What is LNG?

LNG is produced by first removing impurities such as water, carbon dioxide and sulphur, then cooling the purified gas in specialised facilities. It is stored in insulated tanks and shipped via cryogenic vessels or trucks to regasification terminals, where it is converted back to gas for distribution through pipelines.

LNG is colourless, odourless and non-corrosive, making it a versatile energy source. It is widely used for electricity generation, heating, industrial processes and as a cleaner-burning fuel for transportation. The global LNG market has grown rapidly, supporting energy needs in regions lacking domestic gas resources and enabling flexible, cross-border energy trade — particularly in Asia, Europe and North America, where demand for cleaner energy alternatives is rising.

LNG is regarded as a transitional fuel in the shift toward a low-carbon future. It emits about 50 percent less carbon dioxide than coal and 30 percent less than oil when used for power generation, making it a cleaner fossil fuel option. Its flexibility supports electricity grids by providing reliable baseload and peaking power, complementing intermittent renewables like wind and solar. Existing LNG infrastructure (pipelines, terminals and power plants) enables faster deployment compared to building new renewable systems, offering a practical bridge during the energy transition.

Natural gas is poised to play a critical role in powering data centres due to its reliability, efficiency and relatively lower carbon footprint compared to other fossil fuels. As data centres — which underpin the digital economy — and emerging technologies — like AI and cloud computing — experience skyrocketing energy demands, supply of natural gas via LNG offers a stable and scalable energy source. It can be used in gas-fired power plants or on-site generators to provide consistent electricity, addressing the intermittency issues of renewable sources like solar or wind.

LNG’s global supply chain and infrastructure make it accessible for data centres in various regions, while advancements in cleaner LNG facility developments, such as the increasing technical and economic viability of downstream carbon capture and storage, align with the tech industry’s push for sustainability. This combination of reliability and environmental considerations positions LNG as a key transitional fuel for data centres navigating the balance between performance and net-zero goals.

LNG also supports decarbonisation in hard-to-abate sectors such as heavy industry and shipping, where electrification is challenging. However, LNG is not a long-term solution due to methane emissions (a greenhouse gas) and the finite nature of fossil fuels. As renewable technologies mature and costs decline, LNG’s role is expected to diminish, but its scalability, reliability and global trade networks make it a critical interim solution for balancing energy security and climate goals.

While LNG burns cleaner than coal or oil, it presents several environmental challenges:

Mitigating these concerns requires stricter methane leak detection, renewable-powered liquefaction and investment in carbon capture technologies. Regulatory action, such as the EU’s 2024/1787 regulation on methane emissions, is also driving improvements in sustainability.

LNG enhances global energy security by diversifying supply sources and enabling flexible, cross-border energy flows. Its ability to be shipped worldwide reduces dependence on single suppliers and mitigates geopolitical risks. Major exporters like Qatar, Australia and the US supply key importers in Asia and Europe, stabilising energy markets and supporting economic growth. However, high infrastructure costs and long-term contracts can create economic dependencies, and price volatility remains a challenge.

GHD’s Vice President of Future Fuels in North America Ron Heffron has defined over 60 alternative configurations for LNG terminals and developed more than 20 unique mooring solutions for vessels that are typically “permanently moored.” These innovative alternatives are equally applicable to the emerging future fuels sector. For instance, an ammonia terminal could utilise a nearshore floating storage vessel, reducing risks to populated areas and other onshore operations.

GHD also contributes actively at the industry level, currently chairing The World Association for Waterborne Transport Infrastructure / PIANC Working Group 153C, which is updating established design guidelines to incorporate future fuels. The resulting document, titled “Recommendations for the Design and Assessment of Liquid and Gas Marine Terminals Handling Fossil-Based and Clean Alternative Fuels and Cargoes,” is scheduled for publication in 2025.

LNG stands at the crossroads of today’s energy transition, offering a cleaner, flexible and globally traded fuel that bridges the gap between traditional fossil fuels and a renewable-powered future. While it brings significant advantages in terms of emissions reduction, energy security and market adaptability, it also presents environmental challenges that require ongoing innovation and responsible management. As the world accelerates toward net-zero goals, the role of LNG will continue to evolve, shaped by advances in technology, regulation and global collaboration.