The hope is that it would raise gas exports and bring money into state coffers. The plan got a boost in 2021 as Russia’s invasion of Ukraine left Europe scrambling for alternative sources of gas in the short-term.

But now, as more problems emerge, experts are questioning the wisdom of investing vast public sums in the project. 

Europe’s gas demand is declining and is likely to be increasingly fulfilled by booming exports of liquified natural gas (LNG) from the US and Qatar.

Meanwhile, theft of gas from pipelines remains an issue as northern Nigeria and Niger, where the pipeline will pass through, have grown more insecure.

The Nigerian government has spent over $1 billion on its section, with plans for a further $1 billion more to be invested. Experts told Climate Home they fear that much of this money could be wasted.

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Stranded asset

Ademola Henry is an independent adviser to the oil and gas industry. He warned that the pipeline could become economically unviable before the end of its expected lifespan.

He warned that if this happens, the government might have to increase borrowing or taxes or cut spending to offset the losses.

Chukwumerije Okereke is a professor of global climate governance and public policy at Bristol University. He said the pipeline “could result in profits and socioeconomic benefits for the people”.

But, he warned that gas thefts and insecurity in Niger “could pose significant challenges”. Niger suffered a military coup last year and the new government has withdrawn from the Economic Organisation of West African States (Ecowas), a regional political union. This “further complicates the situation”, Okereke said.

He said that the government must “deeply consider” any investments in the sector, especially given global commitments to triple renewable energy and Nigeria’s abundant resources like solar.

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Gas glut

The Trans-Saharan pipeline is a joint project between Nigeria, Algeria and Niger. The plan is for a 4,000 km pipeline to ferry up to 30 billion cubic meters of gas a year from Nigeria, through Niger, to Algeria where it would connect up with existing pipelines across the Mediterranean to Europe.

With Nigeria and Algeria’s state oil and gas companies taking the lead, it was originally scheduled to open in 2015 but there was no progress on it between 2009 and 2019.

In 2019, the pipeline began to be mentioned in planning documents. The three governments signed an agreement to speed it up after Russia’s invasion of Ukraine left Europe looking for more non-Russian gas. 

At that time, Nigeria’s then oil minister Timpire Sylva told European Union diplomats that Nigeria would like to sell them more gas, which he said would “solve the energy problem in Europe”.

But he was not the only one making that offer. The US in particular has ramped up its investment in export terminals to ship its liquified natural gas to Europe and elsewhere. 

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The International Energy Agency predicts a glut of this gas when this infrastructure is up and running, meaning more competition for Nigerian gas sellers.

At the same time, the IEA predicts that Europe’s demand for gas will keep falling, as the invasion of Ukraine fast-tracked plans to get off fossil fuels.

At the time of publication, only the Nigerian section of the pipeline – known as AKK – is being built. 

Okereke warned: “If the Nigerian government proceeds with its part of the Trans-Saharan project and launches it in July this year, despite uncertainties in other participating countries, there’s a risk of assets being stranded – this could lead to substantial losses for the government, impacting taxpayers”.

The post Problems mount for Sahara gas pipeline, leaving Nigerian taxpayers at risk appeared first on Climate Home News.

Russia, the world’s second biggest gas producer, told the United Nations back in February that “natural gas as a transitional fuel… can be used for [emission-cutting] purposes” and this should be recognised at Cop28.

While the final Cop28 agreement does not specifically mention gas, it “recognizes that transitional fuels can play a role in facilitating the energy transition while ensuring energy security”.

It also calls on governments to transition away from fossil fuels in their energy systems so as to achieve net zero by 2050.

Diann Black-Layne from Antigua and Barbuda told the closing meeting of Cop28 that the “transitional fuel” language “is a dangerous loophole”. Coal, oil and gas are all fossil fuels and “we need to transition away from them,” she said.

But Barbados’s climate envoy Avinash Persaud later told Climate Home: “If you actually think about transitioning grids, transition fuels would help to transition with the lowest emissions. You can’t flip a switch and so in the mean time half switch. The challenge is to make sure that the slip road doesn’t become a parking lot.”

Persaud said that “more than a few” countries had supported the language “at some level and at varying degrees”. Another negotiator agreed it “wasn’t just Russia”.

Last-minute addition

Ahead of Cop28, governments and other organisations told a UN panel what they wanted to do to put the world on track to meet its climate goals, in a process known as the global stocktake.

A team of technical experts summarised all the submissions in October. The head of UN climate change, Simon Stiell, called for a “course correction”.

The technical summary included a line which called on governments to “recognise role of natural gas as an efficient transitional fuel”.

At Cop28, a leaked recording heard by Climate Home News shows a Russian negotiator said that ” we suggest emphasising the role of fuels with low-carbon footprint in particular natural gas – that’s transitional fuels and that enables efficient greenhouse gas reductions”.

The UAE Presidency put together an initial 27-page document which included the language which made it into the final text, dropping the mention of gas but referring to “transitional fuels”.

Like many other parts of this document, it included an alternative option of no text. Three days later, after talking to governments, the UAE Presidency dropped it from their next version of the Dubai deal.

With all the attention on the broader issue of fossil fuel phase-out, this language was little noticed or commented on – either in the press or by negotiators.

It stayed off the radar until the scheduled end date for Cop28, 12 December. It appeared in a draft text, according to a source who saw the text, time-stamped 8pm that night.

But some negotiators didn’t see it until the text was published at 7am the following morning. Four hours later, the closing plenary meeting began and within minutes it had been approved.

‘An honest paragraph’

The strongest supporters of anti-fossil fuel language at Cop28 were developed nations, particularly the European Union, and small islands.

But on gas, developed countries did not want to resist, and small islands were still in a separate meeting room discussing the text when the decision was made.

Speaking to press shortly afterwards, German foreign minister Annalena Baerbock said the EU delegation had not had much time to discuss the text.

