LNG can play a key role in accelerating the phaseout of coal in Asia and achieving affordable and impactful decarbonisation, a new study by S&P Global Commodity Insights has found.
The independent study, commissioned by the Asia Natural Gas & Energy Association (ANGEA), examined emissions reduction pathways to 2050 for power generation in Japan, the Philippines, and Vietnam.
For each focus country, the study identified that a balanced approach to energy transition in the power sector – with LNG-fired power supporting expanded use of renewables – would achieve significant emissions reductions in a cost-effective manner. The balanced approach would support the retirement of 50% of coal-fired power by 2035.
“This study underscores the critical role that LNG should play in reducing emissions in Asia and debunks the myth that nations must choose between rapid decarbonisation and economic growth,” said ANGEA CEO, Paul Everingham.
“With more than 90% of power sector emissions in Asia resulting from coal-fired power, global decarbonisation will very much depend on the region’s ability to phase out coal.
“The S&P Global Commodity Insights analysis highlights pathways for Japan, the Philippines and Vietnam – and by extension, other nations in Asia – to do this and reduce emissions by 33 – 38% by 2035, while only investing 8 – 16% more in their energy systems.
“The common element to each of those pathways is increased use of LNG, providing reliable power generation that complements the rollout of more renewable energy.
“On average, for each tonne of CO2 emitted in producing and shipping LNG from Australia, the US, and Qatar, more than 3 t of emissions are avoided on a lifecycle basis when replacing coal in power generation in the analysed countries.”
The study modelled the lifecycle emissions profile of LNG against coal, along with the cost and emissions reductions outcomes of a range of decarbonisation pathways.
In addition to a balanced case scenario for each country, S&P Global Commodity Insights modelled a base case scenario reflecting a business-as-usual trajectory, along with an accelerated approach that would result in full decarbonisation by 2035.
“Both the Philippines and Vietnam would have to more than double their current investment in energy systems to achieve full decarbonisation by 2035, while Japan would have to invest nearly 75% more,” Everingham added.
“And that’s before you take into account the average marginal electricity prices – the costs paid by communities and industries – which would more than double for the Philippines and more than triple in Japan and Vietnam.
“No country can entertain that type of financial burden, but especially not emerging nations such as the Philippines and Vietnam, where continued economic growth is needed to raise living standards.”
S&P Global Commodity Insights Director, Energy Transition Consulting, Allen Chan said a technology-agnostic approach was taken to map out viable pathways for accelerating coal retirements in Asia.
“We think this study is an important piece of research that can contribute to discussions in the region about how decarbonisation and coal phasedown can best be pursued and progressed, by providing quantitative data points to inform trade-offs of different pathways,” Chan commented.
“For the assessed countries, LNG has significantly lower emissions than coal, with an average lifecycle carbon intensity 47% lower, and end-use emissions 57% lower.
“This study shows that renewable energy supported by gas is well placed to accelerate coal phaseout in Japan, the Philippines, and Vietnam, while balancing affordability concerns.”
Everingham said the study highlighted the significant contributions that LNG produced in Australia, the US, Qatar, and other exporting nations could make to emissions reduction efforts by trade partners in Asia.
“By providing policy environments that are conducive to investment, export nations can continue to develop major LNG projects that will help Asia decarbonise,” concluded Everingham.
“Importantly, this course of action would align with energy plans that are already being progressed in Asia.”
