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East Asian net zero pledges likely to reshape regional energy mix

November 06, 2020

Argus Media:

Pledges by east Asia’s three biggest oil and gas importers to achieve carbon neutrality in the next 30-40 years have the potential to reshape regional energy flows, even as it remains unclear how they will be put into practice.

China, Japan and South Korea have all committed to net zero emissions targets since late September. The countries together imported 16mn b/d of crude in 2019 — 35pc of global imports — and are the world’s three biggest buyers of LNG.

Their carbon neutrality pledges are likely to have the biggest impact on coal. Natural gas demand could benefit over the next decade at least, as part of a switch to cleaner burning fuels. China’s state-owned CNOOC expects gas to make up 50pc of its upstream output in 2035, against 21pc now, as it aligns with Beijing’s 2060 carbon neutrality target. China’s gas use is likely to grow until 2040-45, UK-based think-tank the Oxford Institute for Energy Studies says.

Carbon neutrality pledges will concern exporters. China, Japan and South Korea bought 84pc of Australian LNG exports in the year to 30 June 2019 — about 63mn t. “If three of [Australia’s] largest buyers of LNG plan to go carbon neutral in the next 30-40 years, there is going to be a challenge for the gas sector,” says Tim Buckley, the director of energy finance studies at the US-based Institute for Energy Economics and Financial Analysis. “They are not markets that can be easily replaced.” 

[Kevin Foster]

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