101 on LNG: The importance of natural gas in energy transition to a decarbonized world

As we will be discussing at the IESE Global Energy Day on March 27th , the reduction of renewable energy costs and the penetration of disruptive technologies are transforming the energy sector. In this context, the role of natural gas in energy transition will be critical.

Natural gas is the cleanest among all fossil fuels and it has a higher efficiency rate than coal (55% vs 35%) and a lower carbon dioxide (CO2) emission factor (33% vs 95%). It also reduces the nitrogen oxide (NOx) emissions in a half compared to coal and has very little (almost 0) sulphur dioxide (SO2) emissions.

Natural gas can be transported in two ways: by pipeline or by ocean-going ships, usually known as LNG carriers/tankers. Historically, most of the transportation has been made by pipeline (~70% Global Natural Gas trade), but the trend is changing, and currently more transportation is by the tankers. According to Monitor Deloitte, worldwide LNG demand is expected to grow at a 6% CAGR in the following years.

LNG supply and demand forecast

But what exactly is LNG? LNG (Liquified Natural Gas) is natural gas that has been cooled down to -162°. Reducing its temperature and changing its state from gas to liquid achieves volume reduction of 600 times. Once natural gas is in its liquid form, it is loaded into the LNG tankers, that are specially designed to keep the fluid at a low temperature. Upon arrival to the port, the tankers transfer the LNG to the regasification station, where it is transformed back into gas state and injected into the gas network.

LNG tanker

In summary, LNG brings a safer and more efficient way of transporting natural gas and opens the natural gas market to the whole world. Thanks to this technology, countries with no gas reserves and low pipeline infrastructure can consume natural gas.