Asian Renewables Key to LNG Emissions Cuts: WoodMac
Using renewable energy to power LNG plants in Asia Pacific could reduce emissions by about 8%, said Wood Mackenzie in a note published on August 17.
Asia Pacific produces over a third of the world’s LNG, but also generates over 50mn metric tons (mt) of carbon dioxide equivalent (MtCO2e) of emissions during liquefaction, WoodMac said. Australian LNG projects account for over half or 29 MtCO2e of liquefaction emissions from LNG projects in the region.
Many of Asia Pacific’s LNG facilities are in remote areas, far from the power grid. As a result, feedgas is used to generate electricity to run the plant and fuel the liquefaction process. Typically, 8% to 12% of feedgas is consumed at the plant to run these processes. Older, more inefficient plants, as well as nascent floating LNG vessels operate with far higher losses, WoodMac said.
Wood Mackenzie senior specialist Jamie Taylor said there were three main decarbonisation levers to help cut emissions at LNG plants: operational efficiency, design changes, and the use of renewable energy, which could be sourced from the grid or generated onsite.
Feedgas is used to fuel gas turbines to generate electricity to power the plant. Replacing these gas turbines with electricity could greatly reduce emissions, assuming the grid power is less carbon intensive, it added. The other option is to install on-site renewable power, in particular solar.
“If a solar plant or a hybrid solar plus battery storage plant is installed at the LNG facility, back-up generators could be switched off and renewable electricity could be used to meet the power load. As costs continue to decline and technology improves, renewable plus battery storage could become an alternative in the future, especially for new LNG plants,” Taylor said.
Australian LNG plant operators are examining ways to reduce carbon emissions throughout the value chain. Initiatives are underway at the upstream assets supplying the North West Shelf and QCLNG, and Darwin LNG has installed a battery that reduces the need to run one of the gas turbines, Taylor added.
“Our analysis shows that installing renewable energy generation could reduce emissions at Asia Pacific’s LNG plants by 8% in 2020 alone.”
The biggest driver for decarbonisation is the potential for carbon tax or tighter regulations in both exporting and importing countries. This would significantly impact the already strained project economics post oil price crash.
“A carbon tax is likely to be the biggest driver for LNG projects to switch to renewable energy at the plant or deploy carbon capture and storage to reduce emissions from upstream gas, or both,” Taylor said. “Using less feedgas as a fuel would result in more gas being available to supply either the domestic market or be converted into LNG for exports. Rather than increasing annual LNG output, which would only be possible by debottlenecking the plant, this ‘saved’ gas would be used to extend the plateau LNG production level by a few years. Revenues associated with the resulting extended plateau could reach into several billion dollars longer-term.”
Australia Pacific LNG for example is installing 60 MW of solar in 2020 at a cost of $60mn, increasing the remaining value of the project by $62mn. “This is due to the additional revenues generated from selling the ‘saved’ feedgas. The relative benefits of installing solar are increased further when a carbon tax is considered.”