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    LNG 'Key to Net-Zero Carbon World': Shell


As more countries sign up to the lower carbon future, coal and oil will give way to gas in power and transport sectors.

by: William Powell

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LNG 'Key to Net-Zero Carbon World': Shell

More than half of future LNG demand will come from countries with net-zero emissions targets, according to estimates used by Anglo-Dutch major Shell. Last year, Japan and South Korea announced net-zero emissions targets, while the European Union also aims to cut its net emissions to zero, along with many of its oil companies.

To meet its net-zero target, South Korea aims to switch 24 coal-fired power plants to cleaner-burning LNG by 2034. Germany is planning to phase out its lignite and coal plants altogether but with a 2038 deadline.

By 2040 Shell sees demand globally at 700mn metric tons/year, almost double 2020 demand. About three quarters of the additional volume will come from Asia as domestic gas production declines and LNG substitutes higher emission energy sources, tackling air quality concerns and meeting emissions targets, it said.

Launching its annual LNG outlook February 25, it said the industry "will need to innovate at every stage of the value chain to lower emissions and play a key role in powering hard-to-abate sectors."

Global LNG trade rose to 360mn metric tons (mt) in 2020 which, "though marginal [2019 demand was 358mn mt] ... reflects the resilience and flexibility of the global LNG market," it said. However, given that India and China each saw 11% increases, demand elsewhere fell.

Gross domestic product shrank by "several trillion dollars as economies large and small struggled to contain the Covid-19 outbreak." 

Shell's director of integrated gas, and renewables Maarten Wetselaar said: "Around the world countries and companies, including Shell, are adopting net-zero emissions targets and seeking to create lower-carbon energy systems. As the cleanest-burning fossil fuel, natural gas and LNG have a central role to play in delivering the energy the world needs and helping power progress towards these targets.”

Natural gas emits between 45% and 55% fewer greenhouse gas emissions and less than one-tenth of the air pollutants than coal when used to generate electricity.

China and India led the recovery in demand for LNG following the outbreak of the pandemic. China increased its LNG imports by 7mn mt to 67mn mt. Its stated aim of carbon neutrality before 2060 is expected to support LNG demand through the key role gas can play in decarbonising hard-to-abate sectors, namely buildings, heavy industry, shipping and heavy-duty road transport.

India increased imports by 11% in 2020 as it took advantage of lower-priced LNG to supplement its domestic gas production.

Demand in Europe, alongside flexible US supply, helped to balance the global LNG market in the first half of 2020. However, supply outages in other basins, structural constraints and extreme weather later in the year resulted in higher prices.