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Demand for carbon-neutral LNG

grows amid growing criticism

Demand for carbon-neutral LNG is rising, but critics are increasingly arguing
that using carbon offsets is not an effective way to combat climate change

COMMENTARY THE concept of carbon-neutral LNG – still in not as effective as not having those emissions in
its infancy – is rising in popularity. The first car- the first place.
bon-neutral cargoes were delivered in 2019, and “This paradigm … is encouraging a fictitious
WHAT: since then a small – but growing – number of engine that doesn’t help advance our net-zero
Critics are increasingly LNG players have announced the purchase or goals,” Danny Cullenward, a Stanford University
questioning the use of sale of such a cargo. lecturer, who is also policy director at the non-
offsets to sell carbon- But while the emerging trade in carbon-neu- profit CarbonPlan, was quoted by Bloomberg as
neutral LNG. tral cargoes is being welcomed and praised in a saying.
world where decarbonisation is increasingly a Indeed, a similar criticism is being levelled at
WHY: priority, the concept is also progressively com- the concept of net-zero emissions more broadly,
Opponents of the practice ing under fire from critics. This is because those as ultimately achieving it will require offsetting
point out that it does carbon-neutral cargoes traded thus far have all existing emissions rather than releasing none.
not actually prevent relied on carbon credits from other, often nature- Critics – including those within the LNG
emissions. based projects. Thus, direct emissions are still industry – are calling for more transparency
generated from the production of LNG. when it comes to offsetting emissions with car-
WHAT NEXT: Indeed, Bloomberg recently cited France’s bon credits.
Demand for carbon- TotalEnergies – one of the companies to have
neutral LNG is on the rise made a foray into carbon-neutral LNG – as say- On the rise
as buyers and sellers ing it does not count carbon credits in its compa- Despite these concerns, though, carbon-neu-
alike seek to bolster their nywide emissions reports or as part of its plan to tral LNG shipments are rising. According to
green credentials. reach net-zero greenhouse gas (GHG) emissions BloombergNEF, twice as many carbon-neutral
by 2050. LNG shipments have changed hands so far this
“While an important tool … offsetting cannot year than in 2019 and 2020 combined. North
be considered as a substitute for direct emissions Asian buyers in particular are increasingly
reductions by corporates, but as a complement,” turning to carbon-neutral cargoes as they seek
the company was quoted as saying. to reduce emissions while meeting growing
demand for natural gas and power generation.
Criticism Japan is the largest buyer of carbon-neutral
Critics are increasingly highlighting these LNG thus far. Indeed, one of the most recent
aspects of carbon-neutral LNG and arguing carbon-neutral cargoes to be announced was
that balancing emissions that are added to the delivered by Malaysia’s Petronas to Japan’s Shi-
atmosphere with an equal amount of removal is koku Electric in mid-August. And Japan’s Inpex

P4 www. NEWSBASE .com Week 37 16•September•2021