How LNG can deliver global emissions cuts

Charles Ellinas

LNG has a critical role to play in the global energy mix until at least 2050 and likely beyond. With global energy markets shaken by the Russia-Ukraine conflict, interest in LNG as a secure and highly flexible energy source has grown further. This ever-increasing demand is outpacing available supply and is feeding a massive expansion in LNG facilities, both for liquefaction and regasification.

A plethora of scenario-based assessments (see figure 1) show global natural gas demand, including LNG can vary over a wide range, from 1 to 6 tcm in 2050. But broadly, these scenarios can be divided into two categories:

• Those that show how things could evolve if current trends continue. In effect, these are forecasts based on where the world was in 2022 and where these known trends and policies could lead, without assuming a possible outcome.

• Those that show how the world must move to achieve net-zero by 2050. They start with a desired outcome, limiting global warming to 1.5°C by 2100 and achieving net-zero emissions by 2050, and work backwards to the realities of 2022. In effect, they are backcasts, attempting to determine what needs to be done to achieve the end result

Broadly, forecasts show gas demand by 2050 will vary in the range of between 3.5 and 6.0 tcm. The backcast range is 1.0-2.5 tcm.

Of course, neither of these two types is right or wrong or predict what may actually happen. Over the short-tomedium term, though, forecast-type scenarios are likely to be more correct. These show gas demand will continue exceeding 4 tcm in 2040, similar to current levels.

But at some stage, the world is expected to switch

Figure 1: Natural gas demand to 2050 according to scenario-based assessments

from where it appears to be headed towards a lowercarbon future. When this happens natural gas demand will lose market share, but will not disappear. It will still play an important role.

Why is this important? Gas – and LNG – is shown by most credible scenarios to play an important role in global energy demand all the way to 2050 and beyond. It continues to be used by industry, but also as a fuel for heat and to support power generation as intermittent renewables take an increasing share of the load.

Natural gas – and LNG – is preferable to coal and oil as it produces much less emissions. About 40-50% less CO2 than coal and 30% less than oil. It does not emit particulates and emits insignificant amounts of other harmful substances in comparison to coal and oil.

LNG is essential for energy transition

With global energy demand rising, the goal of the energy transition is to deliver reliable energy while reducing emissions. This can be best achieved by combining LNG and gas with renewables, with gas/LNG replacing coal. With energy security propelled to the forefront as a result of the Russia-Ukraine conflict, the world is increasing the share of LNG vis-a-vis piped gas, with its share expected to more than double by 2040.

Solar and wind energy generation systems are intermittent, generating electricity only when the sun is shining or the wind is blowing. There is a lack of commercially viable options to store large amounts of electricity for long periods of time to compensate for cloudy and windless periods. As a result, as the contribution to energy from variable renewables increases, so does the need for natural gas and LNG.

Power generation based on natural gas offers the reliability, flexibility and increased dispatchability –ability to control output – that complements intermittent renewable energy power generation, especially when it replaces coal.

In addition, the technologies required to completely replace all uses of fossil fuels in other sectors, such as industry, transport and heating, are still decades away.

As long as fossil fuels are needed, switching from oil and coal to gas and LNG, where possible, is the most effective and immediate way to minimise greenhouse gas (GHG) emissions (see figure 2). With nearly 40% of electricity globally still generated using coal, there is ample opportunity to reduce emissions by switching to natural gas and LNG. The G7 energy ministers placed particular emphasis on the phase-out of coal from power generation at their meeting in Japan on April 16.

They reaffirmed their “commitment to achieve a fully or predominantly decarbonized power sector by 2035, and prioritising concrete and timely steps towards the goal of accelerating the phase-out of domestic unabated coal power generation.”

The case for LNG can be strengthened further when combined with carbon capture and storage (CCS) to manage emissions. For these reasons, LNG is essential to providing reliable, flexible and stable energy supplies during energy transition and to the drive to reduce emissions.

LNG as a marine fuel

With the marine industry under pressure to reduce emissions, LNG is becoming increasingly important in shipping, as it emits about 25% less CO2 than conventional marine fuels in providing the same amount of propulsion power. This has been recognised in recent years, with the adoption of LNG as fuel increasing, especially in newbuild ships. This helps meet regulatory requirements, reduce emissions and improve air quality. With less than ten years to achieve the target to reduce GHG emissions by 40% by 2040, set by the International Maritime Organisation (IMO), LNG is becoming the fuel of choice to support decarbonisation. Tackling LNG’s emissions footprint will be important to ensure its role in shipping. This requires the ability to track and optimise emissions across the supply chain.

Addressing methane emissions

Emissions of methane during oil and gas production and transportation contribute between one fifth and one eighth of the methane emissions from human activity, and methane is a serious contributor to climate change.

Methane is 28 to 36 times more potent than CO2 over 100 years, and 80 times more over 25 years. Driving down global emissions of methane represents a great opportunity to reduce the short-term climate warming.

Natural gas and LNG are clean fuels that can serve as partners to renewables during transition, but if there are methane leakages and emissions this claim is challenged. Minimising these should be a first order priority for all companies. Gas and LNG can be part of the solution only if they deal with methane emissions effectively.

The European Commission’s methane strategy aims to increase the regulatory pressure and requirements to monitor, report, and verify methane emissions to enable effective compliance with reduction targets.

The G7 energy ministers too placed particular importance on this. They said “We will work with the relevant stakeholders to develop an internationally aligned approach for measurement, monitoring, reporting, and verification of methane and other GHG emissions to create an international market that minimises GHG emissions across oil, gas, and coal value chains, including by minimising flaring and venting, and adopting best available leak detection and repair solutions and standards. This internationally aligned approach would aim to improve the accuracy, availability, and transparency of emissions data at the cargo, portfolio, operator, jurisdiction and basin level, including consideration of accepted protocols and tools such as independent verification that can support robust data collection and reporting. We will also support the development of policies, measures, and industry efforts to reduce methane and other GHG emissions from fossil energy Re: IGRC2024 presence at LNG2023 production, consumption, and international trade.”

Around 150 countries have also now joined the Global Methane Pledge, which aims to reduce methane emissions from all human activity by 30% from 2020 levels by 2030.