James P Chance Howarth’s Post

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Energy Transition, Capital Markets & IR

Ratcliffe-on-Soar’s closure has been widely celebrated as it made the UK the first G7 country to fully eliminate coal power. But what if the replacement is just as damaging? Is another dirtier secret hiding in plain sight? Environmental scientist Robert Howarth's (no relation) analysis of US LNG argues there is: https://lnkd.in/dMKrSJzw His conclusion: US LNG has a 33% higher footprint than coal, largely due to high methane leakage. If true, it drives an LNG tanker through the UK's emissions leadership credentials. Most UK gas supply is imported. ~40% comes via pipeline from Norway. Sourcing from friendly, reliable neighbours with lower emissions intensity makes sense. As UK LNG imports nearly trebled in just 5 years to 2023, the US rapidly emerged as dominant supplier. Last year, US LNG was 26% of imports, up from zero pre-2018 and 4x more than Qatar. Although down this year, US LNG – largely shale gas whose extraction, processing, liquefaction, shipping and regasification results in total emissions comparable to coal – is now effectively the UK's supplier of last resort. Meanwhile, rising policy barriers to UK gas investment are accelerating the decline of domestic supply, which has ~1/4 the average emissions of LNG imports. Besides the domestic socio-economic impacts, this seems environmentally absurd. As the North Sea is mature, arguably it can no longer fill the gap. But maturity is partly a self-fulfilling prophecy: the less that is invested, the more mature it gets, hastening a disorderly decline. This creates still heavier dependence on emissions-intensive imports and undercuts efforts to reduce domestic emissions intensity (which have gone sideways for the past 5 years). Since much of US LNG's emissions fall outside the UK, they don't appear in the UK headline "territorial" emissions figure. Fixating on that target means external emissions - even if serving the UK market and clearly impactful - may get conveniently ignored. This may partly explain the strange de facto policy of favouring dirtier imports over cleaner domestic production, with its associated jobs, supply chain benefits and tax revenues. Why not just stop using gas? Accelerating the renewable ramp-up, storage rollout, grid upgrades and electrification are all essential, but gas still won’t disappear anytime soon given its key role in heating (~85% of homes), power (>30% of supply) and industry. Like coal before it, UK gas demand is in long-term decline, down 36% since 2010, accelerating in 2022-23 amid sky-high prices. Those price spikes – and higher “new normal” price levels post-crisis – also reflect the enduring value of flexible, dispatchable gas for energy security. A domestic gas supply revival looks less likely than ever, but certainly seems better than excessive reliance on LNG imports. https://lnkd.in/dXpGaiAA

UK's last coal plant shutdown bodes well for US LNG exports: Maguire

UK's last coal plant shutdown bodes well for US LNG exports: Maguire

reuters.com

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