The truth about LNG

These three letters are stirring up the world of energy.

"...LNG..."

"...LNG..."

"...LNG exports..."

"...LNG..."

"...LNG..."

LNG, liquefied natural gas, is hailed as the magic solution to A LOT of our problems. In Europe, that's getting much less gas from Russia, it's supposed to keep the lights on.

In Asia, it's supposed to do away with dirty coal.

And in the US, Qatar and Australia – where most of the stuff is coming from – it's supposed to make a lot of people a lot of money.

All these places are frantically bolstering their infrastructure to ship ever larger amounts of liquid gas around the world.

But...is this really a good idea?

In 1823, British scientist Michael Faraday experimented with different gases.

He discovered that when he cooled and compressed them, they turned liquid.

Today, we use essentially the same process to make LNG.

We chill natural gas, so mainly methane, to about -160 degrees Celsius.

That's when it becomes liquid – and 600 times smaller in volume.

That makes it possible to ship and trade it overseas.

"This is absolutely crucial, when you want to transport gas across long distances."

This is Anne-Sophie Corbeau, who researches natural gas markets.

"If you want to transport natural gas from, say, Australia to Japan, you'd need a very long pipeline.

That would not be possible."

In 1959, the Methane Pioneer became the first ship to deliver LNG across the Atlantic.

Today, more than 600 tankers carry the stuff around the world.

Trade volumes had been growing steadily over the last few decades.

And then, in 2022, LNG took center stage.

"The Russian invasion of Ukraine is underway..."

"Russia's full-scale invasion of Ukraine."

Russia invaded Ukraine.

"Russia is shutting down gas supplies."

"A complete halt to the flow of natural gas."

As a response to economic sanctions from the West, Russia shut its main pipeline delivering natural gas to Europe.

Europe, which at that time got 40% of its natural gas through pipelines from Russia, was scrambling to find new supplies.

And so it was suddenly in the market for more LNG.

"The beauty of LNG is that it is flexible.

The ship can be basically redirected to wherever you want.

So LNG for the Europeans has been kind of the savior."

As the war went on, Europe started building more import terminals along its coastline.

This is where the tankers dock, the LNG gets regasified and then fed into the local network.

The US, now the world's biggest exporter, started building more export terminals.

This is where the natural gas gets liquefied and then loaded onto ships.

But the war in Ukraine is really only half the story behind the current LNG boom.

The biggest demand actually lies in Asia.

China and India, in particular, are massively expanding their import infrastructure to secure enough energy for their growing economies.

This map shows all those LNG terminals that are already operating.

Those that are under construction.

And those that have been proposed.

"There are enough projects in development to triple global export capacity of LNG and increase import capacity by two thirds."

This is Robert Rozansky.

He's a researcher for Global Energy Monitor, the NGO which compiled that map.

"Probably not all of that is going to be built.

But even if just some of it gets built, it's very consequential."

"This is huge. This is absolutely gigantic."

Which begs the question...

what does it mean for global warming?

"There's been this assumption that transporting liquefied natural gas on these massive cargo ships is extremely low emissions."

This is Paul Balcombe, a chemical engineer who measures the gas industry's methane emissions.

"And I think we're just understanding in the last couple of years that maybe that's not quite so true."

Here's the thing: When you burn natural gas in a power station, it emits only half as much CO2 as coal.

That's great but it ignores what happened before, on the way to the power station.

And for LNG...that's a pretty long way.

You first have to get natural gas out of the ground.

Then turn it into LNG at a liquefaction plant.

Then ship it to where it needs to go - often thousands of kilometers away.

Then turn it back into a gas.

And only then can you burn it in a power station.

All these steps use energy, for example the initial cooling of the gas and the fueling of the ship.

This adds CO2 emissions.

And to make matters worse, something else might be escaping at every step of the way: methane.

"The big problem with methane emissions is that it's a very potent greenhouse gas.

You only need very small amounts of methane emissions to have a big climate impact."

That's because it initially traps more heat than CO2.

Twenty years after it's been released, methane's warming power is still more than 80 times greater.

And the problem is...

we still don't really know how much of the stuff is escaping along the LNG supply chain.

"So companies haven't really been required to measure their own emissions.

We just don't really have the data until relatively recently, when we've started – academics and other organizations – have started getting on these ships to go and collect some of the methane emissions data.

So, we've got maybe 5% of the way into it.

And we need to do the rest of the 95% to really get a better understanding of the emissions."

One of his recent studies, for example, found more methane than previously thought slipped through an LNG ship's engines.

