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Energy policy in the United States and Europe began to pivot in 2022, following Russia’s invasion of Ukraine. Consequently, momentum has shifted from phasing out natural gas to reducing emissions from natural gas while cleaner alternatives are developed and deployed. Increases in natural gas investment are expected in 2023, including investments that reduce the greenhouse gas (GHG) intensity of natural gas and related infrastructure. Europe and the United States announced several policies in 2022 to incentivize natural gas investment while ensuring emissions reductions. In 2023, natural gas markets are expected to remain tight with European and Asian demand absorbing the incremental LNG export volumes coming online. Around 45% of surveyed companies noted that an unfavorable regulatory environment and significant capital investments have held back more investment in natural gas production. These conditions are expected to improve in 2023 and investment in natural gas infrastructure made in 2022–2023 could balance the market later this decade. But in the United States, more natural gas is being produced with a view to reducing carbon and methane emissions. The volume of natural gas certified as low carbon increased 100 times in the last year.30 LNG exporters have signed contracts with suppliers of certified natural gas to export “cleaner” LNG. Moreover, at least three proposed US liquefaction projects have announced plans to build CCS facilities to produce lower-carbon LNG cargoes. Certified natural gas and lower-carbon LNG are expected to continue increasing momentum in 2023.

Natural gas plays a new role in the clean energy transition

KEY TRENDS

Strengthening Energy Policy and Governance