Natural gas is entering a period of contradiction: global demand is still growing, new export terminals are under construction, and yet the long-term trajectory points toward decline as climate policy, electrification, and renewable energy reshape the energy landscape. The next decade will determine whether natural gas settles into a lasting role as a “bridge fuel” or faces a faster-than-expected phase-down that leaves trillions of dollars in infrastructure at risk.
LNG Exports Are Booming, for Now
The United States is already the world’s largest exporter of liquefied natural gas, with 15.4 billion cubic feet per day (Bcf/d) of capacity. That number is set to more than double. According to the U.S. Energy Information Administration, an additional 13.9 Bcf/d of capacity is planned between 2025 and 2029, spread across five major projects currently under construction. These include facilities along the Gulf Coast in Texas and Louisiana, each adding roughly 1.6 to 2.2 Bcf/d.
This expansion reflects strong international demand, particularly from Europe (which rapidly pivoted away from Russian pipeline gas after 2022) and parts of Asia still building out their energy systems. In the short term, these investments signal confidence in natural gas markets. But LNG terminals are multi-decade infrastructure. A facility that opens in 2028 needs to generate revenue into the 2050s to pay for itself, which puts it on a collision course with global climate targets.
The Methane Problem
Natural gas burns cleaner than coal at the point of combustion, but its climate advantage shrinks considerably when you account for methane leaks across the supply chain. Methane is a far more potent greenhouse gas than carbon dioxide over a 20-year window, and leaks from wells, pipelines, and processing plants have been chronically underreported.
The Global Methane Pledge, now signed by 111 countries responsible for 45% of human-caused methane emissions, commits participants to collectively cut methane emissions by at least 30% below 2020 levels by 2030. For the natural gas industry, this means tighter regulations on flaring, venting, and fugitive emissions. Companies that can demonstrate genuinely low-leak operations will have a competitive edge. Those that can’t may find their product increasingly unwelcome in markets with strict carbon accounting.
Carbon Capture Changes the Math
One technology could extend the life of natural gas power generation significantly: carbon capture and storage (CCS). Modern gas-fired power plants equipped with CCS can now capture 95% to 98.5% of the CO2 produced during combustion, and pilot testing has demonstrated capture rates as high as 99%. At 95% capture, a plant’s lifecycle emissions drop to roughly 40 to 60 kg of CO2 equivalent per megawatt-hour. Push that to 99%, and emissions fall to around 19 kg, which is in the same ballpark as some renewable sources when you factor in manufacturing and installation.
The cost penalty is surprisingly modest at certain levels. Increasing the capture rate from 95% to 97% raised the cost of electricity by only about 1.2% in a U.S. National Energy Technology Laboratory study. The bigger issue is that CCS requires additional natural gas to run, the captured CO2 needs somewhere to go (typically deep geological storage), and the whole system adds complexity to operations. Regulators in Canada and parts of Europe are already writing CCS requirements into law, with Canada targeting an emissions intensity below 30 kg per megawatt-hour for fossil-fueled generators by 2035.
CCS won’t save every gas plant. It makes economic sense for large, baseload facilities that run most of the time. Smaller or older plants are unlikely to justify the retrofit costs.
Heat Pumps Are Eating Into Gas Demand
More than one-sixth of global natural gas demand goes to heating buildings. In the European Union, it’s a full third. That share is under serious pressure from heat pumps, which use electricity to move heat rather than burning fuel to create it.
The EU is targeting 7 million heat pump sales per year by 2030, up from 2 million in 2021. If that pace holds, the IEA estimates it would displace 21 billion cubic meters of natural gas by 2030, an amount equal to nearly 15% of what the EU imported from Russia by pipeline in 2021. Sales growth has been dramatic in countries like Poland, the Netherlands, Italy, and Austria, where purchases roughly doubled in the first half of 2022 compared to the prior year. North America already has the largest installed base of heat pumps of any region.
This trend is structural, not temporary. As electricity grids get cleaner, heat pumps become an even better climate investment. For the gas industry, building heating was a stable, predictable source of demand for decades. That stability is eroding.
Natural Gas as a Hydrogen Feedstock
One possible second life for natural gas infrastructure lies in hydrogen production. “Blue hydrogen” is made by splitting natural gas into hydrogen and CO2, then capturing and storing the carbon. It currently costs between $2.00 and $3.50 per kilogram, making it cheaper than “green hydrogen” (produced using renewable electricity to split water), which runs $3.50 to $6.00 per kilogram.
That cost gap gives blue hydrogen a window of opportunity as a transitional product. But the window may not stay open long. The U.S. Department of Energy’s Hydrogen Shot Initiative aims to bring green hydrogen costs down to $1.00 per kilogram by 2031 through cheaper equipment, larger-scale production, and tax credits of up to $3.00 per kilogram under the Inflation Reduction Act. If green hydrogen reaches that price point, blue hydrogen loses its primary selling proposition, and with it, one of natural gas’s most promising future markets.
The Stranded Asset Risk
Perhaps the biggest long-term question for natural gas is whether today’s infrastructure investments will pay off before the world moves on. A study from MIT’s Energy Initiative estimated the global net present value of fossil fuel resources left untapped under a net-zero-by-2050 scenario at $30.6 trillion. Even under a less aggressive scenario where countries simply maintain their existing Paris Agreement commitments, the figure is $21.5 trillion. These numbers cover all fossil fuels, but natural gas pipelines, terminals, and power plants represent a significant share.
The risk isn’t evenly distributed. Infrastructure in countries with strong climate policy (the EU, Canada, parts of East Asia) faces the earliest pressure. Assets in regions with weaker regulatory frameworks may operate longer but could struggle to find financing as banks and investors increasingly screen for climate risk. Insurance costs for fossil fuel infrastructure are also rising.
A Narrowing but Real Role
Natural gas isn’t disappearing overnight. In most credible energy scenarios, it continues to play a role through at least the 2040s, particularly in providing flexible backup power for grids with high shares of wind and solar, in industrial processes that are difficult to electrify (like steelmaking and cement production), and in parts of the developing world still building out reliable energy access.
But the era of natural gas as a growth fuel in wealthy nations is likely ending. The combination of heat pump adoption, tightening methane regulations, falling renewable energy costs, and advancing battery storage is compressing the space where gas remains the best option. For gas to maintain relevance beyond the 2030s, the industry will need to demonstrate near-zero methane leakage, pair power generation with high-efficiency carbon capture, and find a durable niche in hydrogen production before green hydrogen undercuts it on price. The infrastructure being built today is a bet that all three of those things will happen fast enough to matter.