The pivotal role of LNG in the global energy transition

LNG, colloquially called the ‘transition fuel’ in the transition to net-zero carbon emissions, has a comparatively limited impact on the environment when measured against other fossil fuels such as coal and crude oil. The overall environmental impact of LNG is well-known, measurable, and controllable, reinforcing its role as an energy source that can reduce the carbon intensity of the world’s energy mix. However, LNG faces several regulatory challenges if it is to be used as the preferred low emissions-intensive fuel until renewable energy technologies evolve to provide for a full energy transition.

The environmental impact of LNG

If LNG’s place as a major source of energy is to be maintained, the environmental challenges associated with LNG production and consumption must be addressed. Each step in the LNG production process – from extraction to liquefaction, transportation, and regasification – consumes limited energy resources, and results in emissions of methane, carbon dioxide (CO₂), sulfur dioxide, and nitrogen oxides. While the CO₂ emissions in the LNG value chain are relatively small compared to other fossil fuels, reducing methane emissions has been a recent (and somewhat controversial) focus for the industry. Uncombusted methane has the potential to trap heat in the atmosphere, with studies reporting a greater global warming effect than CO₂. The extent of methane emissions during the whole lifecycle of an LNG project remain subject to debate. Reductions in flaring and venting vary greatly across jurisdictions, with several natural gas hubs failing to place any limits on flaring activities.

Industry players and environmental activists are aligned in their desire to reduce these emissions and there is a push for technologies to lessen the environmental impact across the LNG value chain. New technologies such as leak detection and repair (LDAR) programmes, as well as innovations in measurement technologies, are being implemented across the LNG value chain in most jurisdictions.

Regulatory hurdles for LNG

There are two key regulatory hurdles impacting the extent to which LNG will maintain a dominant position in the energy transition:

1. Inconsistent or overly burdensome regulation of greenhouse gas (GHG) emissions throughout the LNG value chain.
2. Regulations incentivising investment in renewable energy, at the expense of investment in LNG projects.

Firstly, industry players, environmental action groups, and consumers diverge in the extent to which external regulation should govern changes in the emissions intensity of the LNG industry. LNG buyers in many jurisdictions are reluctant to pay a premium for lower-emission LNG, and sellers have consequently been slow to invest in costly LDAR technology or production overhauls to reduce carbon intensity. Forcing an economic model that only permits the sale of lower-emission LNG may hinder energy security and increase energy poverty across much of the world, in both developed and developing nations.

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Read the article online at: https://www.lngindustry.com/special-reports/10092024/the-pivotal-role-of-lng-in-the-global-energy-transition/