Is Liquid Natural Gas taking Asia backward in tackling climate change?
LNG is a short-lived, inflexible and inefficient transport technology. Natural gas pipelines are cleaner, more efficient, long-lived and flexible.
Interconnected pipelines also create more competitive regional energy trading networks. The United States is a prime example.
These advantages of gas pipelines lower costs, increase supply security and encourage technological innovation. That’s a lot of advantages.
In coming years, Asia needs trillions of dollars of new infrastructure as it emerges as the world’s largest, most dynamic economic bloc. As much as half of this infrastructure need is in the energy industry.
LNG represents bad value for Asia. This will become more apparent with every year that goes by.
Signs of this are already appearing. Three LNG export plants built in Australia’s Queensland have been plagued by continuously rising costs, environmental damage to the Great Barrier Reef and admissions of construction inefficiencies by their owners.
Liquid Natural Gas technology involves transporting highly-compressed natural gas in multi-billion dollar, specially-designed ships. Receiving ports must be equipped with similarly expensive, single purpose infrastructure to decompress the gas for delivery into domestic pipeline networks.
This ‘locks in’ high-costs, market rigidities and energy security risks at a time when Asia needs liquid, flexible, innovative energy markets.
Flexible markets enable low emission energy technology to evolve. LNG tilts the playing field the wrong way: toward bilateral ‘lock in.’
LNG technology entered the market during the 1970s, when energy import dependent Japan began importing large amounts of natural gas from the Middle East. For very long distances across large oceans (Middle East-Japan, US-Asia, for instance) and, absent alternatives, LNG may make sense.
A template to study is North America’s continent-spanning gas pipeline network and Henry Hub clearing price. The North American model’s efficiency has been undeniable in rapidly delivering to market newly-discovered gas supplies at competitive prices while deepening supply security through network redundancy.
A huge additional advantage of pipelines is their proven capacity to simultaneously also carry other valuable energy-market freight like biofuels (now being done in Canada’s British Columbia), hydrogen (common in both the United States and Europe) and even waste carbon (soon to be done in America’s Texas).
The final nail in LNG’s coffin may be its high greenhouse gas emissions from compressing and uncompressing gas. Once carbon prices are appplied to these, premature writedown may occur of multi-billion dollar LNG assets which can’t adapt to changing markets.
Grenatec proposes a Pan-Asian Gas Pipeline network stretching from Australia to China, Japan and South Korea as part of a larger, cross border energy network including High-Voltage Direct Current power lines.
The time to start planning the networks of tomorrow is now. That means developing flexible, adaptable, integrated energy production and delivery technologies.