The international scientific community says unequivocally that the world must reduce dependence on coal, oil, and natural gas to meet climate targets.
Industry proponents are also lobbying for gas to be added to green finance rules, which would open new sources of capital for gas projects.
Instead, natural gas and LNG are fundamentally unsustainable, given their greenhouse gas -intensive emissions profile and the deteriorating economics of gas relative to cleaner renewable energy sources.
Methane, the main component of natural gas, is a GHG with more than 80 times the heat-trapping capacity of carbon dioxide over a 20-year period.
Moreover, carbon-neutral LNG deals rarely disclose information about the total emissions of each LNG cargo, where offsets are sourced, whether offsets are for carbon removal or avoidance, or whether the buyer or seller pays for them.
The few carbon-neutral LNG deals that disclose the actual emissions of each cargo have relied on a UK government standard of 250,000 metric tons of CO2 equivalent per shipment, without undertaking more detailed assessments.
Offsetting 250,000 mtCO2e at recent voluntary carbon credit prices could add US$2.2-3.5 million to this price tag, or roughly US$0.60-0.95/MMBtu.
Moreover, voluntary carbon markets — where offsets for carbon-neutral LNG are typically sourced — are growing rapidly.
Adding a multi-million-dollar premium for dubious claims about carbon neutrality therefore makes the economic case for LNG even more far-fetched, especially when compared to the declining costs of clean renewable energy technologies.
The lack of transparency and credibility in achieving “carbon neutrality” creates a greenwashing risk that serious ESG investors want to avoid.
In December 2021, the South Korean government confirmed that gas-fired power plants that emit less than a certain emissions threshold would be treated as temporarily green.
This is consistent with the IEA’s findings that global gas demand could peak in 2025 under a global net-zero scenario.
The industry push for gas to be recognised as “green” indicates that gas corporations can see into their shrinking future.