LNG

GreenLine Mobility Solutions has partnered with Dabur India to deploy LNG-fuelled trucks across the FMCG company’s logistics network. More than 1,000 LNG- and electric-powered heavy trucks are operated across India by GreenLine with the collaboration helping to cut long-haul road freight emissions in sectors including consumer goods, steel and mining.

China’s push to electrify heavy-duty trucking is set to materially lift electricity demand, with potential knock-on effects on LNG imports. Around Beijing, electrification rates are expected to reach as high as 80% on certain corridors, accelerating the shift away from diesel and LNG toward grid-based energy.

The number of LNG vehicles on Chinese roads has almost tripled since 2019 as LNG fuel costs have fallen below those of diesel, offsetting the higher price of LNG-powered trucks. Shell China's VP Mobility, Hu Chuan pointed out “LNG has become a strategic energy pillar for China, thanks to its cost advantages and lower carbon footprint."

China’s rapid adoption and scale-up of LNG trucks sales is displacing the use of oil and oil products in road transport, lowering diesel demand. Based on the current order book and stringent environmental regulations, the International Energy Agency (IEA) expects the number of LNG-fuelled ships to almost double and reach over 1200 vessels by 2028.

The latest National Development and Reform Commission (NDRC) measures for gas utilisation  from June 2024 categorises heavy-duty vehicles transport as a priority sector for LNG as a fuel, and related policies put forward the promotion of natural gas in transport uses.

“The sale of LNG-powered trucks consequently accelerated in 2023 and 2024 – just as LNG prices eased to competitive levels with diesel. However, as LNG prices again rose above the switching point with diesel during H2 2024, new LNG truck registrations tumbled immediately,” analysts pointed out.

Infrastucture constraints are further stumbling blocks to shift much of China’s road transport onto LNG -fuelled trucks. Local authorities’ decisions on building out LNG refuelling infrastructure hinge on economic considerations around the availability of affordably priced gas. “Given the volatility of LNG diesel price competitiveness,” analysts noted that “continued growth in gas-fuelled transport would require stronger policy support.”

Domestic coal, solar PV outcompete LNG

In the power gen sector, meanwhile, the displacement of oil and oil products is set to continue over the medium term. But even though Chinese utilities convert some of their ageing coal-fired power stations to run on natural gas – it is solar power which outcompetes new gas generation on cost.

Looking China’s overseas investment, renewables for the first time overtook fossil fuel projects in terms of new capacity installed. Overseas power projects, completed under China’s Belt & Road initiative, reached a record 24 GW in 2024 – double the capacity installed in the previous year. Solar PV accounted for 8 GW of these projects while though 48% of completed projects were legacy coal-fired and gas- or oil-fired plants, with 6 GW each.

Falling technology costs for green energy and renewables drive this trend, with much of the change owed to very cost-competitive China-made solar panels. “Chinese companies are leading its deployment in many developing markets that could not previously afford

Still, coal power is still dominating the Chinese power market: A staggering 19 GW of coal power projects remain in the pipeline, although they are subject to potential cancellations due to the global shift away from coal and the government’s 2021-policy announcement of ‘No new overseas coal power’. In addition, 9 GW of gas projects are currently under construction or in the planning stages.