Liquid Natural Gas (LNG) is a trillion-dollar, climate change-inducing value destruction machine. It relies on false economics, selective accounting and political capture. Stewart Taggart reports.
We have been sold the myth that LNG represents a crucial multi-decade transition solution to late century low and zero emission energy. But this rests on a specious business case: international LNG trade is needed because natural gas is cleaner burning than coal.
The fib involves counting just Scope One (final natural gas combustion) emissions. It ignores the other 50 per cent of emissions involved in LNG: mining, pipelining, liquefying, shipping, re-gasifying and last mile delivery to power plants.
Mother Atmosphere counts those.
When we do too, a much different picture emerges.
Scope Three emissions of natural gas (from Texas, say) shipped internationally as LNG (through Galveston or Brownsville, say) and combusted for electricity (in Poland or China, say) generates about 0.66 tonnes of gas well-to-wall-socket carbon dioxide per megawatt-hour of downstream electricity generated, according to the US Department of Energy (DOE).
Such Scope Three emissions are just 20-30 per cent lower than the coal-fired power (0.8-1.0 tonne Co2/mwh) LNG replaces. Wind and solar’s emissions are 0.04 mwh (yes: “point-zero-four”) for wind and 0.01 (yes: “point-zero-one”) mwh for solar, according to the International Panel on Climate Change.
Given that wind and solar emit 97-99 per cent less Scope Three emissions than coal or LNG, such reduced emissions – properly priced – more than cover any temporarily higher prices, intermittency and storage issues wind and solar decreasingly face.
In other words, the only thing holding up LNG’s naked emperor is selective counting.
Count and price Scope Three emissions and the rational course is to jump straight from coal to renewables, skipping natural gas/LNG altogether. That especially goes for new build or partially built facilities from now on. They are money down the drain.
Within a few short years, currently higher cost renewables will pay for themselves in Scope Three carbon adjusted terms if they don’t already.
Given proper carbon emission and price transparency, all that looks left for LNG is a self-extinguishing, load-balancing rump role as renewable capacity expands and implicit or explicit carbon valuations rise during the 2020s.
A 10-20 year declining-use lifespan doesn’t look like a great business case for tens or hundreds of billions of dollars of LNG capacity — particularly the new build stuff slated to come on line in the 2020s. That capacity will likely end up relegated to serving a shrivelling backseat market of load-balancing renewables.
However, given the rapid advance of renewable energy storage, even that market may prove transitory as lower cost battery and storage and load balancing technology develops. Ouch.
So what’ll happen to all that newly-commissioned 2020s LNG capacity?
That’s not society’s problem. It shouldn’t be made that. Society’s duty is to isolate and firewall the damage at the industry level, refuse microeconomic bailouts and compel the LNG industry to live or die by its own bad math.
There is, however, a silver lining. I’ll leave you with this: hydrogen.
Notwithstanding a respectable pile of technical challenges, orphan LNG capacity stranded in the next 15-20 years could – with foresight currently lacking – be repurposed to carrying hydrogen.
Yes, there are technical problems. But they’re nothing a “can do” industry “can’t do”.
Hydrogen produced from intermittent surplus wind and solar energy could be shipped internationally in converted LNG tankers. Australia, for instance, is testing a hydrogen export project with Japan’s Kawasaki Heavy Industries (albeit with coal). But that’s a start!
Europe also pays lip service to hydrogen’s potential. Hydrogen presents an entirely different future from the one the LNG industry now proposes. But that’s a story for next time.
Stewart Taggart is a retired Houston, Paris and Sydney energy industry reporter. He holds shares in Cheniere, Dominion and Sempra with the aim of constructive engagement with them regarding climate change and energy innovation.
The east Australian gas cartel wants to export Australian domestic gas and then resell it domestically through 5 proposed import plants at even higher prices, says @barobertson111. Enough is enough. The govt must intervene and stop this madness. https://t.co/L2UMXLSGyZ #auspol
— IEEFA_AsiaPacific (@IEEFA_AsiaPac) July 9, 2019
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