But, she said through a translator, “for me it is really an honest paragraph”. She said Germany and the EU have been accused of hypocrisy at previous Cops for continuing to use gas while asking other countries to move to renewables.

“We wanted to show that this does not happen from one day for another but it will happen slowly, slowly, slowly,” she said. Gas is “a bridge”, she said, and “every bridge has an end”.

Kaveh Guilanpour, from the Center for Climate and Clean Energy Solutions, said he’d rather the language had not been there “but in many ways its consistent with what lot of countries and regions are actually doing”.

The day before Cop28 closed, Brazil auctioned 193 oil and gas blocks. On the day it closed, the Italian export credit agency lent €400m ($436m) to a firm to supply Italy with gas. The day after, the board of a European public bank decided to keep lending to gas pipelines and power plants.

Small islands not there

The negotiating group for 39 small, developing island states (Aosis) was most likely to object to that language.

But, having seen the final text at 7am, when the plenary started they were still frantically discussing whether to support it or not.

As they entered the room with their comments on the text in hand, the room was already standing to applaud Cop28 president Sultan Al-Jaber’s announcement that it had been adopted.

Their lead negotiator Anne Rasmussen from Samoa took the microphone to say she “was a little confused about what happened”.

Delivering her prepared remarks, she said that because of the transitional fuels language – and other issues – that the “course correction has not been secured”.

“We have made incremental advancements over business as usual when what we really needed is an exponential step change,” she said.

To a standing ovation, she said the text includes a “litany of loopholes” for carbon capture and on the removal of fossil fuel subsidies.

This article was updated on 16/12/23 to include the leaked recording of the Russian negotiator

The post How Russia won a ‘dangerous loophole’ for fossil gas at Cop28 appeared first on Climate Home News.

While it no longer funds the extraction of fossil fuels, the EU backs gas pipelines in Eastern Europe using money generated from taxes on pollution.

When polluting European companies are taxed through the EU’s emissions trading scheme, some of the money goes to the Modernisation Fund.

The fund’s slogan is “accelerating the transition to climate neutrality” and it is aimed at ten Eastern European countries which are among the bloc’s poorest.

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But it is giving €86 million ($92m) to the Tuzla-Podisor pipeline which will transport gas from a new field in Romania’s Black Sea to three Romanian gas power plants and perhaps to Romania’s neighbours soon too.

‘Transition fuel’

Justifying the funding, an EU official told Climate Home that the gas will help Romania get off coal and “as such can contribute to emissions reductions”. 

They added that the investment only covers gas transmission capacity “that corresponds to the amount of gas that can be estimated to replace coal-fired electricity generation”.

But critics told Climate Home that the project would increase emissions and damage the EU’s reputation on climate.

Simon Dekeyrel is an analyst at the European Policy Center. He said the EU’s backing for the project is “a negative development, especially since this pipeline is linked to the development of  a new gas field [Neptun Deep] in the EU”.

He added that the idea of the emissions trading scheme is “putting a price on greenhouse gas emissions” and “if the money obtained is then spent on the development of a new gas field within the EU, that is obviously incompatible with that core idea”.

Leaky pipelines

Romanian Greenpeace campaigner Alin Tanase said that gas pipelines often leak methane, a particularly damaging greenhouse gas.

A recent investigation by the Clean Air Task Force found that of nine European countries studied, Romania had a particular problem with methane leaking from its gas infrastructure.

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Faten Aggad from the African Climate Foundation said the gas backing would further damage the EU’s climate credibility, already weakened from its decision last year to put gas in its list of green investments.

“While the EU is singing the phase-out song internationally, it is keeping options open to leverage them for self-interest,” she said. "There is no single meeting in Africa on energy transition that I attended where Europe’s hypocrisy isn’t pointed out."

The decision to back the pipeline was made in March by the fund’s investment committee, a group of 15 officials from the ten Eastern European beneficiary governments, three other EU member states, the European Commission and the European Investment Bank.

The minutes of the meeting when the investment was approved do not note any disagreement among the committee's members. The investment was approved by the European Commission.

Sliding in before the deadline

A spokesperson for the European Investment Bank (EIB) told Climate Home "the selection and submission of investment proposals rest entirely with and is the responsibility of" the Eastern European states that benefit from the fund.

The spokesperson added that the EIB has only a "limited and legislatively specified role in the Modernisation Fund". The bank does a technical check and financial due diligence.

The spokesperson said that Romania was so far the only country to ask for money for gas transmission projects.

It has also been granted €8m ($9m) for the Ghercești-Jitaru pipeline as well as €276m ($294m) towards two gas power plants in Turceni and Isalnita, on the basis they will replace coal.

The EIB itself, which is run by EU member states, loaned the Tuzla-Podisor pipeline developers €150 million ($160m) in 2018.

The following year, the bank announced it was phasing out support for fossil fuels to become a “climate bank” but, as it had already been announced, the support for this pipeline will go ahead. 

The pipeline could also win funding from the EU’s Connecting Europe Facility, as it will be unaffected by new regulations which mean that will stop backing gas pipelines next year.

The post EU uses pollution tax funds to back Romanian gas pipeline appeared first on Climate Home News.

The Vaca Muerta Sur terminal could bring a surge in Argentina’s oil and gas exports, unlocking the Vaca Muerta field, which holds the world’s second-largest shale gas reserves and the fourth-largest shale oil reserve.

The terminal’s construction site in the San Matías gulf is a hotspot for marine biodiversity and a popular site for whale-watching.

Relevant authorities in Río Negro province support the project, citing economic benefits. They are holding public hearings to approve the terminal’s environmental studies.

Campaigners held demonstrations against the project, accusing the authorities of a lack of transparency and shutting down critics.

