Global Liquefied Natural Gas Industry Expansion May Imperil Paris Agreement Temperature Targets

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Authors

Shuting Yang , Arvind P Ravikumar , Sara Hastings Simon 

Abstract

The shift from coal to natural gas (NG) in the power sector has led to significant reductions in carbon emissions, earning NG the moniker of a bridge-fuel. The cheap NG that led to this shift is now fueling a global expansion in liquefied natural gas (LNG) infrastructure, particularly in the US, Canada, and Australia. In this work, we assess the viability of LNG expansion in reducing global carbon emissions through coal-to-gas switching in the power sector. In the near term (pre-2030), coal-to-gas substitution reduces global carbon emissions across all temperature targets – here, the potential for emissions reductions through coal-to-gas switching is ‘LNG-limited’, where there is significantly more coal power generation than the LNG required to substitute it. However, we find that long-term planned LNG expansion is not compatible with the Paris climate targets of 1.5ºC or 2ºC – here, the potential for emissions reductions through coal-to-gas switching is ‘coal-limited’. The rapid decline in the share of coal power globally limits the potential for coal to gas substitution. In all scenarios analyzed, low upstream methane leakage and significant coal-to-gas substitution are critical to realizing the near-term climate benefits of LNG. Investors and governments should consider stranded risk assets associated with potentially shorter lifetimes of LNG infrastructure in a Paris-compatible world.

DOI

https://doi.org/10.31223/X55P5R

Subjects

Oil, Gas, and Energy, Sustainability

Keywords

climate policy, Paris Agreement, LNG, coal-to-gas switching, life cycle emissions

Dates

Published: 2020-12-04 17:18

Last Updated: 2020-12-08 09:13

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License

CC BY Attribution 4.0 International

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Conflict of interest statement:
None

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