Global Liquefied Natural Gas Industry Expansion May Imperil Paris Climate Targets

Abstract:

Natural gas (NG) has been touted as a bridge fuel to a low-carbon future, particularly in countries with significant coal-based power generation. With recent shale gas development in the US and Australia, there has been significant growth in global liquefied natural gas (LNG) infrastructure. However, the long lifetimes of LNG facilities and associated life-cycle emissions may jeopardize the Paris Agreement goals of keeping global temperature rise to “well below 2°C”.

In this work, we build a comprehensive global database of existing, under construction, approved, and proposed LNG projects from industry reports, government documents, and public statements. We then use this database to quantitatively investigate the climate impact of LNG-related life-cycle emissions in the context of IPCC scenarios that limit global temperature rise to 1.5ºC, 2ºC and 3°C. Specifically, we assess the viability of LNG expansion to reduce global carbon emissions through coal-to-gas switching in the electricity sector under different emissions pathways.

Overall, under construction, approved, and proposed projects will increase global liquefaction capacity by 160% from 419 million metric tons per year (MTPA) to 1030 MTPA by 2030 – three-fourths of this capacity expansion can be attributed to the US and Canada. In the base case scenario with a 2.3% average methane leak rate and 35-year average project lifetime, LNG expansion corresponds to an additional emissions burden of 96 GtCO₂-eq between 2017 and 2050 in the absence of any coal-to-gas switching. In 2050, annual emissions associated with existing and under-construction LNG projects will take up 100%, 20%, and 8% of the carbon budget of 1.5ºC, 2ºC, and 3ºC, respectively, challenging the compatibility of LNG with stringent emissions targets. We explore to extent to which coal-to-gas switching in the electricity sector can offset emissions from the LNG sector. Our analysis shows that under the most stringent emissions target (1.5ºC), it is likely that LNG capacity will far exceed that needed to substitute all coal-based electricity by mid-century. The results of this study will allow policymakers to assess the compatibility of LNG expansion with national and international climate targets.