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A balanced approach that prioritizes both continued LNG investment and the transition to renewables is essential for ensuring a reliable energy future while addressing environmental concerns. Continued dialogue and strategic investments in both sectors will facilitate a smoother transition toward sustainable energy systems, and the success of these industries cannot be mutually exclusive.

Energy transitions typically require significant time to implement and achieve a majority market share. Historically, shifts in energy sources have been driven by a mix of technological advancements, economic considerations, resource availability and the provision of superior energy services to consumers. Underlying these shifts in energy sources are business opportunity and the role of government policy. The journey toward a sustainable energy future remains complex and requires careful navigation of these various factors, challenges and opportunities.

The Role of LNG in the Transition

In the race to bring renewable energy to market, technological advancement (closely tied to scalability of projects and the ability to deliver renewable energy at an affordable price) and ever-changing government policies present the biggest challenges to delivering renewable energy to all but the wealthiest nations. It is these challenges, in particular, that highlight the ongoing role of LNG in the energy transition.

A sudden and complete move away from fossil fuels is not only a technological impossibility using today鈥檚 technology, it also presents a serious risk to nations already struggling with energy poverty. LNG, widely considered to be the cleanest of the fossil fuels, provides an affordable energy alternative. LNG projects do not suffer from the same limitations in terms of lack of technological advancement or limitations in scale, and regulations surrounding LNG import and export projects are well established. With proven technologies and an ability to service less affluent markets, there is a need for the continued use of LNG throughout the energy transition.

The resurgence of LNG鈥檚 market share as a longer-term transition fuel has also been influenced by the ability of the LNG industry to further 鈥済reen up鈥� the exploration and production process. Innovations in carbon capture at the point of gas extraction, advancements in methane leak detection and improvements in LNG storage tanks are reducing the carbon intensity of the LNG supply chain. By addressing these shortcomings in the LNG supply chain, LNG projects can continue to provide grid stability and affordable energy until such time as renewable energy sources are able to meet the same demand.

The Need for Continued LNG Investment

For LNG to succeed in its role as the transition fuel, continued investment in the LNG supply chain is needed. Continued investment in the exploration and production of LNG is essential for several reasons:

1. Supply Stability: As global energy demands rise, maintaining a stable supply of LNG is crucial to meet both current and future energy needs. LNG serves as a flexible energy source that can be supplied to remote locations without extensive pipeline infrastructure. Optionality of supply is the simplest way to maintain economic stability with buyers able to engage in short-term contracts as needs change. Diversification of the supplier pool is expected to increase, as is market competitiveness, with a long list of in-progress projects from Qatar, the US, Asia and Central/South America as well as floating LNG projects coming on line between 2028-30.
   
2. Market Dynamics: Investments in LNG can also help mitigate price volatility associated with energy markets. By increasing production capacities, countries can better respond to fluctuations in demand. LNG demand is set to see fast growth over the next two years, with many LNG developers significantly increasing the previously planned build-out of export capacity. Robust supply growth will likely lead to lower prices, encouraging an uptick in short-term buying. Yet, in South and Southeast Asia, ongoing fiscal challenges and lengthy delays for new gas and LNG infrastructure pose structural challenges to demand growth that a low-price environment does not fully resolve. 
    
3. Infrastructure Development: Continued investments support the development of necessary infrastructure, including terminals and shipping capabilities, which are crucial for LNG distribution. Market analysts suggest that supply would be up to 36 million tons higher than the base case over 2025-27 if under-construction liquefaction projects adhered to the original timelines announced during their final investment decision. LNG liquefaction capacity from projects that have already begun construction could add 193 million metric tons per year of new supply capacity through to 2028.
   
4. Global Energy Security: Diversifying energy supply through increased LNG production and exploration enhances energy security for countries dependent on imported fuels. Using LNG in place of higher-emitting fossil fuels provides an immediate reduction in carbon intensity and a nearly 100% reduction in particulate pollution. Then there鈥檚 the matter of reliability and consistency. While wind and solar are at the forefront of the renewable energy push, these energy sources are intermittent. LNG can provide bridging stability to the grid when renewable generation dips. LNG can also be sent from and to any terminal in the world, promoting a flexibility rarely seen across other sectors and establishing a versatile and agile global gas market.

Reducing Critical Minerals鈥� Reliance

It is obvious that there is an urgent need to find energy sources that will allow for a sustainable future (and meet the commitments made by world leaders under the Paris Agreement), but a one-model-fits-all solution cannot be rushed to market. Seasonal changes, terrain conditions and access to coastal and available land all affect the implementation of renewable energy.

Additionally, the transition to renewables is incredibly reliant on critical energy transition minerals (CETMs) such as copper, nickel, lithium and cobalt. The extraction of such minerals comes with significant environmental, economic and geopolitical challenges, each of which must be addressed. The significant potential for exploitation of both the human factor and environmental damage during the mining of CETMs must be regulated in parallel to regulation for renewable energy production.

Meeting the global energy demand in a cost effective, sustainable way will no doubt require a mix of energy sources and technologies. The flexibility offered by LNG, ranging from large-scale projects to smaller-scale liquefaction plants and direct use of LNG in its liquid form rather than after regasification provides the optionality needed to supply energy to major cities and remote locations alike.

Investment in the energy sector needs to follow a combined approach using innovation to reduce the environmental impact of LNG and improve the efficiency and storage capacity of renewable technologies. A balanced approach to meeting energy demand, with an LNG and renewable mixed energy supply, will ensure that nations can not only satisfy the need for energy security, but can meet their sustainable development goals.

Patricia Tiller is the Dubai office managing partner of law firm Hunton Andrews Kurth LLP. The views expressed in this article are those of the author.