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Carbon neutral or ‘green’ LNG: a pathway to the energy transition

Green LNG indicates either the reduction of GHG, or the offset of GHG emissions, linked to some, or all elements of the LNG value chain (source: GECF)
Green LNG indicates either the reduction of GHG, or the offset of GHG emissions, linked to some, or all elements of the LNG value chain (source: GECF)

For LNG to play its role in the energy transition, all stakeholders must get involved in reducing the CO2 emissions in the LNG supply chain, writes GECF Secretariat senior energy forecast analyst, energy economics and forecasting department, Dr Hussein Moghaddam.

As the cleanest-burning hydrocarbon, natural gas will continue to be in demand in the decades ahead. Estimates are demand will rise by 50% from 3,950 billion cubic metres (bcm) in 2019 to 5,920 bcm by 2050, according to the 2020 edition of the GECF Global Gas Outlook 2050.

In spite of that, meeting global targets for climate change mitigation remains our biggest challenge. Significant emissions are released through the combustion of gas to drive the liquefaction process, while any carbon dioxide (CO2) detached before entering the plant is frequently emitted into the atmosphere. Subsequently, investors, regulators, and customers exert mounting pressure on the gas industry, as it needs to do more to accomplish climate objectives and focus on reducing emissions.

More than 120 countries have already developed a climate risk strategy that sets targets to reduce greenhouse gas emissions (GHG) to net zero by 2050. As natural gas has a central role to play in mitigating carbon emissions, LNG producers have started to look for ways to minimise or counterbalance their carbon footprints, thus ongoing LNG decarbonisation efforts are likely to expedite. Accordingly, top LNG producers, traders, and consumers have indicated their plans to decarbonise the LNG supply chain. This is being done in two ways: by offsetting emissions from individual cargoes retrospectively, as well as by building low-emissions liquefaction terminals. As a result, the term ’green LNG’ has appeared as a new product within the LNG industry.

Carbon-neutral or ‘green’ LNG

The carbon neutral or green LNG market is an emerging prospect whereby green indicates either the reduction of GHG, or the offset of GHG emissions, linked to some, or all elements of the LNG value chain – from production of upstream gas and pipeline transportation, to liquefaction, transportation, regasification and downstream utilisation of natural gas.

Companies in the LNG value chain can diminish GHG emissions in numerous ways. For instance, by using biogas as feedstock; by decreasing emissions from upstream, pipeline, and liquefaction facilities; by applying renewable energy to power their liquefaction plants; respectively, by using carbon capture, and storage (CCS), or carbon capture, utilisation and storage (CCUS) technologies by re-injecting CO2 into the subsurface after it has been detained during the processing of the feed gas before liquefaction.

Therefore, it should be taken into account that carbon-neutral does not mean the LNG cargo generates zero emissions, rather that LNG sellers can counterbalance their GHG emissions by obtaining offsets to compensate for all or part of their GHG emissions or the utilisation of carbon credits, which reinforce reforestation, afforestation or other green projects.

It is worth nothing that last year the leaders of the G20 endorsed the concept of the circular carbon economy (CCE) and the GECF is the part of this process. The CCE aims to include a wide range of technologies such as CCS/CCUS as a way to promote economic growth and to manage emissions in all sectors.

Applying a combination of strategies

By contrast, Qatar Petroleum (QP) applies a combination of strategies to reduce its emissions. Its future LNG production will be low-carbon based, as QP is building a CCS facility alongside its 126 mta liquefaction capacity expansion by 2027.

As part of its new sustainability strategy, QP has announced that its aim is to reduce the emissions intensity of its LNG facilities by 25% by 2030. The capture and storage of CO2 from its LNG facilities of about 7 mta by 2027 is another goal. Furthermore, QP aims to drop emissions at its upstream facilities by at least 15%, as well as cut flaring intensity by over 75% by the end of this decade. Additionally, by 2030, QP is attempting to abolish routine flaring, and by 2025, the Qatari energy producer would like to minimise fugitive methane emissions along the gas value chain by establishing a methane intensity target of 0.2% over all of its facilities.

In certain supply contracts, QP is incorporating environmental considerations. In November 2020, QP signed the first long-term deal with “specific environmental criteria and requirements”, which was designed to minimise the carbon footprint of the LNG supplies with Singapore’s Pavilion Energy, and to provide 1.8 mta of LNG over a 10-year period.