The thing is this: IF methane emissions along the supply chain turn out to be quite high, LNG's climate benefit over other fossil fuels shrinks.

A recent study even claims it's WORSE for the climate than digging up and burning coal.

It must be said, though, that this hasn't been peer-reviewed yet.

And many similar studies conclude LNG is still the cleaner way of generating power.

"I mean, the secondary question to that is: Okay, so it's better... is it good enough?

And the answer is invariably: No, it's not good enough to meet our climate targets."

"It's hard to see how you can keep building all this LNG infrastructure and meet our climate goals at the same time."

We reached out to two LNG industry groups to hear their view on this.

The Center for LNG and the International Group of Liquefied Gas Importers.

The first never got back to us.

But the second agreed to an interview.

So how do they bring together our climate goals and more LNG?

"It's not so much a contradiction if you consider the fact that gas and LNG can help in the energy transition."

The industry has long argued that natural gas is vital in lowering emissions by replacing coal, particularly in Asia where it is still used widely.

"Of course, at the end, if you want to reach net zero, you need to move away from all fossil fuels – and natural gas is a fossil fuel.

But yes, for the medium term and even long term, this switch is very important."

The risk of building more fossil fuel infrastructure of any kind, though, is that we "lock in" emissions for decades.

LNG terminals have a lifespan of 20 years or more.

Their operators also often sign long-term supply contracts, guaranteeing they'll run for decades.

"If we make massive investments right now, such that it makes continuing the use of fossil fuels very cheap or much cheaper than other investments, then we have to be really careful about that."

So LNG's climate credentials are questionable, at the very least.

But to be fair, climate action hasn't really been at the top of the oil and gas industry's agenda.

One thing has, though...

money.

Look at this chart.

It predicts how LNG trade will evolve until 2050 – assuming governments will do what they promised to protect the climate.

Now, this is the LNG infrastructure already in place.

And THIS is the one we're currently building.

More than we actually need.

So what's going to happen with these new terminals?

"There's the risk that if we do stay on track to meeting our climate goals, a lot of these facilities, new facilities will be built, not used much, maybe left as stranded assets."

That means they'd shut down BEFORE they made back the money it cost to build them.

That could mean billions of investor and government money down the drain.

Again, we put this to the industry groups.

"It really depends on how you see the LNG demand evolving and it's very hard to predict.

We should have a peak around, I don't know, 2030, 35.

But before that, LNG will still be needed, even if the global gas demand is decreasing.

So this overcapacity...

we don't make any scenarios or predictions at GIIGNL.

But I would say there is a risk, but it should be limited."

And that's the problem with predictions.

This is only ONE scenario, in which governments live up to their climate pledges.

Gas companies might foresee a different future.

"Maybe they're betting this won't happen after all.

And probably that by having the infrastructure in place, by growing the market, there will be momentum to sustain itself."

A forecast is a forecast is a forecast.

This one from Shell predicts LNG demand, the blue line, to keep growing.

"The real question is how is demand going to evolve over the coming decades?

And this is a question that actually nobody is really able to answer.

I have done so many forecasts over my life, but now I'm used to take that with a little pinch of salt."

And there's another reason for specifically building more IMPORT terminals.

"LNG import capacity has also a very strong role in terms of security of supply because it can be an alternative.

You have to be very careful because things happen."

That means how much financial sense it makes, takes a backseat here.

It's more about having the infrastructure in place IF other supplies dry up.

Like it happened in Europe with Russia's pipeline gas.

So where does all that leave us?

Should we push ahead with the LNG expansion – or pump the brakes?

Well, that's a tricky question.

LNG does have its benefits: It's flexible, versatile and fairly cheap.

BUT it also raises two major concerns.

Firstly, we need to make 100% sure it's actually BETTER for the climate than other fossil fuels.

"What we really need to do is: If it is low emissions, we need to prove it.

If it isn't, we need to work out how we can drive them down.

Because it seems that out of all the fossil fuel categories, it seems that LNG may well be the last one we rely on."

And secondly, we need to get a better idea how much LNG we REALLY need.

And for how long.

There are alternatives out there.

"Year after year, we're seeing renewables become cheaper and cheaper, and easier to build.

And it's clear, at least in the power sector, that renewables could be a great replacement for all of this potential gas demand."

When all is said and done, LNG remains a fossil fuel.

If we're serious about slowing climate change, we need to ditch it – the sooner, the better.

And every terminal we build makes that harder.

"What about you?

Does your country rely on LNG?

How do you feel about it?

Let us know in the comments.

And don't forget to hit subscribe for more videos like this every Friday."

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