Energy Transition Outlook 2025–26
With electricity demand rising, persistent geopolitical tensions and an increasingly complex energy system, gas has ceased to be a transitional fuel and, in the view of experts, has taken on a structural role.
A report by Wood Mackenzie provides a clear framework for understanding why Argentine LNG is regaining relevance.
Natural gas is returning to the center of the global energy debate. Not as an anomaly in the face of the transition, but as one of its enabling conditions. This is one of the clearest conclusions of Wood Mackenzie’s Energy Transition Outlook 2025–26, which describes a world where decarbonization is advancing more slowly than expected, international cooperation is weakening and energy demand continues to grow, driven by electrification, industry and artificial intelligence.
“The world will not achieve net-zero emissions by 2050,” the report warns, placing the global energy system on a trajectory consistent with a 2.6°C rise in temperatures, above the targets set by the Paris Agreement. In that context, Wood Mackenzie introduces a key concept: there will not be a rapid substitution of fossil fuels, but rather an “energy evolution,” in which different sources coexist for decades.
Within that framework, natural gas emerges as the most resilient fossil fuel.
The outlook notes that even under scenarios of higher climate ambition, gas retains a relevant role as a backup for renewables, a substitute for coal and a reliable source for energy-intensive industries. “It is not possible to quickly replace a fossil-based energy system with one that is fully decarbonized,” the report argues, underscoring that while renewables grew strongly over the past decade, they barely managed to cover incremental demand growth.
Electricity, AI and the need for firm power
One of the factors reinforcing gas’ role is the explosive growth in electricity demand. Wood Mackenzie projects that electricity will rise from accounting for about 20% of global energy consumption to more than half by 2050 in net-zero scenarios. This jump is being driven by the electrification of transport and industry, hydrogen production and, increasingly, by data centers and artificial intelligence.
The report is blunt on this point: global power infrastructure is not prepared to absorb abrupt demand peaks. In that context, when renewables fall short and storage does not scale fast enough, the system turns to dispatchable sources. “Fossil fuels remain the bedrock of supply for decades to come,” Wood Mackenzie states, with gas as the main backup due to its operational flexibility and lower emissions intensity compared with coal.
Far from reducing the need for firm power, the transition increases it. Gas ceases to be a short-term “bridge fuel” and instead takes on a structural role as a reliability anchor in an increasingly interconnected and volatile system.
LNG and fragmentation: gas as a geopolitical asset
The strengthening of gas is also explained by a deeper shift in the international energy order. Wood Mackenzie describes a world marked by geopolitical fragmentation, a rollback in climate cooperation and a prioritization of domestic energy security. Europe has reconfigured its energy mix after losing Russian gas, Asia is seeking to diversify suppliers, and consuming countries are prioritizing stable and flexible contracts.
In this scenario, LNG consolidates its position as the dominant format for international gas trade. Security, affordability and resilience move to the forefront, the report notes, emphasizing that liquefied natural gas reduces regional dependencies and allows for a faster response to supply shocks.
In this framework, gas ceases to be merely an energy commodity and becomes a strategic asset shaped by geopolitical, financial and industrial considerations.
Vaca Muerta and the window opening for Argentina
Although the Energy Transition Outlook does not explicitly mention Argentina, the framework it proposes aligns directly with the reality of Vaca Muerta. The shale formation in Neuquén brings together several of the attributes Wood Mackenzie identifies as critical in the new energy map: abundant resources, rising productivity, competitive costs and export-scale potential.
In a world that needs new gas suppliers outside conflict zones, Argentina emerges as a player with room to enter the global LNG market. That potential is beginning to materialize through a series of projects aimed at turning Vaca Muerta gas into long-term exports.
Among them is Southern Energy, which is advancing a modular liquefaction scheme focused on exports, as well as the Argentina LNG project, led by YPF alongside ENI and ADNOC, which envisions the development of a large-scale export platform and could add a fourth international partner. LNG del Plata is another initiative seeking to capture part of global liquefied gas demand.
The coexistence of multiple projects reflects the same strategic reading: the LNG market is not shrinking with the transition, but rather being reshaped and becoming more demanding in terms of scale, reliability and clear rules.
Investment, rules and execution
Wood Mackenzie stresses that the main bottleneck in the transition is not technological, but financial. The global energy system requires between $130 trillion and $175 trillion in cumulative investment through 2060, and a significant share will continue to be directed to oil and gas upstream to offset the natural decline of existing fields.
In that context, the report warns that projects able to move forward will be those that can offer regulatory stability, predictability and risk-adjusted returns. For Argentina, the challenge is not only the size of the resource, but its ability to turn Vaca Muerta into LNG projects that are financeable and deliverable on time and on budget.
Gas as part of the system, not an exception
The central contribution of the Energy Transition Outlook is conceptual: it redefines gas’ place within the transition. Not as an anomaly or a detour, but as a functional component of a more complex energy system, where renewables, nuclear, storage and fossil fuels coexist with differentiated roles.
According to the report, fossil fuels no longer dominate the system, but they remain necessary to ensure balance, security and continuity. Within that framework, natural gas occupies a privileged position.
For Argentina, this reading reinforces a key conclusion: Vaca Muerta is not competing against the energy transition. It is competing, instead, for a place within it. And LNG emerges as the vehicle to turn that resource into a long-term strategic opportunity.