Natural gas exporters race to have the least polluting fossil fuels
A big U.S. liquefied natural gas exporter will start giving customers detailed info about the greenhouse gas footprint of its cargoes — a move that provides a glimpse into fossil fuel producers' strategies for competing in a climate-constrained world.
Driving the news: Cheniere Energy, which sends lots of LNG abroad from the Gulf Coast, said Wednesday that starting in 2022 each shipment will have "Cargo Emissions Tags."
- They will provide data about the emissions linked to the entire supply chain, from the wells producing the gas they use to the process of liquefying it at their facilities to the delivery point.
Why it matters: Comparing emissions profiles is slated to increasingly become a way for countries to vie for competitive advantage, seeking to show that their oil or gas is less polluting than other producers.
That race is already starting! In 2019, for instance, Saudi Aramco argued that its lower CO2-per-barrel of oil produced than many other producing nations could allow it to gain market share even if global demand starts shrinking.
Where it stands: One high-profile sign of this new race happened when French utility Engie recently scuttled a deal to import U.S. LNG from the company NextDecade.
It was widely reported that the decision stemmed from concerns over methane emissions from U.S. gas produced via fracking.
- Emissions disclosures are part of a deal announced this week for Chevron to supply Singapore's Pavilion Energy with LNG starting in 2023. Per Reuters, it follows a late 2020 agreement between Pavilion and LNG exporter Qatar that also includes emissions info.
What they're saying: Robert Fee, a senior Cheniere exec, tells Axios that the Engie decision is not what prompted the newly announced initiative.
- "We’ve been working on climate strategy for some time," said Fee, the company's VP for international affairs and climate.
- But he added: "Many of our customers are increasingly interested in climate and understanding their own emissions, including the emissions profile of our LNG."
- The company also said the lifecycle analyses will help identify opportunities to lower emissions.
The big picture: As nations — including big fuel importers — get more serious about climate, the key comparisons are not only between fossil fuels and renewables, or even competing types of legacy energy sources.
- Instead, natural gas and oil will likely be used in large amounts for a long time even as nations move to clean energy, so using the lowest-pollution fossil fuels possible will be important.
- Consider that even in the International Energy Agency's "sustainable development scenario" — which models a global energy system largely consistent with the Paris deal — natural gas demand in 2040 is still higher than it was in 2010.
What we're watching: How the competition evolves in places including Europe, which is planning aggressive emissions policies and imports gas from Russia, the U.S. and elsewhere.
- Another thing to watch is the LNG posture of the Biden administration, which is planning new emissions rules.
- Jennifer Granholm, his pick for Energy secretary, recently voiced support for U.S. exports but wants domestic production to get cleaner.
- But that's unlikely to sit well with some environmentalists who want to see aggressive moves away from all fossil fuels including gas, citing methane emissions that erode its advantages over coal.
U.S. LNG shipments have surged in recent years, driven by growing global demand, huge domestic gas production and support from successive administrations.
The growth export infrastructure as companies rushed to capitalize on the shale gas boom is a turnaround from the century's early years.
Before the shale really took off, the expectation was that the U.S. would need to boost LNG imports, rather than becoming a major global supplier.