Page 5 - AsiaElec Week 26
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AsiaElec COMMENTARY AsiaElec
decarbonisation goals, it will not be surprising if
they turn to carbon-neutral LNG – among other however, that there are also more costly options,
options for offsetting their emissions. While such as transforming methane into hydro-
carbon-neutral LNG is still at a nascent stage, gen with carbon capture and storage (CCS) in
some of Shell’s customers to date are from coun- either the exporting or importing country. This
tries that are increasingly prioritising decarbon- approach, the institute warned, would substan-
isation. For example, South Korea’s government tially affect “project economics and the afforda-
recently adopted a net-zero emissions target for bility of LNG relative to other choices”.
2050. Taiwan is aiming to reduce its emissions Further complicating this picture is the vari-
by 50% by 2050 compared with 2005. And Japan ety of attitudes towards decarbonisation among
is aiming for a 26% reduction in emissions by countries. For some, decarbonisation is simply
2030 – though it has been criticised for not set- not a priority and the affordability of LNG has
ting a higher target. already posed a challenge in times when the
However, the question of additional costs price of the fuel was higher. Indeed, this has
involved in carbon neutrality needs to be fac- been known to result in some countries turning
tored in, especially when the LNG market is back to coal-fired power generation.
awash with cheap cargoes, making it more diffi- LNG spot prices are currently low, allow-
cult to be competitive. ing more countries to buy the fuel. But OIES
Such extra costs need not be extremely high, warned that a shift to low and zero-carbon gas
however. While Shell has not disclosed the addi- had the potentially to raise costs substantially,
tional costs involved in producing and trading depending on the policy environment, among
its carbon-neutral LNG, a paper published by other factors.
the Oxford Institute of Energy Studies (OIES) in It is likely that some voluntary efforts by com-
October 2019 suggested that forest projects are panies involved in the LNG industry to decar-
comparatively low-cost. OIES said that along- bonise will increasingly be coupled with policy
side biogas and biomethane offset projects, for- initiatives, at least in some countries. The chal-
est schemes may not have a great impact on the lenge will be to strike the right balance between
commercial viability of LNG supplies. It added, decarbonisation goals and affordability.
Week 26 01•July•2020 www. NEWSBASE .com P5
