New analysis from the International Energy Agency urges urgent action to reduce greenhouse gas emissions from liquefied natural gas. ESG BROADCAST shares key takeaways.
Regulatory Extract:
The International Energy Agency (IEA) has released a landmark report quantifying greenhouse gas emissions across the liquefied natural gas (LNG) supply chain and identifying multiple cost-effective strategies to reduce them. Titled Assessing Emissions from LNG Supply and Abatement Options, the report was published on June 20, 2025, and unveiled by IEA Director Keisuke Sadamori during the 2025 LNG Producer-Consumer Conference in Japan.
Based on the latest global data, the IEA estimates that the LNG supply chain is responsible for approximately 350 million tonnes of carbon dioxide equivalent (Mt CO₂-eq) emissions annually. These emissions stem from upstream gas production, pipeline transport, liquefaction, shipping, and regasification. Around 70% of emissions are carbon dioxide from combustion and venting, while the remaining 30% is methane released unburned into the atmosphere—a key contributor to climate risk.
“The IEA finds that emissions from global LNG operations could be reduced by more than 60% using existing technologies,” the report states. Measures include methane leak detection and reduction, flaring minimization, improved energy efficiency, and the deployment of carbon capture, utilisation, and storage (CCUS) systems.
Notably, methane abatement alone could cut 90 Mt CO₂-eq annually, representing one-quarter of total LNG emissions. The report emphasizes that nearly half of this methane reduction potential could be achieved at no net cost, making it an immediate priority for policymakers and LNG producers alike.
While LNG is often positioned as a cleaner alternative to coal, the report urges caution. In 2024, over 99% of LNG consumed had lower life-cycle emissions than coal, but this comparison “sets the bar too low” when discussing sustainability. On average, LNG emits about 25% less greenhouse gases than coal per unit of energy delivered. However, this advantage is undermined by wide geographical variations in supply chain efficiency and methane intensity.
The report underscores the role of electrification in reducing emissions. Electrifying LNG terminals and upstream infrastructure using clean electricity could cut an additional 110 Mt CO₂-eq annually. Though capital-intensive, these upgrades are increasingly viewed as essential for aligning LNG with longer-term climate policy goals.
The IEA’s findings align with international climate governance priorities and come at a time when the LNG sector is under pressure to prove its environmental credibility amid growing scrutiny from ESG investors and regulators. With global LNG demand projected to rise over the coming decade, especially in Asia, emissions mitigation across the supply chain is a vital element in ensuring responsible business practices.
Strategic significance lies in the fact that LNG, while cleaner than coal, cannot be treated as a climate solution unless accompanied by serious supply-side abatement efforts. For ESG stakeholders—including energy portfolio managers and sustainability officers—the report signals a shift toward emissions accountability, even within so-called transition fuels.
ESG BROADCAST will continue monitoring the updates related to this topic. Stay tuned to be updated on the related policy and pivotal regulatory shift.
