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News Commentary

High energy prices, climate imperatives must dash gas ambitions in SEA

Gerry Arances - Philstar.com
Fisherfolk hold a protest in the waters of Batangas City on April 22, Earth Day to denounce the expansion of fossil gas plants and liquefied natural gas (LNG) terminal in the area.
Mara Manuel for Center for Energy, Ecology and Development

Upon the opening of the 2nd week of the 27th Conference of Parties (COP) of the United Nations Framework Convention on Climate Change (UNFCCC) here in Sharm El Sheik, Egypt, the buzz on “gas as a transitional fuel” especially for developing countries like Africa (and Asia) has been deafening. It is a phrase that is too familiar to host communities across Asia confronting fossil gas and liquified natural gas (LNG) projects, and other fossil fuels.   

When the fight against coal started over a decade ago in the Philippines, communities, civic movements, youth, and all frontline sectors were fighting not just to stop coal projects in their respective hometowns, but to protect the hope for a livable and sustainable future.

This is what fueled a resistance that eventually won a coal moratorium in 2020, toppled down numerous projects put forward by the biggest corporations, and ultimately blocked the Department of Energy’s (DOE) projection in 2014 of a power mix dominated by the dirtiest fossil fuel at a share of 80% by this year. 

One would think that dealing such heavy blows to the coal industry would mean we are coming closer to a sustainably powered future. Instead, the Philippines is going full circle with another massive fossil pipeline—29.9 GW of new fossil gas power and 9 new liquefied natural gas (LNG) import terminals.

This capacity is but part of a region-wide lofty ambition for gas power. Recent years saw Southeast Asia emerge as a developing market for fossil gas, so much so that its massive 117 GW gas power plants in the pipeline have eclipsed that of East Asia’s 77 GW planned projects.

Since the adoption of the Paris Agreement in 2015, SEA countries at various levels of fossil gas production and dependence have been hugely investing in natural gas infrastructure across the supply chain, from LNG terminals to pipelines to regasification facilities and power plants.

Vietnam leads this expansion with 56.3 GW in the pre-construction and construction stages. The Philippines’ gas plans come second with local conglomerate San Miguel Corporation accounting for nearly half the proposed new capacity at 14.1 GW - the largest from a single developer in the region. Even carbon major Shell has revived its plan to build an LNG import terminal in the already crowded fossil gas hub of Batangas province. 

Southeast Asia’s gas boom comes at a time of intensifying clarity that the climate crisis leaves no space for new fossil fuels—coal, gas, or oil—anywhere in the globe. At COP, civil society and some brave government voices ring out in all available spaces to surface how incompatible retaining dependence on fossil fuels is to the 1.5°C climate ambition. 

A recent report by Climate Action Tracker released during the climate convention showed that the global “LNG capacity under construction, coupled with expansion plans today, could increase emissions by over 1.9GtCO2e per year in 2030 above the emissions levels consistent with the IEA’s Net Zero by 2050 scenario.” This build-up is five times the 2021 EU’s imports of fossil gas from Russia, and double total global Russian exports.

With Southeast Asia leading the global fossil gas and LNG build up with around 117GW as of October 2022—as unveiled by a special report of the Center for Energy, Ecology and Development (CEED), also released during COP27—this would mean disaster to the climate-vulnerable region. 

The fossil fueled crisis of high energy prices today further makes the case for abandoning Southeast Asia’s ambitious gas plans.

Vulnerable peoples in the region have been paying the price of coal, gas, and other fossil companies’ pollution and profits with an unending onslaught of typhoons, floods, droughts, and other terrible climate impacts—now they are also confronted by skyrocketing energy prices. Barely recovering from the economic crisis brought on by COVID-19, our people are now forced to choke out much of their meager earnings to keep powering their homes. 

There is no denying it: continued fossil fuel dependence is igniting a global energy crisis and we are footing the bill.

Hitting too close to home, the Philippines has been battered by steadily rising electricity prices. It has overwhelmed urban centers and even some of our poorest provinces, whose residents now pay among the highest prices with residential rates spiking up to 150% increase in power tariffs. 

Fossil fuel dependence has also reached its economic reckoning in Asia. We see far too many illustrations of the chaos driven by the energy crisis: in Sri Lanka, for example, lines snaked for miles and residents reported having to line up for days to fill a tank of fuel. In Bangladesh,  commercial centers and businesses have been closing early to save on power.

The surge in global prices of fossil gas and coal is at record highs, exacerbated by the impact of the Russian invasion of Ukraine. It accurately depicts just how volatile and hypersensitive fossil fuel prices are to external factors. With the war’s end nowhere in sight, it continues to squeeze the already tight supply. Prices have rallied to new highs, and countries in SEA, whose coal-fired generation already comprises more than 40% of the mix and yet is still intent on adding more gas in the mix, are setting themselves up for worse. 

In March 2022, the Asian spot price for LNG is US $84.76 per million British thermal unit (MMBtu) - more than 15 times its price just a year before. In August 2022, the Asian LNG spot market price hit a new high, trading over USD 70 per mmBTU. Forecasts are gloomy with projections that gas prices will remain high until 2026 when new supply capacity becomes available. 

Due to its exorbitant price, many Asian countries have experienced difficulty securing LNG supply from the market. In South Asia, Pakistan could not afford the high LNG prices due to its low foreign exchange reserves. Similarly, Bangladesh has been forced to cut its LNG imports due to soaring prices and limited supply.

Its unaffordability also exposed the vulnerability of gas projects to become stranded as two LNG terminals in the Philippines expected to be operational this year have been deferred to next year.

The fossil fuel industry has long perpetuated the narrative that fossil gas is a bridge fuel that will provide cheap, reliable energy. It is not. If anything, fossil gas is an expensive detour away from affordable and climate-aligned energy sources. One could only be reminded of how coal was touted in the Philippines and Asia in the last decade as a clean and cheaper fuel! 

All these points to the need to move away from fossil fuels - totally and with urgency. Massive fossil gas expansion will further threaten SEA’s energy security and worsen electricity costs in a region composed of developing nations that are accosted year by year by the impacts of climate change.

Averting a fossil future for Southeast Asia comes at a most opportune time. In the face of climate and economic crisis, it is critical that SEA recognizes the urgency to transition to a 100% renewable energy-powered future where people and the environment will benefit and that the path to energy security need not be costly and encumbering.

If governments, corporations, and world leaders will still pursue this path of further climate destruction, we can only rely on the communities and peoples of the world. Most of the new fossil gas in the Philippines and elsewhere in the Southeast Asian region is now being resisted.

As of this writing, another proposed 300 MW LNG project in the Philippines is again stalled after it has withdrawn its application for an environmental compliance certificate.

As Krishna Ariola, a young Filipina first-timer in COP who ferociously fought this project along with her brave colleagues in the youth movement on the island of Negros, clearly exclaimed here in Sharm El Sheik - “Changing the world is not only necessary. It is possible!”

Moving away from this new fossil gas detour is not only necessary. It is possible. 

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Gerry Arances is founder and executive director of Center for Energy, Ecology and Development (CEED) in the Philippines.

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