This article was published by The Energy Mix on Jan. 5, 2025.
2026 is shaping up as the year when the risks of a volatile, glutted global market for liquefied natural gas (LNG) may be fully felt, with severe impacts for fossil producers, investors, governments, and Indigenous and other local communities looking to cash in on a fuel that was once touted as a “bridge” to a renewable energy future.
LNG exports did see their biggest increase in three years in 2025, and several countries—including Canada—carried on as though that trend was sure to continue for years or a couple of decades. In August, Energy and Natural Resources Minister Tim Hodgson maintained that Canada could get a first shipment of LNG to Germany in “as little as five years”. And the December 11 edition of Global Energy Monitor’s Inside Gas newsletter cited Argentina, Egypt, Israel, Japan, Morocco, Mozambique, Papua New Guinea, Poland, Puerto Rico, and Tanzania as jurisdictions where new LNG development was planned or under way.
The arrival of a new year doesn’t mean those enthusiasts will suddenly conclude that LNG looks more and more like a losing bet. But serious questions about a sustained LNG boom date back a decade or more, and 2025 saw persistent warnings that a wave of construction of new gas import/export terminals was outrunning gas demand. An LNG export boom in the United States drove down the prices companies could charge on international markets while simultaneously contributing to a spike in energy costs for U.S. consumers.
“The price surge is contributing to a deepening sense of runaway costs in the U.S., and flies in the face of Trump’s claims to have driven down energy prices during his first year back in office,” the Financial Times wrote last month. “It comes alongside frigid temperatures across the U.S., pushing up demand for power generation to heat homes and businesses.”
Meanwhile, renewable energy and energy storage costs continue to fall, creating faster, wider competition in regions of the world where LNG had been expected to dominate new energy supply for decades.
LNG boosters have been taking comfort from one of the three energy futures scenarios in the latest edition of the International Energy Agency’s World Energy Outlook, published in mid-November. The Current Policies Scenario (CPS) projects rising oil and gas demand through 2050 and 3°C average warming based on existing national laws, policies, and regulations.
Independent analysts quickly framed the CPS as a pragmatic response to extraordinary pressure from the Trump administration. They said it represents a world in which no countries anywhere take any further action to reduce their climate pollution—or to take better advantage of renewable electrification options that are cheaper than fossil fuels in most parts of the world, go online faster, and are more resilient to extreme weather and other disruptions.
The IEA’s Stated Policies Scenario (STEPS) shows faster adoption of renewable energy, while its Net Zero Emissions by 2050 scenario charts a course to eliminate net carbon dioxide emissions by mid-century. Even under STEPS, “questions still linger about where all the new LNG will go,” the IEA said, with the potential for higher global demand limited by “continued momentum behind the deployment of renewables, nuclear energy in some countries, and [energy] efficiency policies.”
Those factors make the CPS “a backward-looking relic that ignores the seismic shifts already reconfiguring the global energy system,” Carbon Tracker analysts Guy Prince and Harry Benham wrote late last year. They called the scenario “a warning, not a forecast: it implies energy innovation stops in 2030, as if hitting some sort of intellectual brick wall.”
LNG Glut Becomes a ‘Sinkhole’
The wider trends have Thomson Reuters editor and news analyst Antony Currie warning that renewables are on track to turn the LNG glut into a sinkhole.
“Solar, wind power, and batteries are set to make life a misery for the liquefied natural gas market,” Currie warns, in one of the news agency’s prediction pieces for 2026.” Some fossil fuel executives already think the push by incumbents like ExxonMobil, Shell, and Woodside Energy to hike global production by some 50% by 2030, per the International Energy Agency, is creating a bubble. But renewable energy’s advantages will make the pop even worse.”
The industry “argues LNG is the transition fuel to wean the world off coal power—especially Asia, which already accounts for 65% of global LNG imports,” he adds. That hope “might look rational” on the surface, with European imports rising, AI data centres bumping up demand, and Donald Trump “trying to force purchases of more U.S. fossil gas into trade agreements with the EU, Vietnam, and others.” (Although, so far, that isn’t going very well for him.)
But renewables plus storage are cheaper than gas, they’re quicker to install, and gas also faces multi-year delays for new gas turbines that have tripled in price per kilowatt-hour, according to energy tech analyst Jamie Skaar.
All in all, “excess fuel supplies, a hardware backlog, and a more competitive alternative bode ill for LNG market incumbents,” Currie writes. “A crash is looming.”
In the dying days of 2025:
• Energy Transfer LP “indefinitely paused” its Lake Charles LNG project in Louisiana after extending its target date to start exports from 2025 to 2031, preferring instead to focus on domestic natural gas pipelines.
“The abrupt halt to an LNG complex whose committed customers included energy giants Chevron Corp. and Shell Plc caps a years-long effort to flip an unused gas import terminal constructed before the advent of the U.S. shale boom,” Bloomberg wrote. “The suspension indicates increasing industry concerns about LNG oversupply and poor returns,” the Gas Outlook industry newsletter added this week.
• China saw its domestic LNG price hit a five-year low late last month after high inventories, mild temperatures, and “a faltering industrial and economic recovery” forced terminal operators to “sell off stockpiles at lower prices,” Bloomberg reported Dec. 23,.
• Norwegian state fossil Equinor delayed completion of its Hammerfest LNG upgrade and announced that the project will run NOK 5.3 billion/US$525 million over budget.
• Russian Deputy Prime Minister Alexander Novak said international sanctions had delayed his country’s plans to triple its annual LNG production by several years, although Bloomberg reported that sanctioned shipments are still making it through to China.
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