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According to the Argentine Institute of Oil and Gas (IAPG), Vaca Muerta could produce three times more oil and gas than it does today. It is limited mostly by a lack of infrastructure and investments. The Vaca Muerta Sur terminal is a key piece of infrastructure to unlock the field’s potential.

The coalition of climate NGOs Global Gas and Oil Network called Vaca Muerta a “carbon bomb”, citing its potential to release up to 50 billion tons of CO2 into the atmosphere across its lifetime.

The EU, in particular, has shown interest in the Argentina’s gas supplies. In July, the bloc signed an agreement with the country to work on a “stable delivery” of gas from Vaca Muerta to Europe. Brazil has also contributed funds to unlock Vaca Muerta’s exports.

Push from local government

The export terminal is a key piece of YPF’s plan to develop the Vaca Muerta field, which has received overwhelming support across political factions. Regional decision-makers in particular have been instrumental to advance the project.

Provincial regulations have prohibited hydrocarbon projects in the San Matías gulf since the 90s, but in 2022 regulators reversed the provincial legislation to allow YPF to develop the terminal.

Last week, the Sierra Grande municipality held public hearings where YPF presented environmental impact studies for the terminal and the associated 570 km pipeline. 

Cristian Fernandez, from the legal department at the Argentine Foundation of Natural Resources (FARN), criticised the environmental studies submitted by YPF. He said there is no contingency plan for pipeline leaks and oil spills.

Protesters on the coast of Río Negro during the Second Plurinational Encounter, which took place in March 2023. (Photo: Carolina Blumenkranc)

But local authorities defended the project, and claimed to have risks under control. Sierra Grande’s mayor, Renzo Tamburini, said the project would help develop the region.

Dina Migani, Secretary of the Environment and Climate Change of Río Negro province, also voiced her support for the project and played down concerns, despite the project’s proximity to whale transit routes.

“In the survey of the entire trace there are no indigenous lands, and the oil monobuoy is 7km away, near the route where the right whales (Eubalaena australis) transit, as happens in Chubut below Puerto Madryn,” Migani told Climate Home.

Shutting down opposition

Fabricio DiGiacomo, a resident in the neighbouring Las Grutas community registered at the public hearing, voiced his opposition to the project, but was not allowed to enter the session. 

“Vaca Muerta has had, on average, about five (oil-spilling) accidents per day since it began its operations, so I do not see how they are capable of defending it”, added DiGiacomo, who rejected the public audience for being “fraudulent”.

The Argentine Association of Environmental Lawyers said in a statement they would submit a legal challenge to the process, which they claimed lacked open access to information and left opposers out of the hearings in an “unjustified” way.

They also claimed that, during the hearings, demonstrators received threats and intimidation from police and supporters of the project.

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Pablo Lada, a local activist from the neighbouring province of Chubut, says that other nearby communities were left out of the conversation on the San Matías gulf, San José gulf and Golfo Nuevo — which all encompass the Valdés Peninsula, a World Heritage Site.

Dina Migani, from Río Negro’s provincial Ministry of the Environment defended the process and said registrations were open to all residents of Sierra Grande.

Fragile site for biodiversity

The Vaca Muerta Sur terminal is meant to connect the Vaca Muerta shale fields through a 570 km pipeline to the sea. This would allow for Argentina to enter the international market as a major oil and gas exporter.

But the export terminal needed for this to happen is located in a fragile site for biodiversity, according to experts. 

Marine species such as right whales, dolphins and killer whales could be affected by oil spills and shipping traffic, said Raúl González, marine biologist from the National University of Comahue.

Southern Right Whale specimens tracked by scientists in the San Matías gulf. Organised by name and colour, they are Aguamarina (red), Zafiro (yellow), Topacio (green), Fluorita (light blue), Coral (blue) and Turquesa (pink). Source: Siguiendo Ballenas.

The impacts to biodiversity, González said, depend on the contingency plans for oil spills and the routes selected for shipping transit.

The Argentine Association of Whaling Guides called for the cessation of the project, citing Argentina’s commitment to the Cop15 biodiversity pact to protect 30% of oceans by 2030.

In a letter sent to provincial legislators, a coalition of environmental NGOs said pushing the terminal “is to condemn the present and future of current and future generations”.

This story was edited on August 31, 2023, to amend Fabricio DiGiacomo’s residence.

The post ‘Carbon bomb’ in Argentina gets push from local government appeared first on Climate Home News.

Chloé Farand’s eye-opening report from Ghana adds to this debate by showing how ruinously expensive it can be to import shipped gas.

The heavily-indebted nation is planning a 17-year agreement with Shell to ship gas in through a new UK and German-backed terminal.

Critics describe this deal as a rope hanging around Ghana’s neck and ask why the government hasn’t learned its lessons from a previous bad gas deal.

That “take or pay contract” was signed when Ghana was suffering power cuts in the mid-2010s. It has since pushed up electricity prices and left many Ghanaians now choosing between power and food.

It also caused an over-supply of gas which dampened enthusiasm for renewables and for capturing the gas which oil companies burn as a waste product.

And it’s not just Ghana whose economy has been damaged by dependence on fossil fuel imports. Just ask Sri Lankans. Or Europeans last winter.

This week’s news:

• Court says renewable firms can seize Spain’s property after subsidy cuts
• Gas lock-in: Debt-laden Ghana gambles on LNG imports
• UK government bets on ‘pragmatic’ climate inaction ahead of election
• Amazon governments set sights on narco-deforestation
• Deep-sea mining ban draws closer despite China’s opposition
• Brazil seeks European trade advantages in return for Amazon protection

…and comment:

• As Guyana shows, carbon offsets will not save the Amazon rainforest

Britain’s climate election

Brits like me have tended to look on smugly as the climate culture war dominates elections in places like the US, Australia and Brazil.

We’ve tended to have a relative cross-party consensus, at least rhetorically, between the main parties – helped by a legally-binding net zero target and the climate change committee.

