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Australian Energy Producers Journal Australian Energy Producers Journal Society
Journal of Australian Energy Producers
RESEARCH ARTICLE (Non peer reviewed)

Under the loupe: the case for carbon-offset LNG from Australia

Kaushal Ramesh A * and Sally Bogle B
+ Author Affiliations
- Author Affiliations

A Rystad Energy, Singapore.

B Rystad Energy, Perth, WA, Australia.

* Correspondence to: kaushal.ramesh@rystadenergy.com

The APPEA Journal 63 S428-S433 https://doi.org/10.1071/AJ22211
Accepted: 27 March 2023   Published: 11 May 2023

© 2023 The Author(s) (or their employer(s)). Published by CSIRO Publishing on behalf of APPEA.

Abstract

More than 2 million tonnes of carbon-offset (LNG) were traded in 2021, and we expect this market to exceed 25 million tonnes of LNG by 2030. A critical aspect to enable this growth will be the veracity of offset claims (which have come under increasing scrutiny from investors, lenders, and consumers), and compliance with the principles of additionality, permanence, and non-deterrence. This paper will examine broader trends in the decarbonisation of the LNG sector to prepare for a low-carbon world: renewables-sourced electrification, carbon capture, utilisation and storage (CCUS), and the use of high-quality offsets. We discuss the development of a cross-value chain downstream market for carbon-offset LNG in Australia’s North Asian customer-countries, such as in Japan where at least 47 downstream customers have signed carbon-offset GSAs (general security agreements) with 7 importers, and the advantages of Australian LNG to support this nascent market. Proximity lowers emissions from transportation, while the upcoming large-scale implementation of CCUS will lower well-to-ship emissions. For instance, CCUS at Moomba can remove more than 35% of the well-to-ship emissions from Darwin LNG, while the Ichthys CCUS hub will remove more than 22% of that from Ichthys LNG. Further, the existing participation from North Asian buyers in Australian LNG ventures ensures better visibility of the emissions profile that they take home. In addition, we discuss the advantages of purchasing LNG from high-accountability and high-transparency regimes as investors tighten scrutiny on ESG (environmental, social, and corporate governance) reporting, and how blockchain technology is being deployed to ensure robustness in carbon accounting.

Keywords: accounting, Asia, Australia, carbon, CCUS, decarbonisation, emissions, LNG, offsets, technology, transparency.

Kaushal Ramesh is Vice President of LNG and Head of Rystad Energy’s Gas and LNG Analytics and manages their published LNG research, focussing on LNG trading, shipping, and investments. His past advisory work includes project economics, regulatory impact studies, market entry strategies, and LNG contract negotiations. Prior to joining Rystad Energy, Kaushal worked multiple roles at ExxonMobil, managing commercial operations of LNG and condensate cargoes from the Gorgon Project, and gas and power sales contracts in the Asia-Pacific. He also advised spot cargo trades and LNG contracting and investment decisions as a Market Analyst.

Sally Bogle is Senior Editor of Analytics at Rystad Energy. She has a background in research, journalism, and copywriting for a range of public and private sector organisations including Accenture, FT Energy, S&P Global Platts, IHS Markit (CERA Global Insight), and the OECD’s International Energy Agency. She writes regularly on the Australasian upstream oil, gas, and LNG export markets, the impact of new technologies (renewables, hydrogen, AI) and the climate risk policy and investment implications of fossil fuel use.


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