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The phrase "Golden Age of Gas," popularized by the International Energy Agency (IEA) in its 2011 World Energy Outlook report, envisioned a future where natural gas played a dominant role...
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Insights from the Center on Global Energy Policy
The phrase “Golden Age of Gas,” popularized by the International Energy Agency (IEA) in its 2011 World Energy Outlook report, envisioned a future where natural gas played a dominant role in the global energy mix. This outlook for gas was driven by advancements in extraction technologies like hydraulic fracturing, a global push for less-carbon-intensive energy alternatives to coal and oil, and the increasing availability of liquefied natural gas (LNG) for transport across the globe. Gas was hailed as a “bridge fuel” to a low-carbon future, though its long-term environmental impact, particularly given fugitive methane emissions, was a topic of debate.
Over a decade later, reality is more complex across the globe. While gas demand has thrived in certain countries and regions, especially where stranded gas is plentiful and prices are low, the promise of a sustained golden age has been uneven. In the United States, for instance, growth has been fueled by three key factors:
Globally, the golden age of gas has evolved unevenly. Growth has primarily occurred in countries that are net exporters or self-sufficient in gas (see Figure 1), such as the US, Russia, and Qatar. Technological advancements in shale extraction have further bolstered US production, unlocking not just natural gas but also crude oil and natural gas liquids.
Meanwhile, in large markets that require net imports, such as Europe, gas demand has continued to trend lower since peaking in 2004. Higher prices tied to the Russian invasion of Ukraine have accelerated this downward trend. Most of the top 15 countries shown in Figure 2 are European. In Asia, Japan has seen gas demand drop by 20 billion cubic meters (bcm) from 2011–2023, despite the loss of most of its nuclear fleet for most of this period. Two years ago, China surpassed Japan as the largest LNG buyer in the world—a distinction Japan had held since the beginning of the LNG business in the 1960s.
During the 13 years of the golden age, global gas demand has grown an average of 27 bcm/yr, or 4%. In the 13 years prior to 2011, gas demand grew by 6%, or 24 bcm/yr.
In many countries, switching from coal to gas has significantly reduced carbon emissions. Natural gas emits roughly 50% less carbon dioxide (CO₂) than coal when burned for power generation, and it also reduces air pollutants. However, methane leakage—a potent greenhouse gas with a warming potential 25 times greater than CO₂ over 100 years—remains a major challenge. Despite the benefits, gas’s environmental credentials are increasingly overshadowed by the rapid rise of renewables.
China stands out as the largest contributor to gas demand growth during the golden age. Its unique circumstances have driven this trend:
The golden age of gas faces two major challenges:
Gas will likely remain important in regions where it is abundant and cost-competitive, such as North America. It continues to play a role in displacing coal-fired power plants. Emerging technologies, like AI, could further influence gas demand to the upside; however, as the recent news of Chinese firm DeepSeek emerged, AI might also drive efficiency gains in energy consumption, potentially altering the dynamics of gas usage.
Globally, gas must contend with the rapid expansion of renewables and the economic pull of coal. The construction of new LNG facilities face higher costs due to inflation and the limited number of engineering firms with the ability to build them, which limit long-term competitiveness. Buyers are hesitant to sign long-term contracts as renewable energy and coal offer more affordable alternatives in the interim. This ongoing “champagne problem” for LNG pricing (that it is so costly to produce and transport), underscores the growing ability of renewables to undercut gas. Outside of Qatar, most LNG projects require sponsors to cover long-run marginal costs before making a final investment decision. Covering these costs is typically done through signing long-term contracts. If buyers continue reducing their willingness to sign long-term contracts, LNG production will struggle to grow after the next wave of new supply hits between 2025 and 2030.
As a premium fuel, imported LNG may soon face its sunset, while domestic gas growth still has a future in countries with stranded gas. While gas will retain a niche role in certain markets, the golden age of gas is dimming in most markets where gas needs to be imported, overshadowed by a shifting energy landscape toward greater renewables use and the lingering appeal of coal as a cheaper alternative.
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