LONDON – Royal Dutch Shell PLC bet on natural gas as the energy source of the future when it bought BG Group for $ 54 billion. Five years later, it seems that the gas age will not last long.
Falling prices for wind and solar energy, along with the new environmental goals of the government and businesses, are accelerating the transition to cleaner energy and leaving natural gas – long seen by energy companies as a bridge between fossil fuels and renewable energy sources. The fuel is also under increasing control over methane leaks, causing some potential customers to give up gas and move on to low-carbon alternatives.
This is a risk for Shell and rivals such as Exxon Mobil Corp and Total SE, which have also invested in gas, given that gas projects typically cost billions of dollars in advance and take decades to recoup that investment.
Shell last month halved its outlook for global gas demand to 1% per year and said fuel demand could peak immediately after the 2030s.
While flue gas emits less greenhouse gases than coal, environmental gains are lost if there is a methane leak, the main component of natural gas. Methane is stronger than carbon dioxide to contribute to climate change and has become a target for environmentalists.