CATF Analysis: Exported gas climate impacts are complicated, but a focus on mitigation is key

The Biden administration recently suspended the authorization of new liquified natural gas (LNG) exports to countries with whom the U.S. doesn’t have a trade agreement, to revisit previous analysis of their impacts on the environment, economy, and national security. The move reinvigorated conversations around the climate impact of natural gas and the role it might play in meeting global climate goals, and particularly the net climate impact of exported LNG from the U.S. to receiving countries. 

This is a highly complicated question – but at the same time, there is no doubt that for natural gas to have a role in in a net zero energy system, it must include aggressive mitigation of methane and carbon dioxide emissions from the entire gas supply chain – upstream and downstream all the way to the end use. Low cost options are available today to greatly reduce the climate impact of whatever gas is used, and there is no excuse for delaying the application of these mitigation technologies. 

A number of key assumptions must be understood in order to more thoroughly analyze the impact of U.S. gas exports, such as: 

• What is the upstream leakage of methane from the exported source gas supply chain? And how much can we expect these emissions to decline due to current and future policies?  
• What are the CO₂ emissions associated with energy and processes utilized in the gasification, transport, and regasification of exported LNG? 
• What are the end uses of gas received, and what is the efficiency of combustion in those sources where they are not used as product feedstocks? 
• What is the “but for” case if the U.S. gas is not exported? What would be the alternative energy source that would be realistically utilized at the end use, if any? Would other imported gas fill any gaps not provided by the exporter in question? 
• What are the second order effects of gas exports on U.S gas consumption – e.g., would gas exports lead to higher U.S. prices, and potentially resulting lower demand, and how would this be offset by marginally lower global equilibrium prices? How will exports affect U.S. gas and oil production levels? 
• What are the long term effects of gas imports, either in “locking in” unabated gas consumption for the future, or, alternatively, facilitating economic growth which enables gas-receiving countries to progress over time to higher levels of climate mitigation and transition to lower carbon energy sources? 

Not surprisingly, this issue is highly politicized, and various models and studies come to very different conclusions about the comparison between coal and gas depending on varied assumptions. Most models also simplify this complex issue by focusing on assumed direct displacement of one fuel source with another without even considering multiple “but for” scenarios and second order effects. Some of the more notable analyses focus on a single use case, i.e. displacement of coal fired power generation with natural gas. This focus on the electric power sector is notable and highly incomplete since the vast majority of gas in the world is used in industry (for combustion and feedstocks) and buildings, not power generation.  

Nonetheless, CATF’s recent analysis of even a simplified one-for-one electric power gas/coal displacement scenario suggests how the answers vary widely depending on a variety of assumptions, and that the level of mitigation upstream and downstream assumed is a significant part of the analysis. 

For example, we conducted a comparison of lifecycle emissions impacts over the next decades (20-year GWP) from coal and gas electricity in Vietnam. In the cases shown, coal is imported from Australia, while gas is imported as LNG from the U.S. – from either northeast Pennsylvania (where measured emissions are rather low) or the Permian basin (where measured emissions are quite high). That analysis shows that, depending on upstream methane management practices, imported gas that facilitates coal-to-gas fuel switching could range from reducing power greenhouse gas impacts by as much as 40% or worsening them by 20%. 

Lifecycle Emissions of Gas and Coal Imported to Vietnam for Power Generation (20yr GWP) – Regional Cases 

One thing that is not disputable, however, is that, whatever the net greenhouse gas impacts of exported LNG are in a gas-for-coal displacement scenario, they can be significantly reduced through application of upstream methane abatement. 

Fortunately, the Biden administration and Congress have taken action to address methane and carbon dioxide through regulations and policies that will significantly curb upstream emissions from the oil and gas sector. The U.S. Environmental Protection Agency (EPA) has a strong methane standard for the oil and gas sector that will significantly reduce emissions from new and existing sources. Congress has also taken important steps to reduce and mitigate methane. It passed legislation that includes measures to reduce methane from the oil and gas sector by establishing the Methane Emissions Reduction Program. The figure below shows CATF’s estimate of average lifecycle emissions for U.S. gas before and after the implementation of EPA’s upstream methane regulations. While gas emissions decline, there is still potential for large regional variation. And very importantly, significant methane emissions will remain after these regulations are in place. It is technically possible to further reduce gas industry methane emissions, but new policies will be needed to make this happen.  This needs to happen if natural gas exports are to remain viable in a climate-constrained world. 

Ultimately, even stringent upstream methane abatement is not sufficient to dramatically reduce the net climate impact of gas-fired power generation to achieve net zero global emissions. For that, carbon capture and storage would need to be applied to gas fired power generation as well as coal generation. This is demonstrated in the figure below, showing the comparison of coal and natural gas with both upstream and downstream emission controls. And, like upstream methane, policies that reduce upstream CO₂ will be needed for gas to remain viable in a climate-constrained world. 

Lifecycle Emissions of Gas and Coal Imported to Vietnam for Power Generation (Baseline, with upstream abatement, and with both upstream and downstream abatement) (20yr GWP) 

Available evidence does not show that U.S. gas is cleaner than average global gas, so, even on a simplified basis, displacing other sources of natural gas with U.S. LNG may or may not decrease greenhouse gas emissions, depending on the gas source and upstream emissions mitigation levels. The figure below demonstrates how variations in upstream methane of both coal and gas sourced from various countries impact overall lifecycle emissions. Upstream CO₂ and methane emissions from both natural gas and coal vary significantly, from country-to-country, basin-to-basin, and even among companies operating in the same basin. This makes a universal statement about the relative climate impact of natural gas and coal for use in power generation impossible and it suggests that policy should account for this complexity. When it comes to understanding the climate impacts of natural gas vs. coal, the details matter.  

Impact of Variable Upstream Methane Emissions on Total Lifecycle Emissions of Coal and Gas (20yr GWP) 

These issues will no doubt continue to be highly polarizing, with some advocating for no expansion of even lower impact fossil fuel use, while many emerging economy leaders insist that global equity requires that they have access to gas and that an immediate transition to all zero carbon energy is not consistent with human development goals in less wealthy countries. But there also is no doubt that, over the long run, it is essential to aggressively mitigate methane and carbon dioxide emissions from the entire U.S. natural gas supply chain – upstream and downstream all the way to the end use – for the use of exported natural gas in the power sector (or, for that matter, in any other sector), to be consistent with stringent climate goals.  Fortunately, we have low-cost options today to minimize the climate impact of whatever gas is used, and there is no excuse for delaying deployment of these options.