But, after a surprise election victory in suburban London was credited to anti-air pollution measures, the Conservative government has decided it can save itself from electoral annihilation by making climate action an issue in next year’s election.

By cutting climate finance and backing oil and gas production and polluting vehicles, they’re seeking to contrast their “pragmatic” climate action with the opposition Labour Party’s scary, expensive, radical policies.

But pollsters told Climate Home that this could backfire as “British voters remain one of the most pro-climate in the Western world”.

The real risk is that it scares the Labour Party – whose current leader’s principles are notoriously flexible – into dropping their promise to stop issuing oil and gas licenses.

That would be a shame. Since the launch of the Beyond Oil and Gas Alliance two and a half years ago, the handful of countries committing to stop pumping oil has not grown.

As a decent-sized oil and gas producer, the UK joining would be a huge boost to the agenda and with it the hopes of keeping global warming to 1.5C.

The post Ghana’s gas curse – Climate Weekly appeared first on Climate Home News.

In the past, his earnings have been sufficient to provide for his family. But Gakpo is now struggling to make ends meet. 

Once the poster child economy for West Africa, Ghana is suffering from its worst economic crisis in a generation. The debt-laden nation is gripped by soaring inflation and a depreciating currency that has pushed it to default on some of its debt payments. 

The energy sector has been a major contributor to the country’s financial woes. A lack of planning and unfavourable fossil fuel contracts have previously locked Ghana into paying for gas power far in excess of what it could use, pushing the sector into spiralling debt. 

Electricity tariffs have increased around 50% for small businesses and households since September alone. Gakpo says his electricity bill has doubled in a year. To cope, he is cutting back buying food for his family. 

John Gakpo milling corn flour in his workshop in Accra. (Photo: Emmanuel Ameyaw)

Yet opposition lawmakers, energy analysts and local NGOs have warned that Ghana’s plans to import liquified natural gas (LNG) under a 17-year agreement with oil giant Shell could make things worse. 

The agreement, they say, risks pushing electricity prices even higher, perpetuate a cycle of fossil-fuel related debt and leave little space for renewable energy. 

Until 2020, the UK, Germany and the African Development Bank indirectly channelled development funds for a new LNG terminal in the country.  

The project is part of a $245 billion expansion of gas infrastructure in Africa, according to Global Energy Monitor. But it is among the first to allow commercial LNG imports to a Sub-Saharan African nation. 

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A gamble for economic development  

Ghana is heavily relying on gas to meet its growing power needs. Gas generates half of its electricity, while less than 1% comes from solar. 

The government argues importing LNG will shore up Ghana’s energy security as electricity demand is projected to double between 2022 and the early 2030s. 

Proponents say gas power will need to meet virtually all of this added demand, arguing that domestic gas production is reaching capacity and imports from Nigeria are unreliable. 

LNG, they say, will help power the country’s industrial development, displace dirtier and more expensive heavy fuel oil and support the roll out of intermittent renewable energy. 

This is tied to the construction of a $400 million LNG terminal in the port of Tema. The project aims to turn Ghana into a hub for providing LNG to the West African market. 

But critics have denounced the LNG terminal as an example of how mismanaged gas and power investments are financially crippling the country and failing to deliver reliable and affordable energy. They have urged the government to suspend the project.  

Analysts agree that additional gas supplies could be needed in future. But under the deal, Ghana will have to pay charges for some of the LNG even if it unable to use it –– a type of gas contract known as “take-or-pay”. 

However, neither the contract nor the liabilities Ghana could incur have been made public.  

For many developing countries, take-or-pay obligations can become a form of public debt, explained Accra-based analyst Rushaiya Ibrahim-Tanko, of the Energy for Growth Hub. “That’s why we are asking for these contracts to be made transparent,” she said.  

Opponents say Ghana cannot afford such an opaque deal at a time when the country is receiving its 17th bailout from the International Monetary Fund (IMF), the lender of last resort. 

Denis Gyeyir, the Africa programme officer at the Natural Resource Governance Institute in Accra, likened the deal to a rope “hanging around our necks” that could leave cash-strapped Ghana to “suffocate” in more debt. 

Containers in the port of Tema in Accra, Ghana. (Photo: Jonathan Ernst / World Bank)

Energy sector crisis

Ghana is still unable to pay for all the power it consumes. Independent power producers have threatened to shut down their plants if the government doesn’t find a way to pay  $1.7billion in outstanding debt it owes.  

At the same time, the country isn’t using all its own resources. The government has allowed British oil company Tullow to flare gas from its TEN and Jubilee oil fields because it is unable to process the gas. 

Flaring is a wasteful practice that releases climate-heating carbon dioxide and methane into the atmosphere and is harmful to human health. 

Analysis of government data shows that between 2019 and 2022, Tullow flared or re-injected into its oil fields 325 billion cubic feet of gas – worth close to $400m, according to the Africa Centre for Energy Policy (Acep). 

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In 2022 alone, Tullow flared or re-injected two and half times more gas than what Ghana could receive in LNG in the first year of the deal. 

“With the amount of gas that we are flaring we could meet a lot of demand for power generation if we are able to create new processing capacity," Charles Ofori, climate policy lead at Acep, told Climate Home. 

The company, which has committed to end routine flaring by 2025, says it is committed to agree a long-term gas sales deal with the Ghanaian government. 

The Tema project

Located in the eastern port of Tema, in Ghana’s industrial enclave, the LNG terminal will combine a purpose-built floating regasification unit and a former tanker converted to receive and store the liquid gas. 

The project developers say the terminal will have the capacity to process 1.7 million tons of LNG a year – or around 30% of Ghana’s electricity generating capacity. 

It is developed by a partnership between two leading Africa-focused private equity firms: London-based Helios Investment Partners and the Africa Infrastructure Investment Managers (AIIM). 

