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Tariq Siddiqui's picture
COO Upstream EP Advisors LLC

Oil & Energy | Business Development | Capital Projects | Offshore Wind -  Proven leader in offshore development and operations, with 25+ years’ expertise in managing business through cycles...

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  • Dec 21, 2022
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The pressure on LNG to reduce emissions is coming from investors who are wary of sinking money into carbon-intensive projects that will be on their books for decades.

Inflation Reduction Act, which expanded the 45Q tax incentive for capturing and storing carbon, “considerably improves the economics of CCS and likely accelerates the implementation of these solutions.”

  1. The   cost of CCS at a generic facility between $175 and $400 per ton,
  2. That would now be partially offset by the 45Q tax credit of $85 per ton. 
  3. LNG terminals do have some technological advantages in using CCS compared with other facilities; LNG produces a fairly pure carbon dioxide stream as a byproduct of the liquefaction process.
  4. European and Asian countries that are looking to expand imports from the United States have made commitments under the Paris climate agreement to curb emissions and are looking for energy sources that match those commitments.
  5. n response, companies including Cheniere and Chevron Corp. have developed their own criteria for measuring the greenhouse gas content of their products,

BOTTOM LINE

The future of the industry after this tight market is going to basically be a competition for who can provide the lowest-carbon LNG,Potential regulation also plays a role in the industry’s interest in CCS, though Clean Air Act rules targeting carbon are not on the industry’s immediate horizon.

 

 

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