Carbon-neutral LNG needs greater transparency: IEA
LNG carbon offset mechanisms would benefit from greater transparency and a standardised system for monitoring, reporting and verifying the greenhouse gas (GHG) emissions of the cargoes, the International Energy Agency (IEA) said in its latest quarterly Gas Market Report published on July 5.
LNG cargoes can be counted as carbon or GHG neutral if the parties involved in the deal cover the resulting emissions by obtaining certificates generated from projects that reduce or avoid such emissions. They have grown in popularity in recent years although they still account for a minuscule share of global LNG trade, with only 15 such deliveries announced in the past two years, according to the IEA.
Shell is the most active trader of carbon/GHG neutral cargoes, selling six shipments since July 2019 and buying another three.
The European Commission is set to present legislative proposals for a compulsory MRV system for methane emissions from the energy sector later this year. But companies are also making progress in this area, the IEA said, with Singapore's Pavilion recently awarding two contracts with obligations to quantify GHG emissions associated with each LNG cargo.
US exporter Cheniere meanwhile plans to provide GHG emissions data on each of its cargoes starting in 2022. As part of this effort, it is working with other companies and academic researchers to quantify the methane emissions of an LNG carrier on a round trip from the US Gulf Coast to Europe.
Tokyo Gas and 14 other Japanese companies meanwhile announced in March they would establish a Carbon Neutral LNG Buyers Alliance to promote the trade of carbon-neutral LNG.
Reducing GHG emissions associated with LNG will "require effort through the entire value chain," the IEA said. The upstream segment typically accounts for 10-25% of well-to-use emissions, the Paris-based agency said, and this is where carbon capture utilisation and storage (CCUS) can be deployed. Operators can also mitigate methane emissions through better leak detection and repair work, reduced venting and the electrification of compressor stations, it said.
The liquefaction process is responsible for a further 6-10%, and powering facilities with renewable sources can reduce this significantly. CCUS solutions can also help here.
Shipping accounts for a further 5-10%, and the focus here should be on better fuel efficiency and enhanced boil-off management systems, the IEA said. Regasification contributes 1-3%, and solutions include enhanced boil-off recovery, low-carbon electricity sourcing and the elimination of methane venting and leaks.
The lion's share, 60-80%, is from end-use combustion. But the quantity can be reduced by improving the efficiency of power plants and once again deploying CCUS technology.