AIIM’s investments in the project included funding from the African Development Bank, and the UK and Germany’s development finance institutions. Both the UK and Germany defended their investments in AIIM, arguing the firm funded necessary infrastructure to meet growing energy demand in Africa. 

The Emerging Africa Infrastructure Fund, which is backed by European donors, and the Development Bank of Southern Africa also contributed finance. 

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Keeping a low profile

First expected in 2020, the LNG terminal has been repeatedly delayed – something critics have described as “lucky”. Europe’s soaring demand for LNG to replace Russian gas pushed up prices and contributed to the delay. 

Commercial operations are now expected to begin in 2025 and LNG deliveries will be phased in to reach capacity towards the end of the decade.  Plans for Ghana to re-export the LNG to neighbouring countries remain elusive. 

The project partners are keeping a low profile about the plans. AIIM is the only partner to have responded to Climate Home’s questions. 

It said the project will ensure “a significant portion of the population in Ghana can benefit from cleaner and more economical energy sources” and help reduce the cost of power generation. 

But energy analysts are concerned the opposite may be true. Extracts of the contract obtained by Acep show the price of LNG is indexed on the price of crude oil – a common practice for long-term LNG contracts which exposes countries to volatile crude prices.   

Several analysis found LNG could be Ghana’s most expensive gas supply. 

“What Tema LNG will do is make the electricity much, much more expensive,” opposition lawmaker John Jinapor, former deputy minister of energy, told Climate Home. “It could result in huge financial debt. It’s really serious,” he said.   

A woman sets up her breakfast stand near a mobile money box on the side of the road in Accra, Ghana. (Photo: IMF Photo/Andrew Caballero-Reynolds)

Take-or-pay contracts: Ghana’s curse

Former minister Jinapor is familiar with the consequences of excessive gas contracts. 

In response to a period of power shortages in 2012-2016, known as “dumsor” – literally “off -on” – his party, then in power, signed dozens of emergency “take-or-pay” power agreements with support from development finance institutions. 

From a severe undersupply crisis, Ghana soon experienced the opposite problem: it became contracted to purchase gas and power beyond what it could use.   

The IMF estimates that the take-or-pay contracts and inadequate power tariffs cost the country 2% of its GDP annually since 2019. At the end of 2020, a former energy official revealed excess power and unutilised gas were costing Ghana $1.2bn a year. 

Among the reasons for this bloating bill was an unfavourable “take-or-pay” agreement with oil company Eni to buy 90% of gas produced from its deepwater Sankofa field off Ghana’s western coast at a high price. It was backed by $1.2bn in World Bank Group guarantees and debt financing. 

But a lack of infrastructure meant Ghana was unable to use all the gas it purchased despite paying hundreds of millions of dollars annually for it. The deal was widely criticised for putting undue burden on the country’s finances. 

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The World Bank argued the take-or-pay clause was necessary to make the project viable for private investors. A spokesperson told Climate Home the Sankofa development has been “key to providing energy security to Ghana”. 

While there are no formal discussion to restructure the deal, the World Bank is considering another $300m loan to help Ghana clear its power sector arrears. 

Tess Woolfenden, senior policy officer at Debt Justice, told Climate Home the proposed loan “exemplifies that Ghana is in a lose-lose situation with these take-or-pay contracts,” describing “a very toxic cycle” of fossil fuel investments that exacerbate debt. 

Omar Elmawi, of the ‘Don’t Gas Africa’ campaign, urged African countries to stay away from “expensive and inflexible take-or-pay gas contracts” and prioritise renewable energy. 

Impact on the energy transition

The fallout of Ghana’s energy sector debt has diverted investments away from sustainable development and left little room for the deployment of renewable energy.   

In its 2023 budget, the government has planned to spend three times more to offset the energy sector shortfalls than on investments in the agriculture, fisheries, roads, education, gender, social protection and health sectors combined. 

To address the power oversupply issue, the government suspended licences for grid-connected solar and wind projects. The six-year-old ban was only lifted in April. In 2019, Ghana postponed by 10 years a goal to achieve 10% of renewables in its energy mix by 2020. 

Dennis Asare, of the think tank Imani, told Climate Home the LNG deal will continue to incentivise the use of gas and “delay the energy transition”.   

“We have enormous renewable resources to meet our energy needs but the government is more focused on this LNG agreement,” he said, warning that lower-income households, like the miller Gakpo and his family, will “bear the brunt” of a deepening crisis.   

Emmanuel Ameyaw contributed with additional reporting.

The post Gas lock-in: Debt-laden Ghana gambles on LNG imports appeared first on Climate Home News.

Europe’s economic relations with Argentina are strong. Despite the geographical distance, EU investment in the country accounts for half of foreign investment. Similarly, the bloc is Argentina’s third-largest trading partner, behind Brazil and China.

While the more comprehensive trade agreement between the EU and its Latin American counterpart, Mercosur, flounders, von der Leyen agreed on a bilateral agreement with Buenos Aires on Monday (17 July). It follows a similar agreement on materials agreed in June.

“Europe and Argentina are partnering for a more secure, sustainable and prosperous world,” she said.

Ahead of elections, Argentina’s leaders wrap fossil fuels in the flag

The non-binding agreement hinges on four key aspects: hydrogen and its derivatives, renewables, energy efficiency, and liquefied natural gas (LNG).

With Russian gas flows into Europe at an all-time low, the two partners committed to “enabling a stable delivery of liquefied natural gas (LNG) from the Argentine Republic to the European Union.”

Argentina’s export dreams

The 45 million-strong country, which heavily relies on natural gas for its own energy consumption, is a serious player in the gas industry – bolstered by the rich shale gas stemming from Vaca Muerta in the South-West.

To export its fracked riches, Buenos Aires is working on a law to boost its LNG industry – with an eye to begin exporting at scale as early as 2027.

