Op-ed: “If we want to reduce methane emissions, we should favour pipeline gas over LNG” [GasTransitions]
The European Commission’s approach to natural gas and its role in reducing Europe’s greenhouse gas emissions lacks coherence. On the one hand, the Commission’s officials criticize the presumably high share of natural gas in Europe’s energy mix. “If we really want to go to a net carbon economy by 2050, we cannot achieve it with a high share of natural gas as we have it today,” said Klaus-Dieter Borchardt, Deputy Head of Cabinet at the European Commission, addressing the European Gas Conference in Vienna in January 2020.
On the other hand, the EU keeps advocating for liquefied natural gas (LNG) as a preferred fuel for Europe, despite the challenges over its high emissions. Last year, EU Energy Commissioner Kadri Simson promoted LNG as “a way of securing our energy security”, ensuring “that our gas supplies will come from diversified sources”. She confirmed that there will be “investment for accommodating those routes – and there are ongoing investments right now in Krk in Croatia and also extensions in the Baltic Sea LNG terminal in Poland.”
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If natural gas is to be an inherent part of the EU energy transition, as the Commission seems to want, then the climate impact of different gas supplies should be a key criterion in its energy policies. The problem with LNG is that it is much more greenhouse gas-intensive than pipeline gas.
Oil and gas industry’s methane output in context
Methane is the most powerful greenhouse gas. In meeting global greenhouse gas reduction targets and the Paris commitments, methane emissions reduction plays an important role. In the European Green Deal, the need to reduce methane emissions, has been identified as one of the areas that shows the best potential to boost the transition to a clean energy system.
Roughly 60% of total global methane emissions come from human activity, and the other 40% occur naturally. The biggest sources of anthropogenic methane emissions are agriculture (44%) followed by waste and fossil fuels (estimated at 24% of anthropogenic emissions).
In this context an important step is to find out the ‘methane footprint’ of LNG and pipeline gas. A report published by Germany’s Federal Institute for Geosciences and Natural Resources (BGR) compared different studies on methane leakage of gas supplies arriving in Germany. According to an article on the website Clean Energy Wire, BGR’s geologist Stefan Ladage said that “looking at the compiled literature in our study, methane emissions along the value chain from U.S. LNG are higher than those from Dutch or Norwegian pipeline gas, as well as Russian pipeline gas – bearing in mind that data availability is not as good in Russia”.
Wood Mackenzie, which also investigated the issue, concluded that “associated with LNG production are significantly higher than those for pipeline gas projects”. The consultancy, although stressing that direct comparisons between LNG and pipeline gas are not entirely fair, nevertheless estimated that losses along the LNG value chain can account for “more than 12-13 per cent of… gas produced at wellhead” compared to “less than 1 per cent for a typical pipeline project”.
Consultancy Thinkstep published a study in 2017, “GHG Intensity of Natural Gas Transport”, which found that the greenhouse gas emissions of LNG delivered to Central Europe are 2.4 – 4.6 times higher (depending on country of origin with Algeria being the closest and the Australia being the farthest) than emissions from pipeline deliveries via the Nord Stream 2 pipeline.
On the other hand, a 2019 report published by the U.S. Department of Energy’s National Energy Technology Laboratory claimed US LNG has a lower greenhouse gas footprint not only when compared to coal or other LNG supplies but also compared pipeline gas from Russia’s Yamal peninsula. However, this assessment was based on the low-emitting Appalachian shale province and not on the Permian in Texas.
An article published by Science in April 2020 found that methane emissions from the Permian Basin are “more than two times higher than bottom-up inventory-based estimates” and represent 3.7% of the gross gas extracted in the Permian. This is 60% higher than the national average leakage rate.
Unconventional gas production, from which U.S. LNG is derived, is thought to be the major source of greenhouse gas in general and methane emissions in particular. Robert Howarth from Cornell University estimated in 2019 that “shale-gas production in North America over the past decade may have contributed more than half of all of the increased emissions from fossil fuels globally and approximately one-third of the total increased emissions from all sources globally over the past decade”. Howarth also stressed that “a full life cycle of 3.5% (methane) emissions from shale gas over the past decade is quite plausible and perhaps even low”.
