Finding net zero: how green LNG can improve the competitiveness of Australian LNG
Daniel Toleman A C and Lucy Cullen BA Wood Mackenzie, Perth, Australia.
B Wood Mackenzie Asia Pacific, Samsung Hub, Singapore.
C Corresponding author. Email: daniel.toleman@woodmac.com
The APPEA Journal 61(2) 512-515 https://doi.org/10.1071/AJ20117
Accepted: 22 March 2021 Published: 2 July 2021
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.
Keywords: LNG, gas, carbon, carbon-neutral, green LNG, Australian LNG, Australia, LNG buyers, energy transition, majors, company strategy, complex gas, gas commercialisation, commercial arrangement, China, Korea, Japan.
Daniel Toleman joined Wood Mackenzie’s Australian Upstream and LNG research team in 2018 as a content lead. During this time, his focus has been on LNG and gas monetisation, project economics, corporate strategy and industry trends. Daniel has also participated in a wide range of consulting projects including new business development, market advisory, opportunity screenings and cost benchmarking. Prior to Wood Mackenzie, Daniel worked at Shell Australia across a variety of Planning, Finance and Treasury roles. Dan’s qualifications include his CPA (2015), as well as a Bachelor of Laws (LLB), Bachelor of Commerce (B.Com) and a Bachelor of Economics (B.Ec.) (Hons) from the University of Western Australia (2012). |
Lucy Cullen is a Principal Analyst in Wood Mackenzie’s Asia Pacific Gas & LNG team based in Singapore. Lucy joined the team in Singapore in 2019. She is the lead analyst for Northeast Asia and Australia LNG market analysis, including supply–demand forecasts and monitoring contracting activity, infrastructure and policy developments. She is a key contributor to Wood Mackenzie’s global fundamentals view and price forecast and regularly presents to clients and conference audiences. Previously, Lucy was part of Wood Mackenzie’s gas research team in Edinburgh with responsibility for developing Europe, Caspian and North African gas supply analysis. Lucy joined Wood Mackenzie’s Energy Markets research team in 2012. Lucy holds an M.A. (Hons.) in International Relations from the University of St Andrews, the United Kingdom. |
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