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Rystad Energy: US LNG to Asia for power generation expected to cut emissions vs coal

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LNG Industry,

The value-chain emissions of LNG are lower on average than for coal-fired power generation, even when the fuel is shipped over long distances, according to new research from Rystad Energy. Natural gas that is produced and liquefied in the US and shipped to Asia on return journeys of about 23 000 miles could emit up to 50% less than even the cleanest coal power plants. However, there are significant variations between US LNG sources, coal sources and types, and power plants, as well as uncertainties regarding methane emissions through both value chains.

Global natural gas production hit new highs last year – more than 4000 billion m3 – and further growth is expected throughout this decade. Many view LNG as a core component of the energy transition and a way to wean the world off heavier fuels, especially coal, but questions over the fuel’s total value-chain emissions persist.

To help answer these questions, Rystad Energy has assessed total potential emissions for coal-to-power and LNG-to-power value chains, including carbon dioxide and methane, from extraction to end-use in power plants. This research sheds light on the various factors, uncertainties, and challenges influencing total value-chain emissions of the two fossil fuels. The individual stages of the two value chains are detailed at the end of this release.

For this research, Rystad has focused on US LNG shipped to Asia, given the US’ dominant role in the global LNG market. By 2030, global LNG supply is expected to approach 850 billion m3 annually, around 30% of which will likely come from the US. Gas demand in Asian markets is expected to remain strong, and LNG will be a key competitor to coal in power generation.

Greenhouse-gas emissions from the energy sector are high on the agenda among governments, operators, and other stakeholders. From a carbon dioxide perspective, the coal value chain has a significantly higher emission footprint than LNG, primarily due to end-use emissions. However, when adding methane emissions, major uncertainties are introduced. Historically, methane inventories have generally been calculated using engineering-based factors, but recent developments in measurement technologies, such as satellite imagery, have improved the accuracy. New measurement technologies have revealed that methane emissions are likely higher than anticipated in the oil and gas and coal value chains. The enduring uncertainties in methane monitoring are the main reason for varying outcomes and conclusions in recent studies of gas and coal value-chain emissions.

Discussions around leakage rates from upstream and midstream infrastructure and the potency of methane as a greenhouse gas can lead to different conclusions on using natural gas as a transition fuel. One of the key challenges in assessing methane emissions in the LNG and coal value chains is the lack of granular and high-quality measurement data. Even though the trend is positive with respect to on-site monitoring and other measurement technologies like satellite sensors, most available methane emissions data is modelled based on generic equipment and component factors. Rystad Energy’s emissions data supplements reported and modelled emissions data with global satellite methane plume analysis. There are still uncertainties and limitations with satellite monitoring, however, for instance related to the detection threshold as smaller methane plumes are not registered by satellites with global coverage.

“Accurately quantifying emissions for any energy source is essential to understanding its full environmental impact. As the global focus swings towards methane emissions, and the wealth of credible data grows from more granular satellites and increased on-site measurements, the uncertainty within the methane data will begin to contract. With more data and measurement options for methane, consumers and buyers who want to ensure that gas cuts emissions compared to coal will be in a better position. With the introduction of emissions policies globally, such as methane regulations and potentially carbon border adjustment mechanisms, gas supplies from different sources could soon see price differences depending on carbon competitiveness,” said Patrick King, Senior Analyst at Rystad Energy.

Rystad Energy has created high-case and low-case scenarios for both LNG and coal emissions to illustrate the complexities of the evaluation. The low case for US-Asia LNG is an estimate of the lowest potential value-chain emissions, with upstream production in the Appalachian basin, processing at an electrified liquefaction plant, shipping through the Panama Canal to minimise sailing distance, and end-use power generation at an ultra-efficient power plant. The high case assumes upstream production and liquefaction at above-average emissions intensity, a shipping route avoiding the Panama Canal, and end-use power generation by a less-efficient gas turbine plant. For coal, the low case assumes domestically sourced, high-quality coal and a modern ultra-supercritical designed power plant. The high-case coal scenario assumes low-quality domestically produced coal supplying an inefficient and aging subcritical coal power station.

Most US-Asia LNG-to-power deliveries have a lower value-chain emission foot-print than domestic coal-to-power. This holds true even when assuming high methane leakage rates. There are, however, some Asian coal-power stations that could have lower value-chain emissions than some of the high-emitting LNG sources. For the high-case LNG scenario, leakage rates in the natural gas value chain would have to be above 4% to equal the low-case coal scenario emissions. However, several studies have revealed that methane emissions in the coal extraction process are much greater than previously thought, meaning actual leakage rates in the gas value chain would need to be significantly higher – potentially between 6% and 10% – for low-case coal to be favoured over high-case LNG from an emissions perspective. Most US LNG cargoes, however, are understood to be supplied by gas from basins with low methane emissions, like the Haynesville, and associated gas from large operators in the Permian basin, which tends to have substantially lower methane intensity than the worst performers.

For the LNG industry, it is vital for operators and other stakeholders in the value chain to reduce methane leakages and, in that way, widen the emissions gap between gas and coal. This would allow natural gas to play its most optimal role as a transition fuel when coal is being phased out. Increasing scrutiny of methane leakages, along with growth in methane monitoring and identification technologies, will help reduce methane emissions throughout the LNG value chain. On the other hand, coal-to-power, which is dominated by end-use combustion at less efficient power plants, has fewer and less impactful opportunities to crimp its value-chain emissions footprint. As a result, the LNG value chain will likely continue to increase its emissions competitiveness over time.

Most modern gas power stations use combined-cycle turbines, allowing for very high efficiencies with emission rates of typically less than 400g CO2/kWh – well below the 700g CO2/kWh at the best-performing coal power stations.

“Replacing more carbon-heavy fossil fuels with natural gas has often been stated as a mechanism to reduce carbon emissions. In electricity generation, for example, natural gas performs substantially better than coal-fired power stations for final end-use combustion. The full value-chain emissions are also set to come down as improved leak monitoring allows producers to better pinpoint measures to reduce emissions at the upstream and midstream stages,” added King.

The natural gas value chain begins with upstream production, followed by processing to separate liquids, remove impurities, and sweeten the gas, before it is transported to its destination. For LNG, the value chain continues to liquefaction, where the gas is cooled to less than -160°C and loaded onto LNG vessels as a liquid. At the end destination, the LNG is converted back into a gaseous state at a regasification facility before being charged and sent into the importing country’s natural gas grid.

The value chain for coal is highly dependent on the end-use purpose and coal quality. However, the processes can be simplified to initial production at a mine (underground or opencast) before selection, washing, and transportation to the end-use destination by railroad, ship, or truck.

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