Expansion of US LNG Capacity Could Dramatically Reduce Global Greenhouse Gas Emissions

Expansion of US LNG Capacity Could Reduce Global Emissions

A recent study conducted by SP Global emphasizes the potential environmental benefits of increasing the liquefied natural gas (LNG) export capacity in the United States. The research indicates that the continuous development of U.S. LNG projects, especially those currently on hold or still in pre-Final Investment Decision stages, could lead to a significant reduction in global greenhouse gas (GHG) emissions by 2040.

Several key findings emerge from this extensive analysis. The projects under consideration could collectively add 40 million tons per annum (Mtpa) to U.S. LNG export capacity from 2028 to 2040, which would result in GHG emissions dropping by an estimated 324 million tons to 780 million tons of CO2 equivalent (CO2e) over the said period. This reduction translates approximately to avoiding the annual carbon footprint generated by all gasoline vehicles in Los Angeles County or an equivalent decrease in emissions across the United Kingdom's entire vehicle population over the same time frame. Furthermore, the emissions impact is comparable to the CO2 absorption capacity of an astounding 5.4 billion trees over a decade.

The lower GHG intensity of U.S. LNG, compared to the average intensity of various alternative energy sources, accounts for these significant emission reductions. Approximately 85% of the potential energy substitutes to U.S. LNG are non-U.S. fossil fuels, which generally have a higher GHG emissions profile, contributing to the value of expanding U.S. LNG capacity. As Eric Eyberg, Vice President of Gas and Power Consulting at SP Global, explains, "The continued expansion of U.S. LNG capacity enhances global energy security while avoiding higher global greenhouse gas emissions."

The implications of this study stretch beyond environmental impacts; they encompass economic and geopolitical dimensions, too. The previous phase of the study highlighted that growth in U.S. LNG export capacity could secure nearly half a million domestic jobs every year, contributing about $1.3 trillion to the U.S. GDP by 2040 without significantly raising domestic gas prices. Conversely, neglecting the development of new or currently paused LNG capacity risks losing around 100,000 jobs annually and over $250 billion in GDP contributions.

In Phase 2 of the study, researchers delve deeper into the environmental impact of U.S. LNG capacity growth and extend the economic analysis to individual states and congressional districts. An interesting aspect highlighted is the significant potential for economic growth in non-producing states, which could see 37% of new jobs (180,000+) and 30% of GDP contributions ($390 billion) flowing into areas that do not directly produce natural gas. Essentially, about 90% of each dollar spent in the LNG supply chain would remain within the U.S., fostering further economic activity.

Moreover, the study examines how removing infrastructure bottlenecks in the Northeast U.S. could impact pricing significantly. Despite the richness of the Marcellus and Utica formations, pipeline constraints have resulted in gas prices being markedly higher than the national average, especially during cold months. The report indicates that expanding exit capacity by 6 billion cubic feet per day could lead to a considerable reduction in gas prices in Northeast markets—projected drops of 20% to 30%, and significant national savings totaling around $76 billion by 2040.

In conclusion, the insights provided by SP Global not only clarify the robust economic potential of advancing U.S. LNG capacity but also reinforce its critical role in decreasing global GHG emissions. By adopting a comprehensive, forward-looking approach, this study serves as a valuable resource for policymakers, industry stakeholders, and environmental advocates alike, illustrating a path forward to achieving a more sustainable energy landscape. As the call for cleaner energy solutions intensifies, the findings of this study invite a strategic dialogue on the role of U.S. LNG in the global energy transition and its implications for future energy security.