American Petroleum Institute study promotes using liquified natural gas overseas to reduce global emissions
The American Petroleum Institute is promoting environmental benefits it says the world could enjoy if three significant countries used liquified natural gas exports from the U.S. to generate energy instead of coal.
If Germany, China and India would make that change, it predicts the switch would reduce greenhouse gas emissions globally by half.
Impacts of the proposed switch are detailed by a study created by ICF International (a consulting firm that works on policy issues involving energy, the environment, public health and economic development).
API released the study’s results last week.
"This study underscores what we have known for quite some time — that U.S. natural gas is a far cleaner option than coal for electricity generation, especially in key markets in China, Germany and India," said Dustin Meyer, API’s director of market development. "U.S. LNG exports can help accelerate environmental progress across the globe, enabling nations to transition to cleaner natural gas to reduce emissions and address the global risks of climate change."
Coal still makes up 66% of power generation in China, 74% in India and 30% in Germany, according to the study.
Officials said findings from the study include:
• Using U.S. LNG in China would deliver 48% fewer emissions than Chinese coal and 49% fewer emissions than U.S. coal.
• Using U.S. LNG in Germany would deliver 53% fewer emissions than U.S. coal and 51% fewer emissions than German coal.
• Using U.S. LNG in India would deliver 48% fewer emissions than Indian coal and 48% fewer emissions than U.S. coal.
It also indicates that shipping the LNG from the U.S. to those countries would only have a small impact on global emissions.
The U.S. meanwhile, has been weaning itself off coal for some time as prices for it and natural gas have become more competitive.
In the U.S., the percentage of electricity generated by coal was 24% in 2019, down from about 50% in 2005. It notes that the use of natural gas to generate power has climbed over the same period from about 19% to about 40%, with the use of renewable energy generation sources also growing exponentially.
One significant question the study doesn’t address is whether or not demands for energy will recover anytime soon.
While the U.S. was the world’s third-leading exporter of LNG in 2019, market demands have changed, the U.S. Energy Information Administration stated in a recent short-term energy outlook.
In late March, the report noted U.S. facilities producing exportable LNG were putting out a record 9.8 billion cubic feet per day (Bcf/d), but that output had fallen to about 3.5 Bcf/d in July as hundreds of previously planned shipments to overseas customers were canceled.
Historically low natural gas and LNG spot prices in Europe and Asia, based upon lower demand, appear to have impacted the economic viability of U.S. LNG exports, it continued.
In turn, that has impacted spot pricing for natural gas domestically, remarked Tony Say, an analyst who is president of Clearwater Enterprises in Oklahoma City.
On Monday, Say observed the nation’s LNG exporters would have to be able to acquire natural gas at negative prices before it would be economical to ship it overseas, especially to Europe.
The region, he explained, had an extremely mild winter and an ample supply of natural gas reserves to meet its needs, at least until October.
“There is nowhere to put it into storage there, so there has been a collapse in prices. Exporting LNG to Europe just isn’t going to happen right now,” Say said.
As for China, Say noted that an evolving deterioration of diplomatic relations between it and the U.S. potentially could end what LNG trading relationship exists today.
Agency officials estimated U.S. LNG exports will fall to a low of 3.2 Bcf/d this month, before starting a gradual rebound the remainder of the year.
Say said producers are watching the issue closely.
“It is hurting the gas market and the prices our producers are getting here, too,” he said.