China-backed finance institutions have invested the most for liquified natural gas (LNG) in Asia, with as much as US$5.47 billion in project finance for cleaner burning fuel for ships, a new study has found.
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LNG produces fewer greenhouse gas emissions than coal and oil and has been promoted as a “transition fuel” away from heavier fossil fuels. However, experts warn that it is not a low-emissions option because it is largely composed of methane, a potent greenhouse gas.
China, the world’s largest shipbuilder, has yet to officially support a plan to reduce greenhouse gas emissions from shipping, but has pledged in its nationally determined contribution to peak carbon dioxide emissions before 2030 and achieve carbon neutrality by 2060. However, it has declined to join a global pledge to cut methane emissions by 30 per cent by 2030.
South Korea and Japan occupied the second and third spots respectively, as the region’s top contributors to maritime LNG projects based on project financing, despite their commitments to the Paris Agreement and maritime decarbonisation initiatives, according to a study by nonprofit Maritime Beyond Methane that analysed how public financial institutions, such as governments and development banks, support and fund the global LNG shipping sector.
The duo are part of the pledge to curb methane as well as signatories to an agreement to accelerate decarbonisation through “green shipping corridors” between ports. Like China, they are global leaders in ship making, with the three of them dominating over 90 per cent of global production in 2025.
Germany topped the list of the biggest investors in maritime LNG, undermining its well-developed climate policy framework with legally binding climate targets, including a commitment to reach climate neutrality by 2045.
China tops the list of Asian countries that have made the most investment in project financing for liquified natural gas (LNG). Image: Methane Beyond Maritime
State-owned public finance institutions, including export credit agencies and development banks, have directed more than US$21.9 billion globally towards maritime LNG projects through 76 deals over the period of 2013 to 2025, according to the study.
But the analysis said about 18 per cent of these deals, worth over US$8 billion, were categorised as sustainable through “broad, ambiguously defined green-finance frameworks and investment principles”.
Some institutions might have limitations with public reporting of financial contributions just like how Chinese institutional lending policies restrict the public reporting of deal terms, it noted.
“Many financial institutions obscure their involvement by restricting public reporting of information, channeling funds through private subsidiaries, or investing under ‘green’ finance frameworks, enabling LNG investment to persist under the guise of sustainability,” reads the study.
“There is an urgent need for greater transparency in shipping finance to address inconsistent financial reporting, the role of financial intermediary lending, and the role of sustainable or ‘green’ finance frameworks in funding high-emission projects that will not be compliant with future decarbonisation policies.”
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