Green drivers lead to innovation for Pavilion
The Singapore LNG company's new GHG requirements could help set an industry standard
Written by Andrew Hedges, partner, Norton Rose Fulbright
On 31 March, Singapore-based LNG importer Pavilion Energy launched a request for proposals (RFP) of up to 2mn t/yr of LNG for the Singaporean market. In what was an industry first, the RFP outlined Pavilion Energy’s requirement for supply partners willing to commit to the joint development and implementation of a greenhouse gas (GHG) quantification and reporting methodology for the LNG delivered. Bidders were also encouraged to include proposals for GHG reductions as well as to offset carbon from the delivered volumes.
In a significant development, this could set the scene for a standardised industry framework for LNG GHG emissions and pave the way towards more environmentally responsible and sustainable natural gas strategies. We discuss further with Pavilion Energy Group CEO Frederic H Barnaud.
Please walk us through some of the drivers for Pavilion Energy in launching this innovative procurement.
Barnaud: In addition to supplying reliable and competitive natural gas and LNG to Singapore, Pavilion Energy has taken the decisive step to integrate LNG with carbon-neutral ambitions into our portfolio. We believe that the attractiveness of natural gas as a transition fuel must be reinforced by a better understanding of, followed by the reduction of, its carbon footprint.
There is no standardised methodology for quantification and reporting of GHG emissions for LNG cargoes across the value chain from well to discharge port that is transparent and verifiable. With this RFP, we are pursuing equitable quantification and transparent reporting of GHG emissions associated with each LNG cargo produced, transported and imported into Singapore. The statement of GHG will eventually be issued on a per-cargo basis via electronic means, designed to align with existing cargo delivery documentation.
We see the need to build partnerships around standardisation, certification and price transparency for GHG emissions reduction or offset certificates in Asia—and eventually to develop a market and trading hub in Singapore. The next steps are to put in place a taskforce, with some of our strategic shipping and commercial partners, and other stakeholders such as generation companies where this dialogue can take place in a meaningful and practical way.
How do you see this evolving? Will cargo-based carbon footprint calculations become more common?
Barnaud: We foresee a situation where carbon-neutral LNG will be a requirement to stay competitive, where industries eventually evolve to a state where carbon neutrality becomes a norm for all of us. Beyond just a supply tender, this RFP is also about building up partnerships that will last for many years and bringing about a positive impact on the industry.
Pavilion Energy views increased long-term demand in carbon offsets as the key to unlocking additional GHG mitigation projects that benefit communities and the environment. Such projects could include forest conservation or the development of significant renewable power generation that would not have otherwise occurred.
Where does this fit with the wider climate mitigation plans of Singapore?
Barnaud: Natural gas, which is the cleanest burning fossil fuel and comprises 95pc of Singapore’s electricity generated, is expected to continue being Singapore’s leading fuel source in the near future. As a supplier of both LNG and natural gas, Pavilion Energy is deeply committed to supporting Singapore’s energy transition and in particular the strategies to decarbonise imports of natural gas and LNG for power generation plants and industries. In the context of reducing overall carbon emissions and in line with our progressive roadmap on sustainability, we will also review hydrogen as a complement to natural gas.