All these numbers are significantly higher than what is found inside Europe or among key pipeline exporters shipping natural gas to the European Union, where the industry has a good track record of keeping fugitive emissions under control. According to the Annual European Union greenhouse gas inventory 1990–2017 and inventory report 2019 methane missions from natural gas accounted for only 0.5 % of EU-28 greenhouse gas emissions. In addition, fugitive emissions from natural gas decreased by 37mn metric tons of CO2 equivalent between 1990 and 2017 as the European gas industry took steps to reduce its methane footprint.
Furthermore, a 2019 report by Gas Infrastructure Europe (GIE) and Marcogaz, found that super-emitters, i.e. specific points in the system that are responsible for disproportionately large volumes of gas leakage, have not been identified in the EU gas sector, unlike in the U.S.
The companies exporting gas to the EU also have made some steps towards methane emission reductions and climate neutrality. For example, methane intensity of Norwegian energy company Equinor was around 10% of the industry average, according to the annual report released by Oil and Gas Climate Initiative in 2018.
In 2016, Equinor carried out a study on methane leaks from Norwegian gas delivered to customers in the UK and Germany showing that they were below 0.3%, compared to 0.6% average for the gas distributed and consumed in Europe.
Europe’s largest supplier Gazprom also took some steps to reduce methane leakage and the company’s carbon footprint. In its 2018 Environmental Report, whose data were vouched for by KPMG, the Russian gas company stressed it has a low methane footprint comparable to the best performers in Europe.
Measuring methane – devil is in the details
The discussion around methane leakage data is far from over, as some stakeholders question existing data. For example, research compiled by the Environmental Defense Fund (EDF) showed that methane leaks in the U.S. are 60% higher than the estimates made by the Environmental Protection Agency (EPA). On the other hand, a report released in May 2020 by the Atlantic Council questions the reliability of Russian data and stresses that “supplier with poor carbon emissions transparency, like Russia, should be mandated to improve their tracking and verification practices if they are to be compared accurately to other natural gas exporters.”
As part of the Green Deal, the EU now wants to step up efforts to reduce methane emissions for the entire supply chain.It wants to have more reliable data, with the help of satellite measurements, and improved reporting standards.
Given that methane leakage is a (largely) avoidable emission source, this is of course a step in the right direction. But the devil as so often is in the details. There are a number of questions that need to be addressed:
- How will the EU’s measurement standards deviate from what is currently in use in different countries? How will this affect reporting to the UN in the context of the Paris Agreement?
- Will countries attribute emissions to specific producers or will they report on nationwide data? Will they distinguish between oil and gas production? Will they distinguish between different sources of gas, including LNG and pipelines gas? Will they assess each LNG tanker or pipeline individually?
- How will bottom-up assessment (per installed piece of equipment, extrapolated to the full system) be integrated with top-down estimates (via satellites)?
- How can satellites distinguish between different emissions sources, both natural (bogs, thawing permafrost) and anthropogenic, if they occur in the same location?
All these and other technical questions will need to be addressed and discussed between consuming and producing countries. It is important that the EU actively takes up these issues in cooperation with the United Nations and with the producers and consumers, to make sure the measures will be scientifically sound, effective and supported by all sides.
Conclusion: ambiguous policy risks EU’s credibility
Gas companies in the EU and its immediate neighbourhood are not in the list of the largest methane emitters and appear ready to embrace a new European energy reality and further reduce their carbon footprint.
All sides, European utilities, traders, infrastructure operators and the exporters of LNG and pipeline gas should have the same goal here – ensuring the sustainability of gas deliveries to Europe. After all, the methane issue damages the reputation of natural gas as a way to replace a more polluting fuel, coal.
Given the EU’s obvious preference for LNG and LNG’s obvious climate disadvantage compared to pipeline gas, one must ask whether the discussion around methane emission reductions will somehow be used to play favourites. Last time the Directorate-General of Energy amended regulation under the guise of harmonizing the rules (applicable to offshore gas import pipelines), the outcome was clearly meant to address only one single project (Nord Stream 2), reflecting the EU’s geopolitical preferences rather than any real need to iron out market distortions. If the EU’s methane approach is abused as another lever for the EU to disadvantage specific producers and to insert geopolitics into the market, the credibility of EU energy and climate policies as a whole is at risk.
Disclaimer: the opinions expressed in this article solely reflect the views of the author, not of his organization nor of Gas Transitions or Natural Gas World