Despite the fact it's a fossil fuel, natural gas is still getting a lot of attention, with companies and governments continuing to fund new large-scale gas operations as the world begins its transition to green.
Several factors have helped create the hype around natural gas. Firstly, several governments and regional bodies, such as the EU, have included natural gas in their green energy taxonomies as a sustainable source of energy that is expected to support the transition away from dirtier fossil fuels. Second, the demand for oil and gas remains high, and as gas is viewed as the cleaner option, energy firms anticipate many more decades of gas use ahead of them. And thirdly, the Russian invasion of Ukraine and subsequent sanctions on Russian energy have made many state powers feel the need for greater domestic or allied gas production to avoid gas scarcity and boost energy security.
As energy companies and governments worldwide invest heavily in the future of natural gas, some are questioning whether the ongoing funding of the fossil fuel industry can be justified. While renewable energy projects are receiving greater attention and financing, many energy firms are continuing to invest in new gas projects as they expect demand to remain high. But is this the wisest way to bridge the gap to a green transition?
Five liquefied natural gas (LNG) export terminals are currently being built or expanded in the U.S., concentrated along the US Gulf coast in Louisiana and Texas. Another eight projects have been approved and eight more have been proposed. These projects all sit within a 700-mile stretch of coastline, where five plants are already in operation. If all the projects go ahead, this would double to triple the gas export capacity of the U.S.
This may seem positive at a time when Europe and North America are facing severe gas shortages in the wake of the Russia-Ukraine conflict. However, it's important to consider what this will mean in the long term, with massive investments in new gas infrastructure increasing the potential longevity of the fossil fuel. Yes, consumers may be grateful for lower gas prices, and the U.S. will ensure its energy security, but at what cost to its climate goals?
A recent report from Climate Action Tracker stated "This reaction to the energy crisis is an overreach that must be scaled back. As the world's largest oil and gas producer, the US should show the way beyond fossil fuel extraction - but unfortunately, it is now doing exactly the opposite."
A whopping $42 billion is expected to go into new LNG infrastructure next year, compared to $2 billion in 2020.Experts worry that producers may be overestimating the future demand for LNG as they request permission for huge new operations. This could lead to an ongoing reliance on fossil fuels, even as the global renewable energy capacity increases and the need for gas decreases. It could also mean that carbon emissions continue to rise, even as many countries strive for net zero.
Last year, following the Russian invasion of Ukraine, the International Energy Agency (IEA) revised its outlook for natural gas. The organisation stated that gas was no longer being seen as a reliable and affordable energy source, causing governments to look to alternative energy sources to ensure their energy security. This led the IEA to revise its gas growth prospects. Global gas demand is now expected to increase by a total of 140 billion cubic metres (bcm) between 2021 and 2025, less than half the amount previously forecast and lower than the 170 bcm increase seen in 2021 alone.
As new projects take off, one development in Louisiana, the Plaquemines LNG terminal, is concerning energy experts that think the high LNG demand is being vastly exaggerated, and the significance of resulting emissions misjudged. The Institute for Energy Economics and Financial Analysis (IEEFA) highlighted omissions in the Federal Energy Regulatory Commission (FERC) project analysis. If approved, the facility would increase production by 3.2 million tonnes per year. But IEEFA believes that FERC failed to assess the risk of higher methane emissions; the effects of improved methane controls on LNG supply; and the potential pollution effects of transporting the LNG across oceans.
And it's not just the failure to correctly analyse individual project proposals that's concerning, it's the sheer amount of new gas sites that are expected to come online over the next decade. A multitude of energy firms have plans to launch new gas projects including Qatar Energy, Gazprom, Saudi Aramco, ExxonMobil, Petrobras, Turkmengaz, TotalEnergies, Chevron, and Shell. A November report showed that new fossil fuel projects approved (including oil, gas, and coal) could lead to an increase of 70 billion tonnes of CO2 being released into the atmosphere during their operation. This would significantly hinder global climate targets.
Governments and energy firms are pumping funds into new gas projects using the justification of LNG scarcity in the wake of the Russia-Ukraine conflict and the need to ensure their energy security. But according to estimations, the demand for natural gas is expected to fall as the green energy capacity increases worldwide and more climate policies are introduced, incentivising the shift away from fossil fuels. This could result in the development of unnecessary gas infrastructure or a continued reliance on gas that we no longer need.
By Felicity Bradstock for Oilprice.com
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Felicity Bradstock is a freelance writer specialising in Energy and Finance. She has a Master’s in International Development from the University of Birmingham, UK. More
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