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Asia Requires Gas as a Bridge to a Cleaner Future, Affirms Jera, Japan

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Asia's Energy Transition Requires Increased Natural Gas, Says Jera

According to Japan's top utility, Jera, the energy transition in Asia necessitates a greater reliance on natural gas to ensure a stable power supply as countries move away from coal. Toshiro Kudama, CEO of Jera Asia Pte Ltd., emphasized the importance of natural gas in supporting the economic growth of the region, particularly in the face of intermittent renewable energy sources. This perspective aligns with the views of major energy producers such as Chevron and Shell, who believe that gas will play a long-term role in the energy transition. However, the International Energy Agency predicts that gas demand will peak in this decade, suggesting that no new long-lead projects are necessary.

Practicality of Transitioning from Coal

Experts at the Bloomberg New Economy Forum in Singapore echoed Jera's sentiments, highlighting the challenges of immediately transitioning from coal to renewable energy resources in Asia. Yao Lixia, a senior fellow at the National University of Singapore, emphasized that natural gas may be the most immediate solution given the practical limitations.

Lessons from the Energy Crisis

The energy crisis of last year revealed that sustainability took a back seat to fuel affordability and security. Yngve Slyngstad, managing director of Industry Capital Partners, noted that the crisis occurred due to Russia's invasion of Ukraine, which disrupted energy markets and led to surging prices of gas and coal worldwide. Developing nations, in particular, faced difficulties due to the increased cost of fuel. In conclusion, Jera's assertion that Asia's energy transition requires increased natural gas highlights the challenges of transitioning away from coal immediately. While natural gas can serve as a bridge to a cleaner future, it is essential to balance the long-term goals of sustainability with the practical realities of affordability and energy security.

Impact of Asia's Energy Transition on New Businesses

The assertion by Jera, Japan's top utility, that Asia's energy transition necessitates increased natural gas, underscores key considerations for new businesses in the energy sector. As countries move away from coal, there's a growing demand for stable power supply, which natural gas can provide. This perspective is supported by major energy producers like Chevron and Shell, who see a long-term role for gas in the energy transition.

Opportunities and Challenges

This shift presents both opportunities and challenges for new businesses. On one hand, there's a potential market for natural gas as a bridge to cleaner energy sources. On the other hand, the International Energy Agency's prediction of peaking gas demand this decade suggests that businesses must be cautious about investing in long-lead projects.

Learning from the Past

The energy crisis of last year, triggered by Russia's invasion of Ukraine, serves as a reminder of the importance of balancing sustainability with affordability and energy security. This is particularly relevant for businesses targeting developing nations, which were hit hard by the surging prices of gas and coal. In conclusion, while natural gas can play a crucial role in Asia's energy transition, new businesses must navigate this landscape carefully, taking into account the practical realities of the market and lessons from past crises.
Story First Published at: https://financialpost.com/pmn/business-pmn/asia-needs-gas-as-bridge-to-cleaner-future-says-japans-jera
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