Page 6 - AsiaElec Week 11 2021

AsiaElec COMMENTARY AsiaElec

Carbon-neutral LNG picks up

momentum

Several recent developments illustrate the adoption of carbon-neutral LNG picking up pace,
though it is still in its early days

GLOBAL CARBON-NEUTRAL LNG is increasingly carbon-neutral LNG.
gaining momentum as more industry players Nohata reportedly declined to comment on
WHAT: commit to the concept, or put themselves on a the cost of carbon-neutral LNG, according to
More and more path towards it. Carbon neutrality is currently Reuters, citing confidentiality obligations.
companies are getting achieved for LNG cargoes through the issuing This comes after Mitsui & Co. announced last
behind carbon-neutral of carbon credits to offset emissions generated. month that it had agreed to supply carbon-neu-
LNG. Thus far, credits for the nascent carbon-neutral tral LNG to Hokkaido Gas. And both develop-
LNG industry have generally been bought from ments are playing out against the backdrop of
WHY: projects that avoid or reduce emissions, such as Japan’s nationwide net-zero emissions goal, for
The concept is still nature-based schemes. These credits are gener- which it has set a deadline of 2050. Tokyo Gas
in its early days, but ally used to offset emissions associated with the has voiced hopes that more LNG producers
aligns with national entire lifecycle of a cargo, from production to will offer a carbon-neutral version of their fuel,
and company-level end use by the LNG buyer. so that the company can work on widening its
decarbonisation targets. New liquefaction plants have been proposed sources of supply.
that would minimise their emissions from the
WHAT NEXT: start, for example via carbon capture and storage Other moves
There are concerns that (CCS). While these projects have yet to advance The news about the Japanese consortium
the costs of carbon- to the final investment decision (FID) stage, comes around the same time that a number of
neutral LNG will be a their emergence suggests that it could become other moves have been made, either involving
deterrent to some. increasingly easier to source carbon-neutral carbon-neutral LNG or a shift towards the con-
LNG via various avenues in the future. cept. Also this week, Russia’s Gazprom reported
that it had delivered the first carbon-neutral
Buyers’ club LNG cargo to reach Europe, in collaboration
This week, Tokyo Gas announced that it had with Royal Dutch Shell. The super-major took
joined 14 other Japanese companies in forming delivery of the cargo, which was sourced from
the Carbon Neutral LNG Buyers Alliance in an Novatek’s Yamal LNG project in Russia, at the
effort to promote the more widespread use of the Dragon LNG terminal in Wales.
greener version of the fuel. For Tokyo Gas, the According to Shell, an average LNG cargo
move is another step forward on carbon-neutral of about 70,000 tonnes emits roughly 240,000
LNG, which it first imported in 2019, subse- tonnes of carbon dioxide equivalent (CO2e)
quently becoming the first company in Japan to across the value chain.
supply it to customers as carbon-neutral city gas. Shell has been involved in the shipping of a
It now wishes to expand its network of buyers. handful of carbon-neutral LNG cargoes to date,
“We are seeking an innovation in hydrogen, including the one received by Tokyo Gas in 2019
methanation and carbon capture utilisation – one of the first two such cargoes in the world
technology, but it may take time,” Tokyo Gas’ at that time.
executive vice-president, Kunio Nohata, said this Separately, commodity trader Vitol
week. “Therefore we want to spread the use of announced on March 1 that it was launching a
carbon-neutral LNG, which is the most feasible green LNG product that will allow customers
measure right now to slash CO2 [carbon diox- to offset the greenhouse gas (GHG) emissions
ide] emissions,” he added. associated with their cargoes. Vitol said in a
The alliance comprises Tokyo Gas, Asahi statement that all of its LNG customers would
Group Holdings, Isuzu Motors, Olympus, Sakai be offered the opportunity to convert cargoes to
Chemical Industry, Duskin, Tamagawa Acad- green LNG through carbon offsets, with emis-
emy & University, Toshiba, Toho Titanium, New sions to be offset estimated using the Wood
Otani, Marunouchi Heat Supply, Sumitomo Mackenzie LNG Emissions Tool. The offsets
Mitsui Trust Bank, Mitsubishi Estate, Yakult will be sourced from Vitol’s existing portfolio
Honsha and Lumine. It opens up a number of and from the wider market.
downstream industries that consume gas to Vitol’s head of LNG, Pablo Galante Escobar,

P6 www. NEWSBASE .com Week 11 17•March•2021