% increase from 2025 levels.

The Strait of Hormuz crisis has stalled global LNG-demand growth this year. The immediate variables are the return of Middle East supply and the response of import costs.

Cederic Cremers, President of Integrated Gas at Shell, said: “The LNG industry has proved resilient and able to adapt to changing market conditions.” He described the conflict as a system-wide shock whose disruption cascaded across all segments of the economy.

More investment in both supply and demand infrastructure is needed, Cremers said. His conclusion: the long-term outlook remains strong, and LNG will remain a stabilising force in the global energy system.

The International Gas Union's 2026 World LNG Report, released in July, said LNG remains exposed to geopolitical uncertainty. Its assessment highlighted the fuel's ability to redistribute large quantities of clean-burning energy from a broadening supply base. That flexibility strengthens LNG's role as a shock absorber for the global economy.

Takeaway: Exporters still expect growth, but they recognize that supply and demand infrastructure must keep pace.

What should traders watch next?

Traders should track whether Middle East LNG supply returns and import costs ease. Those changes will show whether this year's demand stall is temporary. The larger test is whether industrial loads and data-center growth can absorb enough gas to support Shell's 2050 volume while renewables meet most electricity-demand growth.

Watch item: Middle East supply restoration, import-cost levels and the pace of infrastructure investment will determine whether this year's demand stall becomes a pause.