The global liquefied natural gas (LNG) industry is undergoing a major transformation as expanding supply, rising project costs, accelerating renewable energy adoption, and shifting energy demand reshape investment decisions. Analysis by Josh Runciman and Amandine Denis-Ryan of the Institute for Energy Economics and Financial Analysis (IEEFA), together with research by Purva Jain, suggests that high-cost LNG projects are facing increasing financial pressure while governments and businesses explore cleaner, lower-cost energy alternatives.
Global LNG Capacity Set to Expand by 60 percent
Global LNG production capacity is projected to increase by approximately 60 percent by the early 2030s, creating the potential for a prolonged supply surplus.
According to IEEFA, existing LNG facilities and projects already under construction are expected to provide sufficient supply to meet global demand through 2040. The additional supply is likely to place downward pressure on international LNG prices, making it more difficult for expensive new developments to generate attractive financial returns.
As renewable energy expands and demand growth for fossil fuels slows, projects with high capital costs, complex infrastructure requirements, or elevated emissions could struggle to compete with lower-cost LNG exporters.
Browse LNG Project Illustrates Rising Sustainability and Investment Risks
Australia’s proposed Browse LNG project highlights the growing economic and environmental challenges confronting large-scale fossil fuel investments.
The Western Australia development is expected to require more than AU$37 billion in capital investment, making it one of the country’s most expensive LNG projects.
According to IEEFA, domestic production costs are estimated at approximately AU$7.80 per gigajoule, increasing to more than AU$9 per gigajoule when delivered to Perth. This makes Browse gas around four times more expensive than existing domestic gas supplies.
For export markets, Browse LNG delivered to North Asia is estimated to cost approximately US$7.80 per million British thermal units (MMBtu)—around 60 percent higher than future LNG supplies from Qatar and above the International Energy Agency’s long-term benchmark of US$7.50 per MMBtu.
As global LNG markets become increasingly competitive, projects with higher production costs face growing commercial risks.
Carbon Emissions Increase Sustainability Challenges
Environmental performance is becoming an increasingly important factor in LNG investment decisions.
The Browse gas field contains approximately 10 percent carbon dioxide, significantly higher than the 0.1 percent concentration at Australia’s Scarborough gas field.
The project could emit up to 6.8 million tonnes of carbon dioxide annually, increasing pressure to deploy carbon capture and storage (CCS) technologies.
Using Chevron’s Gorgon CCS project as a benchmark, IEEFA notes that carbon capture costs have reached approximately AU$222 per tonne of carbon dioxide, while capture performance has fallen below original expectations.
Applying similar CCS solutions to Browse could increase total project costs by around 9 percent, further weakening its long-term competitiveness.
India’s Energy Transition Reduces Dependence on Imported Fossil Fuels
Research by Purva Jain highlights how India’s dependence on imported LNG-linked fuels and LPG continues to create financial pressure on consumers and public finances.
Following an INR 60 increase in domestic LPG cylinder prices, state-owned oil marketing companies still incur losses of approximately INR 380 per cylinder.
By May 2026, cumulative losses had reached around INR 40,500 crore, despite the government’s INR 11,000 crore LPG subsidy allocation for FY2026-27.
Commercial LPG prices have also increased by INR 195, adding further cost pressures for businesses.
Electric Cooking Supports Sustainability Goals
According to the research, electric cooking provides a cleaner and more affordable alternative to imported fossil fuels.
Economic analysis shows electric cooking is approximately 37 percent cheaper than LPG and 14 percent less expensive than piped natural gas.
As India’s electricity mix incorporates more renewable energy, electrification can reduce fossil fuel imports, lower government subsidy requirements, improve household affordability, and strengthen national energy security while supporting climate goals.
Southeast Asia Reassesses LNG Expansion
Several Southeast Asian countries are reconsidering large LNG investments as infrastructure costs rise and renewable energy becomes increasingly competitive.
In Thailand, expensive LNG import facilities and gas-fired power assets are becoming underutilized because demand growth has not matched infrastructure expansion.
In the Philippines and Vietnam, shortages of gas turbines have delayed projects, increased capital costs, and prompted developers to cancel or restructure several LNG investments.
At the same time, imported LNG continues to struggle against lower-cost domestic coal and increasingly affordable renewable electricity in major markets such as China and India.
Europe’s Declining Gas Demand Signals Structural Change
Europe is also reshaping global LNG markets through declining natural gas demand.
Although the United States is expected to supply approximately two-thirds of Europe’s LNG imports in 2026, total European gas consumption continues to fall because of renewable energy expansion, electrification, improved energy efficiency, and structural reductions in fossil fuel use.
The decline raises concerns that recently constructed LNG import terminals may operate below expected utilization levels over their long operating lifetimes.
Sustainability Trends Reshape LNG Investment Decisions
The combined research indicates that future LNG investments will increasingly be evaluated not only on production costs but also on emissions intensity, carbon management, market flexibility, and long-term competitiveness in a decarbonizing global economy.
With global LNG supply expanding by 60 percent, major projects requiring more than AU$37 billion in investment, carbon capture costs reaching AU$222 per tonne, and cleaner alternatives such as electric cooking offering savings of 37 percent over LPG, sustainability is becoming a defining factor in energy investment decisions.
As renewable energy, electrification, and energy efficiency continue to expand worldwide, governments and investors are placing greater emphasis on affordable, low-carbon, and resilient energy systems, creating a more challenging outlook for expensive LNG developments while accelerating the global transition toward sustainable energy.
SHAFANA FAZAL