In order to fulfil the objectives of decreasing GHG emissions, CCS is being used in Australia. Chevron, operator of 15.6 mta Gorgon LNG offshore Western Australia, has injected more than 4M tonnes of CO2 in the CCS facility since its commissioning in August 2019.

Meanwhile, Novatek has embraced a long-term methane emissions reduction target in Russia. By 2030, plans call for methane emissions to be reduced by 4% in the production, processing and LNG segments. Moreover, Novatek aims to decrease GHG emissions per tonne of LNG produced by 5%. In this regard, Novatek and Baker Hughes, which provides engineering and turbomachinery at Yamal LNG, signed an agreement to introduce hydrogen blends rather than solely running methane from feed gas into the main process for natural gas liquefaction to reduce CO2 emissions from Novatek’s LNG facilities.


Bio-LNG will have a significant role in the coming years to fuel heavy road and water transport in the Netherlands. The construction of the first Dutch bio-LNG installation was launched in Amsterdam last November.

Waste management company Renewi, Nordsol (which processes the biogas into bio-LNG) and Shell (sales of bio-LNG at its LNG filling stations) have developed this project. Biogas is made up of roughly 60% methane and 40% CO2. An additional CO2 cutback takes place due to the recycling of the CO2 by-product in the market, which results in a 100% CO2 neutral fuel.

Inpex, which is Japan’s biggest oil and gas producer, has recently disclosed its strategy to become a CO2 net-zero company by 2050 by developing its renewable and hydrogen energy together with the utilisation of carbon capture technologies. In October 2020, Japan set a target to become carbon-neutral by 2050.

Two major LNG importer regions, namely Asia-Pacific and Europe, have already set policies regarding long-term decarbonisation targets. It is worth noting that most of the carbon-neutral LNG cargoes have been supplied by companies in Asia to a certain extent, where carbon policies and investor pressure are fairly fragile.

According to the 2020 edition of the GECF Global Gas Outlook 2050, LNG imports to Asia are forecast to increase to about 800 bcm (585 mta) by 2050, accounting for 71% of global LNG imports. As a result, the region will be the engine for global LNG demand growth. As concerns with air quality rise in numerous Asian countries, the most realistic solution to attain a decarbonised society and minimise the level of CO2 on a global scale, is the combination of natural gas and renewable energy. Emissions and cleaner-burning fuels are going to be the centre of attention.

Europe could be the predecessor for carbon-neutral LNG in the long term, by sticking to its new methane strategy, which was revealed by the European Commission (EC), and in accordance with their 2050 carbon-neutral goal. Importantly, the EC suggested LNG producers engage with their international partners to explore possible standards, targets, or incentives for energy supplies to the EU.

Source: GECF
Source: GECF

Who pays for green LNG production?

An LNG seller will probably need to diminish and offset GHG, which emphasises the need for robust offset markets to be completely carbon-neutral through the entire LNG value-chain.

Accordingly, this highlights challenges for legacy LNG projects with limited means to decrease carbon, making them dependant on expensive market mechanisms. LNG producers have to keep the balance between the competitive fuel pricing and the expensive emissions reduction initiatives. Therefore, the question of who pays the additional costs to produce green LNG is yet to be decided.

As noted, the balance of carbon emissions is feasible for any LNG facility and can lead to carbon-neutral LNG cargoes. However, this is probably not a sustainable long-term process and does not directly cope with the project’s emissions.

GECF proposes that both sellers and buyers contribute to achieving emissions targets. The discussions with respect to these issues should involve all LNG industry players, such as sellers, buyers, traders and policymakers. A more focused perspective that targets minimising emissions in upstream and liquefaction might be more feasible for LNG producers. This will align with their ongoing efforts to reduce their carbon footprints which are coming under increasing scrutiny from the public and investors.

In conclusion, as LNG demand keeps expanding, the demand for green LNG will grow as well. Green LNG can help ensure that natural gas continues its role as a crucial part of the energy mix, supporting climate goals over the energy transition period.

As stated in the 2019 Malabo Declaration at the 5th GECF Summit of Heads of State and Government in Equatorial Guinea, the GECF member countries reiterate the strategic role of the development, deployment and transfer of advanced technologies for more effective production, and the utilisation of natural gas to enhance its economic and environmental benefits.

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