Cheniere and Shell collaborate to deliver carbon-neutral US LNG to Europe
May 5, 2021
Cheniere Energy, Inc. and Cheniere Energy Partners, L.P (together, “Cheniere”) and Shell have collaborated to deliver a carbon-neutral1 liquefied natural gas (LNG) cargo to Europe from Cheniere’s Sabine Pass Liquefaction Facility.
The companies worked together to offset the full lifecycle greenhouse gas emissions associated with the LNG cargo by retiring nature-based offsets to account for the estimated carbon dioxide equivalent (CO2e) emissions produced through the entire value chain, from production through use by the final consumer (all scopes2).
Credits used were purchased from Shell’s global portfolio of nature-based projects with Cheniere purchasing the portion attributable to estimated CO2e emissions associated with activities upstream of the Freight on Board (FOB) delivery point, including production and liquefaction.
Nature-based projects protect, transform or restore land and enable nature to add oxygen and absorb more CO2 emissions from the atmosphere. Each carbon offset is subject to a third-party verification process and represents the avoidance or removal of 1 tonne of CO2e. These projects also have additional benefits for local communities, such as funding new schools or fresh water supplies.
“We are very happy to be collaborating with Cheniere on this opportunity,” said Steve Hill, Executive Vice President, Shell Energy. “It is great to see more producers offsetting their GHG emissions to meet the increasing demand for carbon-neutral LNG. Using high quality nature-based offsets to compensate for emissions that cannot be avoided or reduced is an important step as we find more ways to reduce emissions across the LNG value chain.”
“At Cheniere, we’re focused on measuring, reducing and mitigating emissions, and this first carbon-neutral cargo for Cheniere highlights our efforts to measure and mitigate emissions throughout the LNG value chain,” said Anatol Feygin, EVP and Chief Commercial Officer of Cheniere. “We are thankful for our collaboration with Shell in this effort and for our mutually beneficial commitments to improving environmental performance and maximising the climate benefits of Cheniere’s LNG.”
The transition to a low-carbon energy future requires a range of solutions across the global energy system, from electricity generation to industry and transport. LNG plays its role by providing a readily available source of gas for use in these sectors, bringing the benefits of being the cleanest-burning hydrocarbon, producing half the greenhouse gas emissions and less than one-tenth of the air pollutants of coal.
To decarbonise LNG, all levers will need to be pulled. Lower-emission LNG production, methane management and using carbon capture and storage (CCS) technologies are all different ways to lower emissions along the value chain. While these technologies develop at scale, what we can do today is to use the best quality nature-based offsets to compensate for emissions along the LNG value chain.
1 The terms “carbon neutral”, “carbon off-set” or“carbon off-set compensation” indicate that Shell has engaged in a transaction to ensure that an amount of carbon dioxide equivalent to that associated with the production, delivery and usage of the fuel has been removed from the atmosphere through a nature-based process or emissions saved through avoided deforestation. Further information on Shell’s Net Carbon Footprint ambition and investments in natural ecosystems.
2 Shell uses the DEFRA (UK Department for Environment, Food and Rural Affairs) conversion rates to calculate LNG emissions needed to be offset for Scope 1, 2 and 3. According to the 2020 DEFRA conversion rate,1 tonne of LNG emits approximately 3.42 tonnes of CO2e across the value chain, including end use. End use refers to combustion, which comprises about 2.54 tonnes of the total 3.42 tonnes of well-to-wheel emissions. The remaining emissions of 0.88 tonnes are across the value chain from exploration and production to transportation and regasification.