The case against LNG terminals

May 15, 2022

How viable a long-term solution is expanding the LNG infrastructure?

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lobal warming and climate change caused by emissions of carbon dioxide and other air pollutants pose a serious threat to human well-being and the health of the planet. To avoid the devastating effects of an increasing carbon footprint, the energy sector requires urgent action on a global scale. Many countries are strategising energy transition to reduce carbon emissions and mitigate the effects of climate change. Some of these countries, including Pakistan, consider liquefied natural gas (LNG) the cleanest fossil fuel.

However, LNG is a fossil fuel contributing to carbon pollution and global warming. While it emits less carbon dioxide than some other fuels, it has the additional problem of methane emissions — primarily from flaring and leaks during transport and distribution. Methane is an extremely potent greenhouse gas — it has a shorter residence time in the atmosphere but it causes a larger temperature hike than CO2 does.

The main problem with LNG from a climate perspective is that the liquefaction process uses tremendous amounts of energy. This offsets virtually all the climate related benefit of natural gas relative to coal and oil. The oil and gas industry has been trying in recent years to improve its image by promoting natural gas and LNG as clean fuels.

In Pakistan, gas consumption occupies the largest share of the primary energy supply. In 2018-19 the share of gas was approximately 53 percent (1,453,519 mmcf). The power plants consumed 35 percent of the total, households 21 percent, industry 17 percent and fertiliser plants 16 percent.

Owing to the rapid depletion of indigenous natural gas resources and the widening demand-supply gap, LNG became the life-saver albeit at a high cost. Its share in Pakistan’s natural gas market increased after the government started importing re-gasified liquefied natural gas (RLNG) in 2015 for gas-fired power plants. The share of liquefied natural gas (LNG) imports in the gas mix had increased to approximately 22 percent in 2019. At present, the government has long-term arrangements for LNG import with Qatar, the ENI Corp, and with the Gunvor Group. It imports 6.0 million tonnes per annum (mtpa). In addition, Pakistan also purchases LNG from the ‘spot’ market.

The first LNG terminal in Pakistan was built in 2015. At present two LNG terminals, Engro Elengy Terminal Limited (EETL) and PGP Consortium Limited (PGPCL), are working. Four more are on the charts. According to the Global Energy Monitor, Pakistan is going to be sixth in the world in terms of proposed, constructed and operating LNG import capacity.

However, expanding the LNG infrastructure may not be a viable long-term solution for Pakistan’s energy needs. The LNG contracts in Pakistan, like in the rest of the world, are for about two decades. It has been suggested that renewables will become the cheapest form of energy before the expiry of these projects. The price-sensitive market and non-availability of LNG on regular basis, cause, among other things, under-utilisation of gas-based power plants.

The main problem with LNG from a climate perspective is that the liquefaction process consumes tremendous amounts of energy.

The LNG projects have serious implications for climate change and renewable energy targets that the country committed to under the Paris Agreement, the Nationally Determined Contributions 2021 and the Alternative and Renewable Energy Policy 2019. The LNG terminals in the Port Qasim area are seen as a threat to biodiversity, including mangroves, and fishing.

The Indicative Generation Capacity Expansion Plan (IGCEP) 2021-30 envisages a decrease in the share of RLNG in the energy mix from 19 percent in 2021 to a mere 1 percent by 2030 and eventually zero. This is a source of confusion about the role of LNG terminals.

According to Sindh Environmental Protection Agency (SEPA) regulations, projects “located in environmentally sensitive areas” and those “likely to cause an adverse environmental effect”, including all LPG and LNG projects (including terminals and re-gasification units) require both an initial environmental examination (IEE) and an environment impact assessment (EIA).

All LNG terminal projects are located in creeks that have been designated environmentally sensitive areas for being rich in fish nurseries and mangroves. EIAs for some LNG projects suggested that terminals do have implications for mangrove forests in and around Port Qasim. Ibrahim Haideri and Rehri Goth are two of the biggest fishing communities near an LNG project site.

A boom in the construction of LNG terminals threatens to lock in massive amounts of GHG emissions and negate any chance of limiting global warming to the 1.5°C tipping point identified by the Intergovernmental Panel on Climate Change (IPCC).

Pakistan is a party to the Paris Agreement which requires reducing energy-related carbon emissions by more than 70 percent by 2050 compared to 2015 levels. The government recently launched Pakistan’s updated NDCs (2021) which reinforce its commitment to reducing GHG emissions. Pakistan’s contribution to these emissions is just 0.9 percent. However, the LNG infrastructure will contribute to the increase at the regional and global levels.

Pakistan aims to shift to 60 percent renewable energy and 30 percent electric vehicles by 2030 and ban imported coal. It has signed the International Renewable Energy Agency (IRENA) Statute and wants to promote, as well as adopt the use of renewable energy for sustainable development. But this can only be achieved with a massive investment in renewable energy and energy efficiency.

Renewable energy currently forms less than 3 percent of Pakistan’s power generation fuel mix. The country relies heavily on imported fuels. The national power generation mix has been restructured in recent years to reduce reliance on imported oil. The new mix leans towards imported LNG. This may jeopardise the country’s renewable energy plans.

The writer is an award-winning environmental journalist. He is associated with The Knowledge Forum, a Karachi based civil society organisation

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