BRG Energy’s 2024 analysis offers critical insights into the greenhouse gas (GHG) emissions associated with liquefied natural gas (LNG) and pipeline gas, particularly relevant for importing regions like Europe and Asia. The study compares the life-cycle GHG intensity of these energy sources, highlighting the implications for future LNG exports, especially from the United States, which are expected to face stricter environmental regulations from importers. The analysis also underscores the importance of emission reduction efforts throughout the entire supply chain, from production and transportation to end-use combustion.
The study’s findings demonstrate that while both LNG and pipeline gas offer substantial emissions advantages over coal, significant variations exist within the gas sector itself. For European imports, US LNG exhibits comparable emissions to pipeline gas on average. However, a closer examination reveals that US LNG outperforms pipeline gas from sources like Algeria and Russia, which have higher emissions profiles. Norwegian gas boasts the lowest emissions, partly due to its proximity to European markets. Crucially, the study reveals that the combustion of these fuels, or downstream emissions, constitutes the largest portion of total emissions, far exceeding those from production (upstream) and transportation (midstream). This observation highlights the importance of addressing emissions across the entire value chain.
When considering Asian imports, a different picture emerges. US LNG demonstrates a significant emissions advantage over most pipeline gas sources, including Turkmenistan, with the notable exception of Russian pipeline gas supplying the Asian market, which is comparable to US LNG. This finding positions US LNG as a strong contender in the Asian market, particularly in Southeast Asia, where it can play a vital role in displacing coal and contribute to a cleaner energy mix. However, the study underscores the persistent need for emissions reductions in the upstream and midstream segments, even with the lower overall emissions profile of US LNG compared to other gas sources.
A key takeaway from the analysis is the need to address emissions across all stages of the LNG supply chain. The study reveals that while downstream emissions from fuel combustion dominate the overall footprint, upstream and midstream emissions are still substantial, accounting for roughly half the emissions from combustion for both LNG and pipeline gas. This reinforces the importance of continued efforts to reduce emissions related to production and transportation, such as minimizing flaring and methane leaks. Initiatives like the EPA’s new regulations and EDF’s MethaneSAT satellite, which will publicly track methane leaks, are crucial for enhancing transparency and accountability in the industry. These efforts not only align with environmental goals but also become critical for securing market share, as importers are increasingly prioritizing cleaner energy sources.
The study also provides a framework for understanding the concept of Scope 1, 2, and 3 emissions. Scope 1 emissions are direct emissions from a company’s operations, such as those from fracking equipment. Scope 2 covers indirect emissions from purchased energy, like electricity used in operations. Scope 3 emissions, the most significant category for oil and gas, encompass emissions from the use of a company’s products – in this case, the combustion of LNG or pipeline gas. The analysis demonstrates that Scope 3 emissions from gas combustion significantly outweigh Scope 1 and 2 emissions combined, highlighting the crucial role of end-use emissions in the overall environmental impact. For gas, Scope 3 represents approximately 67% of total emissions, while for coal, it reaches around 80%. This underscores the dominant role of Scope 3 emissions in the life-cycle analysis of fossil fuels.
The BRG Energy report has significant implications for policy and corporate strategy, particularly for the incoming Trump administration and companies operating in the LNG sector. Despite prior skepticism on climate change, supporting continued efforts to reduce emissions aligns with US economic interests by ensuring the competitiveness of US LNG in the global market. Furthermore, third-party verification of emissions data offers greater transparency and builds trust with overseas buyers. This approach can help establish standardized reporting and verification procedures for full-cycle LNG emissions, further enhancing market transparency and promoting responsible energy practices.
The commitment to reducing Scope 3 emissions presents a formidable challenge for the oil and gas industry. While many companies focus on reducing their direct (Scope 1 and 2) emissions, addressing Scope 3 requires a systemic approach, involving engagement with consumers and the development of lower-emission technologies. Occidental Petroleum’s commitment to net-zero emissions by 2050, inclusive of Scope 3, stands out as a significant step in this direction. Their ambition underscores the growing recognition that comprehensively addressing emissions across the entire value chain is essential for a sustainable energy future. The study’s findings and the focus on Scope 3 emissions reinforce the role of natural gas as a bridge fuel in the transition towards renewable energy sources. Its lower Scope 3 emissions compared to coal make it a more environmentally viable option in the short to medium term while renewable energy technologies continue to develop and scale.
