A key growth driver behind liquefied natural gas (LNG) demand has been environmental policy and regulatory pressure driven by decarbonization and air quality improvement goals. The Paris Agreement signed in 2016 aims to restrict greenhouse gas (GHG) emissions and slow the global temperature rise to 2 °C above pre-industrial levels. The Philippines committed to the agreement. It pushes for cleaner sources like natural gas to meet its growing energy demand. This aligns with its decarbonization goals. Additionally, it announced limits on air pollutants such as carbon monoxide (CO), hydrocarbons (HCs), oxides of nitrogen (NOx) and sulfur (SOx), and particulate matter (PM). Exhibit 1 shows examples of a few decarbonization and air quality goals adopted globally.
Exhibit 1: Decarbonization and air quality goals adopted globally
Decarbonization and air quality goals drive LNG demand for power generation in the Philippines. This is further fueled by a maturing LNG market, technology and business innovation leading to capital and operational expenditure improvements, and commoditizing LNG markets. Exhibit 2 below illustrates delivered ex-ship cost (DES) of U.S. LNG to the Philippines based on a tolling model. U.S. LNG exporters have introduced flexibility and cost competitiveness into the LNG market. They achieve this by allowing LNG buyers to pay tolling fees and reserve liquefaction capacities, regardless of liquefaction or usage fees. This is expected to drive LNG demand growth in the Philippines.
The rest of this article is available to ADI Plus Essential subscribers. ADI Plus Enhanced and Enterprise subscribers also get a downloadable PDF of the report.
Log in or subscribe to unlock ADI Plus content >>
Have questions? We're happy to help.
About ADI Analytics
ADI is a prestigious, boutique consulting firm specializing in oil and gas, energy transition, and chemicals since 2009. We bring deep expertise in a broad range of markets where we support Fortune 500, mid-sized and early-stage companies, and investors with consulting services, research reports, and data and analytics, with the goal of delivering actionable outcomes to help our clients achieve tangible results.
We also host the ADI Forum that brings c-suite executives together for meaningful dialogue and strategic insights across the oil & gas, energy transition, and chemicals value chains. Learn more about the ADI Forum https://www.adi-analytics.com/forum/.
Subscribe to our newsletter or contact us to learn more.
