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U.S. LNG Exports Can Save GHGs Globally, U.S. Accrues Social Cost

Leslie Abrahams's picture
Carnegie Mellon University

Leslie Abrahams is a joint PhD candidate in the departments of Engineering and Public Policy and Civil and Environmental Engineering at Carnegie Mellon University. Her research focuses on the...

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  • Feb 26, 2015

By Leslie Abrahams and Costa Samaras 

While much of the eastern U.S. is trying to keep warm during the recent Alaska-like cold snap, it’s useful to remember the winter of 2006. The residential price of natural gas, which heats more than half of U.S. homes, was more than $16/thousand cubic feet (MCF). Today, residential delivered gas is closer to $9 and the U.S. commodity natural cost is less than $3. The growth of U.S. shale gas has reduced natural gas prices, and the U.S. is currently the largest natural gas producer in the world. As a result of these low natural gas prices, companies are now looking to export U.S. natural gas as liquefied natural gas, or LNG, to Europe and Asia where the prices are higher. Many policymakers want to export LNG for geopolitical reasons too. Russia provides about 30 percent of Europe’s overall natural gas demand, and continued Russian aggression in Ukraine has hastened Europe’s plans to seek alternative supplies. While terminal construction times, infrastructure limitations and price concerns limit the ability of Europe to stop importing Russian gas altogether, exporting U.S. LNG is one of the options (PDF) that can increase energy security in Europe. But exporting LNG requires a substantial amount of three things: capital, infrastructure, and energy. Our research team wanted to find out how an increase in U.S. LNG exports would affect greenhouse gas (GHGs) in the U.S. and abroad, and we found exports most likely save GHGs globally. Like most energy policy issues though, it’s complicated.

Global LNG trade was about 12 trillion cubic feet (Tcf) in 2012. The Natural Gas Act, as amended, provides for expedited LNG export approval to countries with which the U.S. has a free trade agreement (FTA), while export applications to non-FTA countries must undergo an extensive review process to determine whether the marginal increase in export capacity is in the U.S public interest. Factors considered in the public interest determination include economic, international, energy security, and environmental impacts (PDF). To date, the total non-FTA export capacity is 3.8 Tcf/year. Recent and proposed policies will expedite the export approval process, and the quantity of LNG exports from the United States is likely to increase in the future. If all of the pending applications to the Department of Energy (DOE) were to be approved, export capacity to non-FTA countries alone would reach almost 14 Tcf/year.   

To get U.S. LNG into European or Asian markets, gas has to be produced, processed and transported to U.S. LNG export terminals. There, the gas is cooled to -256 °F and loaded onto LNG tanker ships as a liquid, and heads for foreign ports. The LNG is unloaded in an import facility, where the LNG is regasified and then used for electricity or heating. This whole process, or life cycle, results in GHG emissions from energy use and methane leakage. In addition to estimating the life cycle emissions from the LNG supply chain, we considered how the natural gas might be used when it arrives at its destination. The way the LNG interacts with the importing country’s energy landscape provides important context for estimating life cycle emissions. For example, exported U.S. LNG may displace the use of coal or other sources of natural gas, and it may have multiple end uses, such as generating electricity or heat.

In a new peer-reviewed paper in Environmental Science and Technology, our research team found that each of these different fuel displacements and end uses, along with different global warming potential time scales and methane leakage rates, has a different emissions profile. For example, by displacing coal, LNG reduces life cycle emissions from electricity generation by 45 percent and life cycle emissions from heat generation by 16 percent on a 100-yr global warming potential with an average of 3 percent fugitive emissions rate. We found LNG saves GHGs under upstream fugitive emissions rates up to 9 percent and 5 percent for electricity and heating, respectively. The DOE reported that leakage rates for Russian natural gas exports were several percent higher than U.S. leakage rates. Therefore, we found using U.S. LNG can most likely have lower life cycle GHGs when it displaces Russian gas, as long as U.S. leakage rates remain below about 5 percent. What this means is that LNG exported from the U.S. is mostly likely to save GHGs when it substitutes for coal or Russian natural gas abroad. 



We found that in the LNG life cycle, emissions from methane leakage matter – a lot. Leakage emissions matter much more than say, which U.S. port we ship LNG from, or even whether we ship it to Europe or Asia. Shipping is only 3.5-5.5 percent of the “landed” emissions of US LNG delivered to foreign ports. So the recently proposed more stringent actions to reduce leaks in domestic upstream production and pipeline transmission are the most important thing policymakers should consider to ensure LNG exports have global GHG benefits. In fact, LNG importing nations should also prioritize methane leakage reductions. If the natural gas is widely distributed via pipeline transmission after arriving in the importing country, there could be additional methane leakage that could reduce GHG benefits. The White House has issued guidance to start counting the “upstream” emissions in NEPA actions. Policymakers can use our life cycle estimates to understand how the environmental profile of the exports affects the public interest determination for LNG exports.

While global GHGs are likely reduced by exporting U.S. LNG when substituting for coal and Russian gas abroad, the U.S.’s emissions will go up when we make LNG. So if emissions inventories for climate negotiations stop at country borders, we could look worse while other countries could look better. We find there is an imbalance in accrued social costs and benefits, from a country-specific carbon accounting perspective. Using a social cost of carbon of $49 per metric ton, when U.S. LNG displaces coal for electricity generation abroad the global social net benefits are about $28 per MWh. But incorporated into these savings is an additional U.S. country-specific cost of producing and liquefying the natural gas of about $13 per MWh. Under the range of U.S. social cost of carbon prices, exporting LNG could have a social cost of between 12.5 percent to 137 percent of the market price of gas (at $4/MCF). This is important because emissions inventories for global climate discussions traditionally focus on what is emitted within a country’s borders, rather than on the net global consequential impact of those emissions. Thus this spatial shift in embodied carbon emissions, as well as other local environmental and social impacts from increased domestic natural gas production, is another important consideration when determining whether increased U.S. LNG export capacity is in the public interest.

Here is a video abstract summarizing our results:

Leslie Abrahams is a joint PhD student in the Departments of Engineering and Public Policy and Civil and Environmental Engineering at Carnegie Mellon University

Costa Samaras is an assistant professor in the Department of Civil and Environmental Engineering at Carnegie Mellon University

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Thank Leslie for the Post!
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Joe Schiewe's picture
Joe Schiewe on Feb 26, 2015

I thought the US imported more natural gas than we exported.  What is the incentive for us to export more of it? Why not keep it ourselves until we at least at a balance and have those that currently import to us export to those you propose we export to?  I am sure that there are some nuances (different grades of LNG?) that I am not aware of for it sounds like this is more about US jobs and profits.  If that is the case – just say it.

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