Out-Law News 1 min. read

Liquified natural gas sector launches carbon neutral framework


An international trade body for the liquified natural gas (LNG) sector has launched a framework for a unified approach to declaring LNG cargoes carbon neutral.

The framework, called the “Monitoring, reporting, and verification (MRV) and GHG (Greenhouse Gas) neutral framework” (42-page, 2.04MB PDF), sets out a series of steps, with the first requiring LNG importers to monitor, report and verify the intensity of their greenhouse gas emissions.

The framework is designed to create a transparent approach to declaring LNG cargoes GHG neutral, through an independently verified cargo statement which lists emissions and their offsets, according to a statement by the trade body, the International Group of Liquified Natural Gas Importers (GIIGNL).

The framework requires that methane emissions are reported separately in the cargo statement, alongside all seven GHGs covered by the Kyoto Protocol. It covers all sources of GHG emissions, all GHGs and all stages in the LNG value chain, from well to end use.

Renewables and climate change expert John Yeap of Pinsent Masons, the law firm behind Out-Law, said: “The extent to which Asia Pacific’s growing economies with a high degree of dependence on carbon intensive power generation will be able to transition away from that dependence will no doubt be closely scrutinised following COP26. The unavoidable truth though is that these economies almost invariably will need time to transition. Reducing dependence on coal, and increasing the use of LNG will help, and the ability of LNG sector to demonstrate carbon neutrality will further go towards achieving that aim.” 

“There will naturally be cost implications in achieving carbon neutral LNG which may affect the viability of such projects in some developing nations where affordability of cost reflective power remains a consideration. To address this, countries with high cumulative carbon emissions that have achieved their development before there was scrutiny on carbon may need to consider their ability to respond with assistance to subsidise the costs so as to enable these nations to speed up their decarbonisation,” he said.

GIIGNL is a non-profit organisation aiming to promote the development of activities related to LNG including purchasing, importing, processing, transportation, handling, re-gasification and its various uses.

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