Page 6 - GLNG Week 26

GLNG CommEntaRy GLNG
Calamity awaits, report warns
Confused messages in an environmental NGO-backed report undercuts its points
PoliCy
WHat:
lNG plans will cause environmental doom, GEM has said
WHy:
A baf ing comparison between lNG infrastructure and coal undermines the report’s intent.
WHat nExt:
The question of how fossil fuels can be consumed
is an important one. This report misses the point in its bid for attention grabbing headlines.
THE world cannot lock in future carbon emis- sions through natural gas production, a recent report has warned, claiming LNG plans under expansion are “as large or greater than the expan- sion of coal- red power plants”.
The New Gas Boom report, from Global Energy Monitor (GEM), previously known as CoalSwarm, said there was a risk of long-term nancial problems with stranded assets. Canada and the US dominate the planned LNG projects, with 74% of the proposed new capacity, with at least 202 terminal projects in development. Of these, 116 are export terminals and 86 imports.
Plans in the US will cost $507bn, while Can- ada’s projects will require $410bn, Russia $86bn and Australia $38bn, it said. There is around 353mn tonnes per year (tpy) of capacity planned for the US and 282mn tpy in Canada.
e report went on to quote Lazard Bank as saying that the costs for unsubsidised solar pho- tovoltaic (PV) were comparable to natural gas peaking capacity, while wind power was similar to combined cycle gas turbines (CCGT). LNG plans run the risk of a similar change in sector dynamics as the coal industry.
The GEM report went on to question the nancial sustainability of companies that pro- duced gas as a result of hydraulic fracturing. Given that, in the US, there is little gas-focused drilling and that, rather, it is produced in associ- ation with oil, the logic behind this assertion in the report appears questionable.
In order to justify its statement on LNG plants equating to coal, the report compared the pro- posed 856mn tpy of LNG capacity with the more than 579 GW of coal capacity. e report raised concerns about methane leakage, citing a 2018 report putting the amount of gas lost in this way in the US at 2.3%, although raising the possibility that this underestimates the true gure.
is statement is not without its critics. A 2015 paper in Environmental Science & Tech- nology found that LNG would reduce green- house gas (GHG) emissions “under upstream fugitive emissions rates up to 9% and 5% for electricity and heating respectively”. further- more, the study putting emissions at 2.3% was based on aircra observations, which some have taken issue with.
Power plans
Where LNG plans rely on power sector demand, the New Gas Boom has said these run the risk of under-use. is is clearly something of an over-simpli cation of demand drivers for LNG.
China, for instance, expects to see the
strongest growth for gas consumption in the industrial sector, taking a 47% share, while power generation will account for 37%, accord- ing to a recent paper from the Oxford Institute for Energy Studies (OIES). Much of the Chinese gas demand increase in 2016-17 came from the government’s push into gas boilers, replac- ing coal, in houses. India is also seeing strong demand in non-power sectors for LNG.
The report makes a number of mistakes. Largely, of course, it con ates the myriad plans for developments in the US and Canada with likely future production.
Expansion
Looking past the mistakes, though, the report’s claim about the rise of cheap renewables and whether this undercuts gas expansion plans is a valid one, although it is dressed up in unneces- sarily hyperbolic language.
ere are serious questions that need to be asked about the impact of expanding hydrocar- bon consumption. A paper published in Nature on July 1 found that “little or no additional CO2-emitting infrastructure can be commis- sioned, and that infrastructure retirements that are earlier than historical ones (or retro ts with carbon capture and storage [CCS] technology) may be necessary, in order to meet the Paris Agreement climate goals”.
GEM is funded by a number of environ- mental groups, including the Natural Resource Defense Council (NRDC). In April, GEM pub- lished a report on pipeline plans, with similar concerns about stranded resources.
GEM's backers, and those reading the report, would have been better served by a slightly more sober analysis, although less headline grabbing. Looking at improved e ciency in the gas and coal sector, and at the "carbon budget", would have provided a more reasoned take and avoided many of the aws undermining this report.™
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Week 26 04•July•2019