Tokyo Gas, gas users form alliance to boost use of carbon neutral LNG

TOKYO (Reuters) - Tokyo Gas Co Ltd and 14 other Japanese companies that use city gas have formed an alliance to enhance the use of carbon neutral liquefied natural gas (LNG) to help tackle climate change, they said on Tuesday.

Carbon neutral LNG typically involves companies supporting projects that reduce emissions to compensate for emissions generated from exploration and production.

The move, which comes as carbon reduction targets tighten around the world, may encourage global gas producers to offer cleaner supplies.

Members of the new Carbon Neutral LNG Buyers Alliance come from various industries and include Toshiba Corp, Isuzu Motors Ltd and Mitsubishi Estate Co Ltd.

In 2019, Tokyo Gas, Japan’s biggest seller of city gas, bought a cargo of carbon neutral LNG from Royal Dutch Shell, which also supplied a similar cargo to South Korea’s GS Energy, Taiwan’s CPC Corp and China National Offshore Oil Corp, or CNOOC.

Tokyo Gas has already sold some of the supply to its local customers and it wants to expand the buyers’ network, Kunio Nohata, the company’s executive vice president, told a news conference.

“We are seeking an innovation in hydrogen, methanation and carbon capture utilisation technology, but it may take time,” he said.

“Therefore we want to spread the use of carbon neutral LNG which is the most feasible measure right now to slash CO2 emissions,” he said.

Nohata declined to comment on the cost of carbon neutral LNG, citing confidentiality obligations.

Tokyo Gas hopes more LNG producers will offer carbon neutral LNG so that it can widen its procurement sources, he said.

In February, Hokkaido Gas Co Ltd said it will buy carbon neutral LNG, which will account for about 10% of its annual LNG purchases, from Mitsui & Co Ltd.

Reporting by Yuka Obayashi; editing by David Evans