Abstract
Liquefied natural gas (LNG) will continue to play a critical role in the global energy mix. Even under sustainable development scenarios, which envisage aggressive emissions reductions, LNG demand grows through 2040. The benefits of gas combustion over coal are clear and well known, but pressure is mounting for LNG players to make their gas even cleaner by reducing emissions and decarbonising portfolios. Asian LNG buyers are increasingly carbon-conscious. Six ‘carbon-neutral’ cargoes and a long-term supply tender have been announced. More are likely to follow as visibility on carbon credentials becomes the norm, potentially leading to greater scrutiny of projects and new price premiums. As a result, Australian LNG operators, many of whom have comparatively large carbon footprints, must begin the journey towards carbon neutrality. Innovation is key, with proposals including the use of batteries, renewable energy and carbon capture and storage. This study will highlight how these solutions can be deployed to improve Australian LNG’s carbon competitiveness. Regulation must advance in parallel with technology. There remains a lack of transparency and standardised emissions measurement across the industry. The definition of carbon-neutral itself is inconsistent, ranging from carbon-neutrality up to the point-of-sale all the way to an ambitious objective to offset full life cycle emissions. But the trend towards greener LNG is here to stay. In a jurisdiction at the forefront of carbon reduction, Australian players have an opportunity to partner with buyers to shape this new, ‘greener’ market. This study will consider what Australian operators must do to maintain competitiveness in a changing world.
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