Total’s carbon-neutral LNG cargo a sign of things to come

“This first LNG shipment, whose carbon emissions have been offset throughout the value chain, represents a new step as we seek to support our customers towards carbon neutrality,” explained Total president for gas Laurent Vivier. “The development of LNG is essential to meet the growth in global demand for energy while reducing the carbon intensity of the energy products consumed.”

The LNG cargo was loaded at the Ichthys liquefaction plant in Australia, and the shipment was delivered on 29 September to the Dapeng terminal, China.

With pressure mounting from shareholders, banks, governments and climate activists to lower global greenhouse gas emissions, Poten & Partners head of Asia business intelligence Sophie Tan said carbon-neutral LNG supply will be a “growth area over the next few years.” Ms Tan explained that sellers are offering “carbon-neutral LNG supply in the sense that they’re offering carbon offsets in a separate agreement with the LNG supply.”

Speaking during a recent Poten & Partners webinar, How will the decarbonisation push affect LNG project funding? MsTan said others were trying implement their own solutions, but “there is no fixed way of doing it at the moment.” She described three ways of providing carbon offsets for LNG, each of which must provide verified emissions reduction credits or verified carbon standards.

These methods are nature based, community based or through renewable projects. An example of a nature-based solution would be reforestation project.

A community-based project would be replacing fossil fuels with a cleaner source of energy. One such example would be switching from coal-fired power generation to providing renewable energy to a local community. “And it has to be a permanent reduction in carbon emissions to be picked to become a verified source of credit,” said Ms Tan. ‘If you are an oil and gas company, you could invest in renewable power projects and whatever carbon credits that you create from that project could be used against another project to reduce its carbon emissions.”

In the case of LNG cargo for CNOOC, Total said the carbon footprint of the LNG shipment was offset with VCS emissions certificates through the financing two projects:

Hebei Guyuan Wind Power Project, which aims to reduce emissions from coal-based power generation in northern China.

Kariba REDD+ Forest Protection Project, which aims to protect Zimbabwe’s forests.

Total and CNOOC have offset the amount of CO₂ equivalent (CO2e) associated with the entire carbon footprint of the LNG cargo (including the production, liquefaction, shipping, regasification, and end-use) through VCS certified emission reduction projects.