Natural gas and the energy transition

Natural gas is playing an increasingly key role in the global energy transition. In its liquefied form (LNG) it has become a global commodity, enabling the transportation of natural gas across long distances and connecting markets worldwide. Providing a reliable and flexible energy supply, natural gas also offers a cleaner alternative to fossil fuels on the journey toward a low carbon future.

Natural gas is a fossil fuel composed primarily of methane, formed over millions of years through the decomposition of organic matter. On an annual average, natural gas serves as an energy source for electricity generation (40–45%), industry (30–35%), households (15–20%), and transportation (3–5%).[1] However, in what is a significantly seasonal market, household consumption can be significantly higher during the winter months.

The production and refinement processes in energy-intensive, so-called hard-to-abate industries, such as steel, cement and chemicals, require particularly high amounts of energy. As a result, they face a number of unique additional challenges in achieving zero emissions including, for example, the need for very high-temperature heat and long-life capital assets.[2] 

In 2024, global natural gas consumption reached 4,200 billion cubic metres (bcm), enough to supply 2.52 billion households with natural gas annually.[3] The largest consumers of natural gas include North America (28%) and the Asia-Pacific region (22%), while Europe accounts for 13% of global consumption. In contrast, the United States (26%) and Russia (16%) account for the largest share of natural gas supply, with Iran, China, Canada, Qatar and Australia each contributing less than 10% to total global production.

Backing up the energy transition

Since natural gas emits approximately 50% less C02 than coal, it is considered the fossil fuel with the lowest carbon and pollutant emissions. This makes it a crucial transition fuel on the path to a lower-carbon future. Even under ambitious climate targets adopted by many countries to reach net zero by 2050, fossil fuels will still play a key role in the energy mix, and are expected to account for 20 to 30% of total energy supply by 2050. This is particularly relevant in the context of grid stability and the integration of intermittent renewable energy sources. During periods of low wind or sunshine, as well as sudden demand fluctuations, natural gas power generation serves as a reliable backup source, ensuring energy security and a stable supply.

LNG: market, mechanisms, and flexibility

Liquefied Natural Gas (LNG) is playing an increasingly central role in the global energy landscape. When cooled to approximately minus 162°C, natural gas changes into a liquid that is 1/600th of its original volume. This makes storage and transportation significantly more efficient. Unlike conventional natural gas, which is moved via pipelines, LNG is stored in specialised containers and can be shipped by sea or carried by road. A single LNG tanker can transport around 0.1 bcm – approximately one terawatt hour (TWh) of energy. Three such shipments a month would be sufficient to meet Switzerland’s annual consumption of gas. This makes LNG significantly more flexible than pipeline gas, as it is not tied to fixed transportation routes. In addition to its supply chain flexibility, LNG can be a substitute for pipeline gas or other fossil fuels such as coal or oil, enabling its use across various sectors, including power generation, industry, and shipping.[4][5]

In recent years, LNG has experienced remarkable growth. The global LNG market is estimated at approximately 580 bcm, representing around 15% of the natural gas market in 2024. By 2028, its share of total natural gas consumption is expected to increase by another 5%, reaching 20%. The United States, Qatar and Australia account for two-thirds of global LNG production. The US is set to double its LNG export capacity by 2028, which would make it the world's largest LNG exporter. The main importers of LNG remain the Asia-Pacific region followed by Europe.

Natural gas in Switzerland

Switzerland is a minor player in the European gas market, consuming around 1% of the continent’s demand. As a key transit country, however, it plays a crucial role in gas transportation, particularly through the Transitgas pipeline that connects northern and southern Europe. Despite this, Switzerland does not have its own gas storage facilities and is therefore reliant on neighbouring countries for gas supplies.

Switzerland imports approximately 70% of its gas from Germany and 30% from France, with a small share coming from Italy.

Axpo and gas: markets, customers and the road to biogas

Natural gas, in its various forms, will continue to play a significant role in our energy future, particularly as a transitional fuel in achieving net-zero targets. Axpo remains an important player in the energy transition and supports its customers in reaching their green energy goals. Many industrial clients as well as small and medium-sized enterprises (SMEs) from various sectors continue to rely on gas as an essential component of energy-intensive production processes. Axpo supports them with flexible and market-oriented solutions.

Each year, Axpo imports an average of 25 to 30 LNG shipments into Europe and is one of the leading players in the Iberian LNG market. Axpo is the only energy company in Switzerland with the expertise required for the transportation, storage, and trading of natural gas and LNG, both nationally and internationally, and advised the Swiss Federal Council on the 2022/23 energy crisis.

The importance of gas trading extends far beyond supply, however. Closely linked to electricity prices, it is a key indicator of market trends. Thanks to our deep expertise in both the gas and electricity markets, Axpo provides customers with valuable insights into market prices and developments, enabling businesses to make well-informed decisions about their energy supply.

Axpo is also committed to innovation. In 2025, the company entered the small scale LNG (ssLNG) market with its first bunkering vessel, enabling the direct use of LNG to fuel ships and road tankers. Additionally, Axpo is investing in the expansion of its biogas facilities. Biogas can be processed into bio-LNG, a renewable alternative to fossil LNG that can be used within the existing LNG infrastructure. The applications for fossil LNG also apply to renewable bio-LNG, making it a viable solution for the transition to sustainable energy.[6]

Resources:

[1] International Energy Agency. (2020). Global natural gas demand per sector, 2005–2025. IEA. https://www.iea.org/data-and-statistics/charts/global-natural-gas-demand-per-sector-2005-2025

[2] International Energy Agency. (2020). The challenge of reaching zero emissions in heavy industry – Analysis. The challenge of reaching zero emissions in heavy industry – Analysis - IEA

[3] International Energy Agency. (2024). Global gas security review 2024: Executive summary. https://www.iea.org/reports/global-gas-security-review-2024/executive-summary

[4] International Group of LNG Gas Importers. (n.d.). Benefits of LNG. https://giignl.org/benefits-of-lng-2/#lng-cleanest

[5] International Energy Agency. (2025). Gas market report: Q1-2025 (p. 6). Gas Market Report, Q1-2025

[6] European Biogas Association (EBA), Gas Infrastructure Europe (GIE), NGVA Europe, & SEA-LNG. (2020). BioLNG in transport: Making climate neutrality a reality (p. 9). BioLNG in Transport