The agreement insists that supplying LNG will be  “consistent with [the EU’s and Argentina’s]  respective long-term decarbonisation objectives and consistent with the goals of the Paris Agreement.”

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Likely as a concession to Brussels, the agreement also insists that Argentina tackles its leaky gas wells. In 2022, at least one new gas well was drilled in Vaca Muerta per month.

Meanwhile, the formerly Argentina-based NGO Center for Human Rights and Environment warned in 2018 that at least 5% of produced gas was entering the atmosphere, often due to operators venting surpluses to maintain operational security.

“The Participants endeavour to reduce methane leakages in the fossil gas supply chain to the maximum technically feasible level,” the EU-Argentina agreement stresses, adding that new technologies should help tackle “venting and flaring.”

Both venting and flaring are commonplace methods of ensuring production equipment does not get damaged by too much fossil gas. Given methane’s extreme climate impact, it is 28 times worse than CO2 on a 100-year basis, uncontrolled venting is among the most climate-damaging by-products of producing fossil gas.

The agreement also points to integrating “recovered methane into the supply chain.” Methane that would otherwise leak into the atmosphere can be captured and used regularly. One key source may be landfills, like Norte III in Buenos Aires, which account for about half of the city’s methane emissions.

With corporate climate cheats on the chopping block, net zero is growing up

Renewable potential

“In large parts of your beautiful country, in the large plateau of the South, you can only hear one sound: this is the sound of the wind, running undisturbed,” explained von der Leyen in June when speaking to business executives.

Argentina has all it takes to become a “renewable energy powerhouse,” she said, adding that “the extraordinary Patagonian winds are a blessing of nature.”

In practice, the EU-Argentina agreement is sparse on the details – aside from a commitment to “facilitate investments necessary to increase energy trade between the Participants.”

European investments are largely expected to come through the European Gateway Initiative, which has a “Team Europe” approach, meaning that EU countries invest under the banner of the bloc.

For example, France and the EU have supported upgrading and bringing the country’s electricity grid up to speed. Other projects include waste and water management support and aid in exploiting the country’s rich mineral resources.

Whether similar initiatives will help fund the country’s nascent LNG infrastructure is unclear.

The post EU and Argentina strike gas, hydrogen & renewables deal appeared first on Climate Home News.

As the country gears up for election season, all the leading candidates and even some young environmentalists support the building of the Néstor Kirchner pipeline — a key piece of infrastructure that would allow for record gas exports from the Vaca Muerta “carbon bomb”.

Fossil fuels’ opponents have been villified with state-owned oil company YPF hiring a consultancy who advised them to ridicule environmentalists who opposed offshore oil drilling, as well as attaching the project to “nationalistic” views.

Pipeline for a “carbon bomb”

Ten years ago, gas was discovered in the Vaca Muerta shale fields of Argentina’s far west.

Despite this bounty of energy though, Argentina is still shipping in expensive foreign gas, as moving Vaca Muerta’s gas to eastern population centres by truck is prohibitively expensive.

To overcome this, successive governments have tried to build a pipeline from the gas fields to the country’s capital Buenos Aires, to provide energy to its 15 million consumers and to export gas abroad, earning the country much-needed foreign currency.

Hoy, en una jornada histórica, comienza el llenado del Gasoducto Presidente Néstor Kirchner, la obra de ingeniería más importante de los últimos 50 años y un hito trascendental en la gestión del ministro @SergioMassa. pic.twitter.com/0GH0CUm6DU

— Flavia Royon (@FlaviaRoyon) June 20, 2023

The project was held back by economic crisis then pandemic but today a section of it was finally inaugurated.

Argentina secures funding boost to kickstart gas exports from ‘carbon bomb’

Wearing a hard hat near gas workers waving the Argentine flag, energy minister Flavia Royon called the pipeline “the most important engineering work of the last 50 years and a transcendental milestone”

The pipeline is named after former president Néstor Kirchner, deceased husband of the current vice-president Cristina Fernández de Kirchner.

Election campaign

With presidential elections scheduled for October, all the leading candidates support the pipeline.

With unpopular president Alberto Fernández not running for re-election, the most likely candidate from the current ruling faction is economy minister Sergio Massa. He has called the pipeline a “turning point” and was at today’s ceremony.

Cristina Fernandez de Kirchner (left) and Sergio Massa (right). (Photo: Victor Brugge/Wikimedia Commons)

The right-wing opposition’s leading candidates –  Horacio Rodríguez Larreta, Patricia Bullrich and Javier Milei – all support the pipeline too.

Support goes further than the political class. Even the Argentinan branch of Greta Thunberg’s Fridays for Future movement is supportive.

Recently, Bruno Rodriguez, a leading figure from Youth for Climate Argentina said that Argentina “must develop” and producing gas “is a step in that direction”.

Asked about this, Thunberg said: “I don’t know these parts of the movement so I can’t speak on behalf of them but our general message – at least in the part of the climate movement I’m in – is that we need to move away from all fossil fuels and all false solutions”.

#SB58 | Le pregunté a @GretaThunberg cuál es su opinión sobre el hecho de que algunas organizaciones de juventud climática están apoyando la explotación del gas en nombre “del desarrollo” y en nombre de que “es un recurso para la transición”

Su respuesta: pic.twitter.com/63AlY4TjAH

— Tais Gadea Lara (@TaisGadeaLara) June 14, 2023

Martín Álvarez is a researcher at Observatorio Petrolero Sur, based in the city of General Roca, not far from the gas fields.

He told Climate Home that the Buenos Aires-based Youth for Climate has been able to “be interlocutors with real power due to the lack of federalism that exists in the country”.

He said that the strength of the environmental movements lies in different provinces of Argentina “not in the youth of the urban middle class, who never understood what is happening [outside of the big cities]”.

