Decarbonising LNG value chain using carbon capture and storage: why, where, how much and what are the limitations?

Abstract

As a result of global aspirations to achieve energy transition along with the desire to ensure energy security, energy exporters proposed a series of new ‘carbon-neutral’ products – liquefied natural gas (LNG) and oil. In 2019, a new market was officially born after the first-in-history shipment of carbon-neutral LNG cargo from Shell to Japanese Tokyo Gas. Until 2021, it grew rapidly, however in 2022, announcements about volumes delivered to the customers significantly dropped. In this paper, we will explore the reasons for this dynamic, review perspectives of the carbon-neutral fuels markets, and explore the potential steps that producers and consumers could undertake to achieve global climate targets. We specifically focus on the consequences of implementing carbon capture and storage (CCS) technologies. Based on the data on the world CCS facilities, provided by the International Energy Agency, we conduct preliminary analysis of the capital costs associated with the construction of carbon capture, utilisation, and storage facilities. After that, we apply the cost estimation method (class 5) based on the US Department of Energy Classification, to estimate the costs of using CCS for emissions management in different regions/countries. As a result, the study demonstrates that due to the various economic, geographical and infrastructural limitations, it is more feasible to implement CCS on the producer’s side than on the consumer’s side. We also show what level of CCS implementation within the LNG value chain is economically feasible for different market participants and what the costs are.