Page 4 - AsiaElec Week 26

AsiaElec COMMENTARY AsiaElec

Shell to sell two more cargoes

of carbon-neutral LNG

Royal Dutch Shell has agreed to supply two more cargoes of carbon-neutral LNG, as it
continues to grow this nascent industry

CHINA ROYAL Dutch Shell announced this week that decarbonisation goes, which is why it is investing
it had agreed to deliver two cargoes of “car- in nature-based projects as it strives to become
WHAT: bon-neutral” LNG to a subsidiary of China a “net-zero” emissions company by 2050 or
Shell is supplying National Offshore Oil Corp. (CNOOC). The sooner. Nature-based projects are one compo-
carbon-neutral LNG to delivery, to CNOOC Gas & Power Group, will nent, with Shell also pursuing targets such as
a subsidiary of China’s mark the first carbon-neutral LNG to reach an improvement in the energy efficiency of its
CNOOC the Chinese mainland. Shell has supplied three operations, selling more natural gas, generating
carbon-neutral cargoes to date, starting in June electricity from renewables and providing low-
WHY: 2019 – to Tokyo Gas, South Korea’s GS Energy er-carbon fuels such as biofuels and hydrogen.
A small number of and Taiwan’s CPC. In another innovation, the cargoes being
buyers are increasingly delivered to CNOOC will be auctioned through
interested in ways to Carbon neutrality the Shanghai Petroleum and Gas Exchange
offset their carbon Shell said in a statement that for LNG to be car- (SHPGX), which Shell said would offer many
footprint bon neutral, all emissions from exploring for and downstream gas buyers the opportunity to
producing the natural gas used as feedstock, as decarbonise their energy use.
WHAT NEXT: well as the use of the fuel by the final consum- No date has been disclosed for the auction,
Questions of affordability ers, are offset by credits from a variety of nature- and the size of the cargoes has not been spec-
need to be addressed based projects. Under the latest agreement with ified either. However, Shell said the cargoes
as carbon-neutral CNOOC, the nature-based projects include would provide enough energy to power nearly
LNG becomes more afforestation schemes in China’s Qinghai and 300,000 homes for an entire year. Separately,
widespread Xinjiang provinces that the company supports. the super-major has said that an average LNG
“We are very excited and humbled to be cargo of around 70,000 tonnes results in roughly
working alongside our trusted partner CNOOC 240,000 tonnes of CO2 emissions across the
in bringing the first carbon-neutral LNG car- value chain.
goes to [the] Chinese mainland,” Shell Energy’s
executive vice-president, Steve Hill, stated. “We Cost question
are particularly pleased to be able to also use It has not yet been disclosed what additional
credits from projects in China for China. Using costs may be involved in producing and selling The challenge
nature-based credits in conjunction with LNG carbon-neutral LNG. However, it comes as the
is a unique solution to support the needs of Chi- industry is ramping up efforts to illustrate the will be to
nese gas customers looking to decarbonise their role natural gas can play in the energy transi- strike the right
energy use.” tion. Shell notes that natural gas is already the
Shell said in its statement that nature-based cleanest-burning among fossil fuels, emitting balance between
projects protect, transform or restore land, help- 45-55% fewer greenhouse gas (GHG) emissions
ing to boost oxygen while carbon dioxide (CO2) and less than one-tenth of the air pollutants com- decarbonisation
emissions from the atmosphere are absorbed. In pared with coal when used to generate electricity.
addition to protecting biodiversity and restoring Pursuing carbon neutrality takes this one step goals and
ecosystems, the super-major hopes the credits further. affordability
from projects in Qinghai and Xinjiang may also “Carbon-neutral LNG cargoes are another
increase the added value of forestry in China choice we are offering our customers, as they
and provide a new source of income to local seek to address their CO2 emissions today,”
communities. Shell’s vice-president of LNG marketing and
Shell has said previously that its global trading, Slavko Preočanin, said in 2019, when
portfolio of nature-based projects includes the the company’s first carbon-neutral cargoes were
Katingan Peatland Restoration and Conserva- announced. “In turn, they are then able to offer
tion project in Indonesia, the Cordillera Azul the same to their customers, who increasingly
National Park project in Peru and the Form want to reduce the net carbon footprint of their
Reforestation project in Ghana. The super-ma- energy use,” he added.
jor notes that there is no single solution as far as As more and more countries adopt ambitious

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