Industry stakeholders collaborate for carbon-neutral LNG
Jul 6, 2021
LNG carrier “Amani” arrives at the Senboku LNG terminal from Brunei to deliver Osaka Gas’s first carbon-neutral LNG cargo.
Photo courtesy Osaka Gas
Shell Eastern Trading (Pte) Ltd has signed an agreement with Brunei LNG Sdn Bhd for the purchase of a carbon-neutral1 liquefied natural gas (LNG) cargo and a sales agreement with Osaka Gas Co., Ltd. for delivery of this cargo. The cargo, which was delivered today at the Senboku LNG terminal in Japan, is the first carbon-neutral LNG cargo for both Brunei LNG and Osaka Gas.
Shell, Brunei LNG and Osaka Gas have collaborated to offset life-cycle carbon dioxide equivalent (CO2e) emissions generated across the value chain2 from this cargo, using high quality carbon credits from Shell’s global portfolio of nature-based projects. Nature-based projects protect, transform or restore land and enable nature to add oxygen and absorb CO2 emissions from the atmosphere. Each carbon offset is subject to a third-party verification process and represents the avoidance or removal of one tonne of CO2e.
To scale-up the market for carbon-neutral LNG, multi-stakeholder collaboration is needed across the value chain. This will help foster large-scale change and enable individual businesses to achieve their net-zero emissions targets. With this cargo, Osaka Gas will be able to supply carbon-neutral gas to commercial and industrial customers in Japan. For Brunei LNG, this first carbon-neutral sale will support their commitment to being a responsible producer and reliable energy partner as Brunei Darussalam progresses towards a low carbon, climate resilient nation.
“We are very pleased we received our first carbon-neutral LNG cargo from Shell, a leading supplier of CNLNG,” said Keiji Takemori, Senior Executive Officer of Osaka Gas. “We would like to provide carbon-neutral natural gas to our customers as a way to enhance the value we offer to them. Through various initiatives including CNLNG, we strive to achieve our goal of becoming carbon neutral by 2050 in cooperation with our partners and stakeholders under our Carbon Neutral Vision we announced in January.”
Hajah Farida Dato Haji Talib, Managing Director and CEO of Brunei LNG said, “We are elated to lead and be the first carbon-neutral LNG supplier in the Southeast Asian region. Brunei LNG recognises the necessity of delivering a more sustainable low-carbon energy solution to our customers. The integrated collaboration between Brunei LNG, Shell and Osaka Gas marks an important milestone in our journey as a key partner for energy transition, enabling our customers to move towards their net-zero ambition by compensating the full life-cycle CO2e emissions of the cargo. Our carbon-neutral LNG offering is one of our ways to transform the business to be more sustainable, keeping in pace with society’s ambition to tackle climate change.”
Steve Hill, Executive Vice President, Shell Energy stated, “We are proud to be working with Osaka Gas and Brunei LNG for their first carbon-neutral LNG cargo. What is unique about this deal is that it is an excellent example of collaborative action across the value chain – a critical need for delivering on climate ambitions. Shell, Brunei LNG and Osaka Gas have collaborated to offset life-cycle CO2e emissions of this cargo, which is an important step in growing the market for carbon-neutral LNG. As more ways to avoid and reduce emissions develop at scale, the industry needs to work together to use high quality nature-based offsets to compensate for greenhouse gas (GHG) emissions along the LNG value chain that are otherwise hard-to-abate.”
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, producing half the greenhouse gas emissions and less than one-tenth of the air pollutants than coal when used to generate electricity. 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, an immediate action today is to use the best quality nature-based offsets to compensate for emissions along the LNG value chain.
1 The CO₂e life-cycle emissions of the LNG cargo will be offset with verified nature-based carbon credits.
2 DEFRA Greenhouse gas reporting: conversion factors 2020 will be used to calculate life-cycle emissions