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    From the Editor: Is the climate case for LNG exports growing? [Gas in Transition]


It is, but it is not clear cut, and the idea that there is no push back from environmental organisations holds little water. However, if the priority is to stop still-rising global coal use, LNG exports are a mighty big weapon to leave unused. [Gas in Transition, Volume 3, Issue 4]

by: Ross McCracken

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From the Editor: Is the climate case for LNG exports growing? [Gas in Transition]

In June 2021, a study with the cumbersome title Life Cycle Assessment of Greenhouse Gas Emissions from LNG exports from North America’s West Coast for Coal-Displaced Electricity Generation in Asia looked at the entire life cycle emissions of producing LNG from Rocky Mountain gas fields in the US and exporting it to coal-dependent economies in Asia.

It concluded that such exports would result in net lifecycle greenhouse gas (GHG) emissions reductions of between 42%-55%, if the exported LNG were used to displace coal-fired generation.

The range of values reflected assessments for China, India, Japan, South Korea and Taiwan, with China providing the lowest value (42%) and South Korea the highest (54.8%). The study found that 22.8mn mt/yr of exported LNG would displace 3.3% of coal-fired electricity generation in China, with a net GHG reduction of 71.4mn mt/yr of CO2e.

Given the relatively small impact on Chinese coal-fired generation, significantly increased LNG exports would cut emissions further, it concluded.

Debating points

The study worked on a 100-year emissions timeframe, which would be questioned by many environmental organisations. Using this timeframe reduces the impact of methane emissions, which have a much higher global warming potential over shorter time frames. And, as LNG is methane, this has consequences. A 1.5°C pathway requires net zero carbon economies by 2050, not 2123.

In addition, the study was focussed on LNG exports from the US West Coast, which for a variety of reasons have not materialised. US LNG export projects have been built on the US’ Gulf and Atlantic coasts. The only west coast LNG export projects in North America are still under construction, but are in Canada and Mexico. As a result, the longer logistics chains to Asia for US LNG would need to be taken into account.

Given the nature of lifecycle emissions assessments, there are, no doubt, other issues which could be raised with the study. 

PPI policy briefing

In January this year, a policy brief, The Climate Case for Expanding US Natural Gas Exports, was published by the US-based Progressive Policy Institute (PPI). It pulls together a number of studies and findings to make the case for expanded US LNG exports as a climate tool.

It also melds the climate case with security of supply concerns, arguing that US LNG has significantly lower GHG emissions than Russian gas. It argues that Russia will redirect gas formerly destined for European markets to Asia, but that this will have few if any climate benefits.

Principally, it says lifecycle emissions from LNG need to be seen within the context of coal use. Global coal-fired generation is not falling. It hit an all-time high in 2021, pushing CO2 emissions from coal power plants to record levels. The International Energy Agency (IEA) reported in December that global coal use increased again in 2022, by an estimated 1.2%, surpassing 8bn mt/yr for the first time.

The conclusion the PPI draws is that current climate policies are not having a sufficient impact and that new policies need to be adopted.

The PPI focuses more directly on the issue of the short-term impact of methane emissions, arguing that the climate benefits of US LNG must be maximised by aggressive reductions in fugitive emissions of methane in the LNG supply chain. Citing the IEA’s Methane Tracker it also notes the vast methane emissions which result from China’s mammoth domestic coal mining industry. The gas industry has long argued with justification that the upstream GHG emissions from coal are underestimated and have not received as much scrutiny and indeed measurement as up and downstream gas operations.

The briefing said that US LNG delivered to China has at least 30% lower lifecycle GHG emissions than Chinese coal and that a similar industry study found a 48% emissions reduction. The first figure is a self-reference to a study by the same author conducted in 2022, and the second to a study by the American Petroleum Institute, entitled Study: New Lifecycle Analysis of US LNG Exports, as such, neither are likely to sway opponents of LNG.

It also cites EQT, the largest natural gas producer in the US, which argues that a fourfold increase in US LNG capacity by 2030 to displace coal-fired power in Asia and Southeast Asia could reduce global CO2 emissions by an incremental 1.1bn mt/yr. Again, same problem.

Counter narrative

There is, of course, a counter narrative. Many environmental groups see the ‘climate case for LNG’ as self-interested lobbying on the part of the gas industry.

The National Resources Defence Council (NRDC), for example, published the study, Sailing to Nowhere: LNG is not an effective climate strategy, at the end of 2020. It argues that LNG is neither clean nor particularly low in emissions and that the massive investments required to support the industry will lock-in fossil fuel dependence, making the achievement of climate targets near impossible.

However, the figures it cites make interesting reading. It focuses on the short-term impact of methane emissions, over the next 20 years, rather than adopting a 100-year time frame. It says: “the near-term climate effect of LNG is close to that of coal, just 27% to 33% lower.”

Can a reduction of 27%-30% on a near-term timeframe really be considered “close to coal”?

The numbers show at least that there is some agreement that LNG exports can result in lifecycle GHG emissions reductions, if they displace coal-fired generation.

The well-documented success in terms of emissions reductions of coal-to-gas switching in both Europe and the US are also highly persuasive. The US Energy Information Administration produced data last year, for example, which shows that the majority of GHG emissions reductions in the US – 61% in the period 2005-2020 -- came directly from the expansion of natural gas use at coal’s expense.

It is not a stretch to argue that were gas more available in Asia, coal-fired generation would be on a similar long-term downward trend as in Europe and North America – the result of a powerful combination: renewables expansion and coal-to-gas switching.

But with gas scarce, Asian countries are fighting emissions with one hand tied behind their backs.

LNG is not clean

As the NRDC study points out, LNG falls far short in terms of emissions when compared against renewable energy technologies such as solar and wind. And, it is also clear that LNG does not have a role in a net zero carbon world, unless accompanied by major investments in emissions abatement and a ruthless focus on eliminating methane leakage at all stages of the value chain. A 30% reduction in emissions – taking the lower NRDC figure -- is significant, but so too is the residual 70%.

As such, the argument is really about renewables’ capacity to expand faster, and whether investment in LNG detracts from the expansion of cleaner technologies.

The NRDC’s comparison with renewables is perfectly valid. They are, of course, much cleaner than any fossil fuel. It seems, if you are anti-LNG you compare the fuel with wind and solar; if you are pro-LNG you compare it with coal and oil.

However, LNG does need to be viewed within the context of the wider hydrocarbon complex because that complex still provides the majority of the world’s energy. It might seem counterintuitive to encourage investment in LNG, when the aim is to reduce emissions, but if that investment undermines spending on coal use, it is valuable. LNG spending, in the coal-to-gas switching context, detracts from investment in the coal industry.

It is perfectly possible to see a scenario in which overall investment in fossil fuels contracts, but LNG investment increases. There should be no breaks on clean energy investment, but equally it makes no sense to hold back an industry which offers substantial GHG emissions reductions in the near term. The simple fact is that coal use is still so large – and still growing – that all options need to be mobilised to reduce its climate impact over the next 30 years.