Leaked document

Environmentalists that oppose oil drilling off Argentina’s eastern coast, which the government approved in 2021, face a state campaign to discredit them.

Last June, Extinction Rebellion Argentina leaked a document which proved that YPF hired a consultancy called Eonia to train supporters of the pipeline in government and the oil industry to influence public opinion and build a “social license” for the project.

 

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A post shared by Rebelión o Extinción Argentina (@xrargentina)

In a slide labelled “rejection of ridicule”, the manual says that many people join a cause because it is fashionable, a sense of belonging or a desire to be part of something bigger and positive.

“We must turn this fashion into a deep fear of being ridiculous,” the slide says, “tying it with the most insane claims and with the most uncomfortable forms”.

Alongside the text are pictures of Extinction Rebellioin protesters throwing soup and paint over artworks, like a Van Gogh painting in London. The painting was unharmed.

One of its slides is titled “nationalist acceptance” and says the oil drilling should be framed as a way for Argentina to go from energy importer to exporter and “make the dollars that Argenina lacks”.

The first offshore driling is expected to start before the end of the year, with Norwegian firm Equinor given the contract.

Protesters in Mar Del Plata march against offshore oil drilling last January (Photo credit: Diego Izquierdo/Greenpeace)

Álvarez said he had “great concern” because it is the state that is carrying out these policies, as the government has a majority stake in YPF.

Environmentalists face harassment and threats on social media too. With twitter users calling them “traitors to the homeland” and declaring “with the bones of the environmentalists, we will build the foundations of the refineries”.

In Argentina’s 40th year of democracy, Alvarez said, environmentalists should not be marginalised and stigmatised or there will be no progress towards a fairer society.

The post Ahead of elections, Argentina’s leaders wrap fossil fuels in the flag appeared first on Climate Home News.

In a controversial move last year, the European Commission gave gas power plants a ‘sustainable’ label under the EU’s green finance taxonomy, provided they meet a strict CO2 emissions threshold.

Gas power plants will be considered as a “transitional” technology under the EU taxonomy provided they replace existing coal-fired power stations, and “subject to clear limits and phase-out periods”, the EU executive said.

That decision was challenged by four environmental groups – ClientEarth, WWF’s European Policy Office, Transport & Environment (T&E), and BUND (Friends of the Earth Germany).

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The four started legal action in September to stop the inclusion of fossil gas in the bloc’s sustainable finance rulebook, arguing that the legislation clashes with the European Climate Law and does not respect the EU’s obligations under the Paris Agreement.

However, in February the Commission rejected their request, and the NGOs are now challenging this decision by filing a case with the Court of Justice of the European Union. 

Absurd and unlawful?

“Labelling fossil gas as ‘sustainable’ is as absurd as it is unlawful. It goes against the EU’s own scientific advice and fundamentally undermines the credibility of the EU’s climate action. Fossil gas is not clean, not cheap and not a secure source of energy,” said a spokesperson for the four green organisations. 

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The NGOs argue that gas cannot be considered a sustainable source of energy and has a huge impact on climate change as it is a high-carbon source when burnt, while its extraction and transport also lead to the release of methane, a powerful greenhouse gas. 

Including fossil gas in the ‘green’ taxonomy would also worsen the EU’s dependency on imported fossil fuels, exposing EU member states to more price volatility, dependence on producing countries, and supply crises in the future, they add. 

“We’re taking the Commission to court in the hope of restoring some credibility to the Taxonomy and avoiding this huge risk to the climate and people’s energy security,” the spokesperson said. 

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Contacted by Euractiv, a Commission spokesperson said the EU executive “takes note of the legal action undertaken by several NGOs” but prefers not to comment on the substance of the case “before EU Court judgments are delivered”.

A hearing at the General Court is being scheduled for the second half of 2024, with a judgement expected to be released in 2025.

Nuclear challenged too

A separate lawsuit at the Luxembourg-based European Court of Justice against the inclusion of gas and nuclear in the taxonomy regulation will also be filed by Greenpeace on Tuesday.

In September, Greenpeace organisations from eight countries asked the EU to review its decision, but their request was rejected. 

As the lawsuit is being filed on Tuesday, activists from Greenpeace Luxembourg are planning to gather in front of the Court to protest the “green” label for gas and nuclear. 

Unlike gas, nuclear is a zero-carbon technology. But Greenpeace opposes it due to concerns over the disposal of nuclear waste and about safety and cost.

The post Campaigners sue EU for labelling gas sustainable appeared first on Climate Home News.

Just days after Amer was offered the new job, a close friend working as a contractor for an oil and gas company died after getting lost in the desert. Other workers told Amer it was work-related, but officially, the man’s death was listed as natural causes.

Despite knowing the circumstances of his friend’s death, Amer still celebrated his new contract with the National Petroleum Construction Company (NPCC), a UAE-based engineering and procurement company, by ordering sweets for his family back home in Lahore, Pakistan. It was a better paid job, Amer said, and “all work is risky here.”

UAE and its neighbor, Qatar, are in the midst of a major build out of infrastructure to increase gas production and exports, encouraged in part by Europe’s recent demand for alternatives to Russian gas. They will rely on migrant labour to get it done.

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But stories like Amer’s friend’s are not uncommon. In 2022, a coalition of non-government organizations, Vital Signs, estimated that 10,000 South Asian migrant workers die each year in the Gulf region, and as many as half are reported as only “cardiac arrests” or “natural causes,” a suspiciously high percentage that potentially obscures how many of these deaths were work-related.

Industry observers and workers note that the UAE’s oil and gas sector has better safety protocols than other industries in the country, but they also point to a lack of transparency and potential conflict of interests in how work-related injuries or accidents get reported.

A Climate Home News investigation found that, while migrant workers will build a major gas expansion in the UAE to supply Europe with energy alternatives, these workers face harsh conditions and a lack of transparency when risk turns deadly.

