Natural Gas Morphs From Being a ‘Bridge’ to Becoming the Destination

Some power companies have stopped calling the fuel a temporary pathway to renewable energy and are making it central to their long-range plans.

The Gateway Generating Station natural gas-fired power plant in Antioch, California. The fuel’s use is on the rise. Photographer: David Paul Morris/Bloomberg

Welcome to our guide to the commodities markets powering the global economy. Today, reporter Josh Saul examines how perspectives on the role of natural gas have flipped in recent years.

Consider this an obituary for a bridge.

Utility executives have long called natural gas a “bridge” to a carbon-free power grid. On one side lay a past of smoke-belching coal plants; on the other, a clean future of renewables gradually stabilizing the climate.

They’re saying that a lot less often these days. The power demand boom accelerated by artificial intelligence has all but killed off the analogy. So has US President Donald Trump’s support for fossil fuels and hostility toward clean energy.

Some of those same utility executives now say gas will remain central to their plans for years to come.

One recently described solar and wind power as a bridge to more gas plants, turning the whole idea on its head. Another said clean energy isn’t even on the agenda anymore.

Some power companies also purged climate targets from their communications.

BloombergNEF analysts back up the idea that the fossil fuel has a long, bright future. “Gas now plays a larger role,” with demand rising 25% through 2050, according to the New Energy Outlook.

That’s due to lower long-term prices and growing electricity demand from data centers. Most of the growth will come after 2035 thanks to an increase in the sector’s consumption, led mainly by the US.

The changing forecasts provide the backdrop for the BNEF Summit that starts today in New York. Speakers will address the energy transition, and other panels will probe the effect of artificial intelligence on gas usage.

We’ll see how many of those leaders agree with NextEra Energy Inc. Chief Executive Officer John Ketchum, who in an earnings call last week cast renewables as the bridge and gas the destination.

Solar and wind facilities, after all, are faster to build than gas plants, even if they can’t run 24/7.

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“We should be thinking about renewables and battery storage as a critical bridge to when other technology is ready at scale, like new gas-fired plants,” Ketchum said.
–Josh Saul, Bloomberg News

Source: Morgan Stanley, Bloomberg, ICE

The oil market is in very rare territory, with futures pricing that points to near-term tightness while also flagging a “meaningful surplus” further out, Morgan Stanley said. The Brent forward curve is downward sloping across the first nine contracts and upward sloping thereafter. Analysts expect the global benchmark to drop back into the low $60s-a-barrel this year.

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