Editorial: Challenges and opportunities in 2021 [LNG Condensed]
Methane is a greenhouse gas and a much more potent one than carbon dioxide, particularly when measured on a short-term basis. The usual 100-year time-scale for measuring greenhouse gases’ (GHG) impact is somewhat arbitrary and net-zero carbon targets cluster around 2050, which is more in line with short-term GHG impact assessments.
Regulatory Action
|
Advertisement: The National Gas Company of Trinidad and Tobago Limited (NGC) NGC’s HSSE strategy is reflective and supportive of the organisational vision to become a leader in the global energy business. |
Regulation is coming. Towards the end of last year, the EU published a methane strategy, which initially focuses on improvements in measurement, reporting and verification for all energy-related methane emissions. Better measurement is the first step towards increased regulation.
In addition to mandatory measurement and reporting, improvements in leak detection and repair of leaks might be made obligatory on all fossil gas infrastructure. The European Commission (EC) will also consider the need for legislation on eliminating routine venting and flaring in the energy sector covering the full supply chain up to the point of production.
Internationally, the EC hopes to develop a methane supply index, work which would fall to its proposed international methane emissions observatory. Although not yet under consideration, measurements and indices could make possible the application of something similar to the proposed Carbon Border Adjustment Mechanism for methane emissions, which would have a clear impact on LNG projects by putting a price on the methane intensity of their supply chains.
The International Energy Agency is also promoting the case for methane regulation, arguing that it is among the most cost effective and impactful actions governments can take to achieve climate change targets. The agency estimates that the oil and gas sector emitted 70mn metric tons (mt)of methane in 2020, which accounts for just over 5% of global energy-related GHGs.
To stay in line with the IEA’s Sustainable Development Scenario, these methane emissions need to drop to 20mn mt/year by 2030, a goal which the agency says is technically possible.
LNG Bunkering
The second major development of 2021 will be a jump in demand for LNG as bunker fuel, refl ecting the number of new LNG bunker vessels deployed over the course of 2020 and 2021, and the delivery of more LNG-fuelled vessels.
The real change in 2021 is the average size of these vessels as more LNG-fuelled crude tankers, ultra large container ships, gas carriers and cruise ships come into operation. While the number of LNG fuelled vessels is expected to roughly double over the next five years, in tonnage terms the increase is fi ve to six times.
While there is no question about LNG’s benefits in terms of reducing toxic air pollution, various studies on life-cycle emissions reductions give a mixed picture when it comes to GHGs, varying from no benefi t at all to up to around 20%, largely as a result of methane emissions along the supply chain as well as the way in which vessels are operated.
This is where the two issues come together. The LNG sector risks retarding the development of a key growth market, if it fails to take a leadership role in addressing methane emissions.
Possibilities such as the use of renewably-generated electricity for compression rather than gas-fired generation units at liquefaction plants, forestry and other offsets, carbon capture and storage, supply chain methane leakage reductions and the introduction of bio-LNG blends all have a knock-on effect in terms of improving the prospects for the uptake of LNG in transport, both on sea and land.
LNG is currently positioned as a transition fuel, and in some quarters not even that, but to improve its lifecycle GHG emissions profi le is to extend the longevity of its relevance in the energy transition.
LNG Condensed magazine is available exclusively to NGW Premium Subscribers. You can subscribe to NGW Premium here.