A report by Global Energy Monitor warns that rising global LNG capacity could lead to climate damage and ultimately strand $1.3 trillion in assets, a claim the Canadian energy industry disputes.
Currently, with new projects underway or in planning stages, LNG capacity is set to increase three-fold. North America’s fracking boom and rising Asian LNG imports are fuelling the growth.
“By locking in decades of high emissions, the expansion puts investments in new infrastructure on a collision course with Paris climate goals of 15 per cent natural gas reductions by 2030,” the non-governmental agency said in a press release issued Monday.
“The conclusions of the Global Energy Monitor’s report are factually incorrect. Sharing these untrue statements is unacceptable,” said Tim McMillan, CEO of the Canadian Petroleum Producers. “This is another deliberate attempt by a foreign-funded activist organization to discredit the Canadian oil and natural gas industry.”
There are currently 202 LNG terminal projects in development worldwide, including 116 export terminals and 86 import terminals. These projects, valued at $1.3 trillion, would triple global LNG export capacity.
Global Energy Monitor says, measured by global warming impacts, the scale of the LNG expansion is as large, or larger than, the expansion of coal-fired plants. This is mostly due to fugitive methane emissions that occur at all stages of the gas extraction and supply cycle.
The organization also notes that as renewable energy costs fall, the expansion of global LNG infrastructure could face long-term financial viability and stranded asset risks of up to $1.3 trillion: “Since 8 per cent of terminal capacity under development has moved past the final investment decision stage into construction, there is still the opportunity to avoid overbuilding.”
Concerning climate damage, Global Energy Monitor says methane is responsible for 25 per cent of global warming to date. Methane is the chief component in natural gas.
Large-scale LNG infrastructure expansion would “lock in increases in natural gas,” said the NGO. The Intergovernmental Panel on Climate Change found for a 1-in-2 to 2-in-3 chance of limiting global warming to 1.5°C above pre-industrial levels, there needs to be a decline in natural gas use of 15 per cent by 2030 and 43 per cent by 2050, relative to 2020.
“The LNG boom is happening incredibly fast, just as methane is turning out to be a significantly worse actor than had been realized,” said coauthor Ted Nace, Executive Director of Global Energy Monitor.
Analysis of data from the Government of British Columbia, the B.C. LNG Alliance, the United States’ Energy Information Agency, U.S. Department of Energy, and the International Gas Union, indicate that Canadian LNG has less than half the carbon emission intensity compared to LNG from the U.S. Gulf Coast, CAPP claims in its release.
“A decade ago large-scale fracking was just getting started, and we had no idea that North America would become a huge gas exporter. Scientists still didn’t realize just how large and potent the fugitive emissions of methane would turn out to be,” said Nace.
Nace said, contrary to the facts, there is still talk of natural gas as a bridge toward renewables: “The one piece of good news is that most of these projects are in the pre-construction stage, so there is still time for a moratorium on LNG infrastructure before we lock ourselves into even more irreversible climate damage.”
For every LNG facility built in Canada, global emissions are reduced by 100 MtCO2e per year. Five Canadian LNG facilities would meet or exceed our commitment under the Paris Agreement, based on incremental new power generation demand displacing coal. Canadian GHG emissions intensity from LNG facilities is expected to be even lower as a result of strong regulations, and an opportunity to electrify the upstream, according to CAPP.
Eliminating upstream combustion emissions via electrification is made possible by connecting to a lower-emissions electricity system, which could reduce the upstream carbon intensity by approximately half.
“Using the Pace Global 2015, of life-cycle GHG intensities of both coal and LNG, CAPP estimates that by 2040 about 1,500 megatonnes of carbon dioxide equivalent (MtCO2e) emissions could be eliminated every year if new power plants in China, India and Southeast Asia are fuelled by natural gas instead of coal,” said McMillan.
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