As the war in Ukraine further pounds natural gas markets already facing upheaval and soaring prices, major industry players now have to grapple with a wide array of issues in order to bring order and calm to the sector.
One of those issues in Japan is the future of “carbon-neutral” LNG (CN-LNG), a product that offers both the molecules and credits that claim to offset the emissions from the fuel. After taking off a year ago with sales of CN-LNG to Tokyo Gas, the niche sector has quickly expanded to involve over 40 gas utilities in Japan.
That momentum is now slowing, however, as higher LNG prices eat into company budgets for the CN premiums. It was true even before recent sanctions linked to the war cast doubt on the viability of some energy transactions.
The war in Ukraine is starting to reshape energy markets and the CN-LNG sector, which was created quickly in just about a year, may now need to take a pause and reflect. Japan’s government and businesses need time to analyze CN-LNG standards and framework, which have lacked a common meeting point not only domestically but globally.