This paper reports on an investigation into the transient compressible flow physics that impacts transmission system operation under variable gas quality conditions. Gas quality issues are becoming more prominent due to the diversification of supplies, e.g. new LNG terminals, unconventional gas sources and decentralized green fuel injections (hydrogen, substitute natural gas). A comprehensive pipeline flow model with gas composition tracking resulting from the coupling of mass and chemical energy transport models has been developed to study the effect of the variation in gas composition on the operation strategy of the pipeline system. Three illustrative examples demonstrate the effectiveness of the proposed approach. The first two examples present model validation on a field data concerning variable gas quality and variable demand conditions in the gas transmission system. The impact of hydrogen injection to the pipeline system on gas properties and flow characteristics is illustrated by the third example involving analysis of short-term scheduling with gas quality control. The results show that variable gas quality has a significant influence on the pipeline system inventory and peak capacity as the gas mixture compounds change and energy wave is introduced to the pipeline system. •Transient thermo-hydraulic model for pipeline transportation of natural gas under variable gas quality conditions is proposed.•Chemical energy flow rate instead of volumetric flow rate is selected as a dependent variable.•Model validation on field data is carried out.•Operating strategy of the pipeline system with energy flow rate as a control variable is simulated.•Advantages of energy-based over volume-based approach are illustrated.