The LNG as a fuel market is expected to grow at a CAGR of over 8% during the forecast period of 2020 – 2025. Factors such as gradual shift from conventional energy sources such as coal to cleaner energy sources such as natural gas for power generation, along with increase in use of LNG for transportation are expected to help grow the market. However, the high cost and complexities of the LNG production plants, and the infrastructure required for safe distribution of LNG have somewhat hampered the growth of the market.
- There have been a significant shift in the transportation industry from conventional sources to a much cleaner and affordable sources such as LNG in the recent years. In countries such as China the growth of LNG based vehicles from 2012 to 2018 amounts over 600%.
- Asia-Pacific is expected to be the fastest growing market in the forecast period mainly due to increased focus on shift towards cleaner fuel for both energy generation and transportation.
- With worldwide increased focus on energy generation from cleaner fuels and increased in LNG based vehicles, the market is expected to grow in the forecasted period. The major market includes countries such as USA, China, etc.
Key Market Trends
Transportation Application to Dominate the Market
- LNG use for transportation have shown a significant growth in recent years and is expected to do so in the forecasted period.
- There have been significant rise in LNG based heavy duty trucks in China, aiming at reduction in greenhouse gas emissions. The number of LNG trucks rose from around 35,000 in 2012 to 235,000 in 2018 and LNG buses rose from around 14,000 in 2012 to 122,000 in 2018.
- EU have also been aiming at increasing its LNG based heavy duty transportation system and have managed to get a growth of over 250% from 2016 to 2018.
- The strict regulations in response to climate change have put pressure on shipping vessels to choose LNG in place oil. At the beginning of March 2018, there were more than 120 vessels burning LNG, with more than two-third operating in Europe
- 13 out of 73 cruise ships on order and to be delivered between 2017-2026 are LNG powered, with an increasing trend towards LNG powered ships.
- Hence with growing stricter regulation, government subsidies and the aim towards reducing greenhouse gases is expected to drive the market in the forecasted period.
Asia-Pacific to Dominate the Market
- Asia-Pacific region have crossed it’s expected LNG import, with China importing three times the expected LNG in 2018.
- There has been a major increase in use of LNG for power generation and transportation in the region, aiming at reducing greenhouse gas emissions.
- China gas demand grew from around 240 BCM in 2017 to around 280 BCM, with a lot of demand coming from industrial and transportation sector.
- China, with it’s huge fleet of LNG powered buses and trucks have been leading the LNG based transportation sector. In China 2,552 LNG fuel station were installed and 6.7 million tonnes of LNG was used in transportation in 2018.
- Therefore, with increasing investment in infrastructure development for LNG use in the region and increasing desire towards energy generation and transportation for being cleaner and cheaper, this region is expected to show growth in forecasted period.
The LNG as a fuel market is moderately consolidated with some of the major companies holding a major share of the market. Some key players are Chevron Corporation, Exxon Mobil Corporation, Royal Dutch Shell Plc, Total S.A., BP Plc, Petro China among others.
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