Activists warn that the UAE’s gas plans could clash with the country’s role as president in the next round of UN climate negotiations, Cop28. The president of the upcoming Cop28, Sultan Al Jaber, is also the CEO of the Abu Dhabi National Oil Company (Adnoc).

The International Energy Agency has said that limiting global warming to the Paris Accord target of 1.5C requires no new development of oil and gas fields.

Migrant workers for an ADNOC oil and gas project chatting on the street in Abu Dabhi, UAE. (Photo: anonymous based in UAE)

Gas expansion

As Europe searched for quick replacements for Russian gas last year, several countries turned to UAE to cover their needs, including France, Germany and Austria. Germany’s agreement with Adnoc covers at least two years. The European country has also signed a 15-year contract with Qatar and recently opened two floating import terminals.

Niklas Höhne, a climate policy expert and co-founder of NewClimate Institute, says the German government is consiering building up to 13 import terminals.

“It is a huge overcapacity if it is built,” says Höhne, adding gas deliveries from existing pipelines from Norway would be more efficient.

UAE’s state-owned energy company, Adnoc, is boosting its gas production to stop importing gas from Qatar and expand its own exports.

Qatar already exports more liquified natural gas (LNG) than any other country in the world. It is now expanding gas production in the offshore North Field, with plans to increase exports by nearly 60% by 2027. Both countries’ energy ministers have suggested that they will keep producing gas for several decades.

The expansion is already underway in the UAE. Amer’s new company has been hired by Adnoc to develop a new $548 million pipeline to expand gas production in the Lower Zakum field in the shallow waters offshore of Abu Dhabi.

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The country has also revived plans for a LNG export terminal in Fujairah, outside the Strait of Hormuz choke point, to ship gas to both Asia and Europe, and is seeking to speed up construction. The terminal would more than double UAE’s current export capacity.

At least two leading contracting groups have shown interest in developing the project, with bids likely to come in the next months, energy news outlet Upstream reported.

These projects will be built by the country’s migrant workforce. Almost 8 million people, mainly from South Asian countries like India, Nepal, Sri Lanka and Pakistan, work across all industries in the UAE, and represent 90% of the country’s total workforce, according to the United Nation’s International Labour Organization (ILO). Amer, for instance, is the main income earner of his family of five back home in Pakistan.

An Adnoc worker walking by an oil and gas infrastructure project in Abu Dhabi. (Photo: anonymous based in the UAE)

There are no publicly shared figures on how many workers are currently employed in the UAE’s oil and gas sector, but 30% of the country’s GDP is directly based on the industry. Adnoc alone has approximately 55,000 direct employees, according to one 2016 report, not counting contractors and other third-party workers.

High risk in Lower Zakum

Amer’s friend went missing in the desert while working as a jeep driver on a pipeline construction project. He and his colleague were missing for two days.

By the time the vehicle was traced, he had died and his colleague was in critical condition, according to an Adnoc health & safety officer, who agreed to share limited information about the death because of fears of retribution. Adnoc did not make public a complete disclosure of the event.

The death was formally ruled a heart attack by Adnoc and other government officials, according to multiple sources with knowledge of the situation.

“In case of serious accidents or deaths, it becomes a police case and a medical expert will conduct a postmortem [examination],” the health and safety officer said. “If it is deduced a heart attack or a natural death, then companies don’t have to pay families.”

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The source said that government officials do influence the death reports that medical experts produce.

“Companies have to report accidents to government authorities such as the Abu Dhabi Occupational Safety and Health Center (Oshad). But if you are the government authority, like Adnoc, you will usually conduct investigations yourself,” says the health officer.

“Even when police and doctors are involved to assess a situation, it is hard to really assure there is no conflict of interest.”

A spokeperson for Adnoc told Climate Home News the “health and safety” of its workforce is a top priority, but offered no comment on the specific event or the potential conflict of interests.

“Any work-related incident is thoroughly investigated, and learnings are shared internally. We include contractor activities in all our safety approaches and data, and we value all of the people that work for ADNOC,” the spokesperson added.

Activists have previously called out the lack of transparency around the high rate of unexplained heart attack-related or natural deaths of young migrant workers across the Gulf.

“There is clearly a problem with the manner in which deaths are investigated and certified in the UAE and the Gulf more broadly,” says Nicholas McGeehan, founding co-director of Fair/Square.

“This is particularly true when the deaths involve non-nationals and the lower down the social strata you go, the more likely it is that a person’s death won’t be investigated even in cases where employer negligence is suspected,” McGeehan added.

Migrant workers chatting outside an oil and gas project in Abu Dhabi. (Photo: anonymous based in UAE)

The main risks on oil and gas infrastructure projects like Lower Zakum are fires, equipment-related injuries, falling overboard, and inhaling poisonous gas, according to an Adnoc engineer who has worked on offshore expansion projects and who also wished to remain anonymous over similar concerns.

While Adnoc’s risk assessment controls are generally effective, the engineer said, when there are accidents, they rarely get reported.

“The main issue is that the bureaucracy sweeps these things under the rug, especially if the victim is a low-skilled person,” he said. “If there was more transparency and accountability, even the rare accidents will be taken seriously because of negative public perceptions,”

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The wages are also not proportionate to the high risks of the work that low-skilled migrant workers do.

“Engineers will get paid okay but low skilled workers really don’t,” the engineer said. “It might be better than other industries but it is still extremely exploitative given the intense work that is done.” A low skilled contractor will typically get paid around US$300 per month, according to several workers spoken to about their wages.

Rising temperatures could make the job even more challenging for workers. A 2015 MIT study estimated that, under a very high emissions scenario, temperatures in Gulf nations may cross the limit of survivability for humans in the second half of the century.

Already, the Gulf is one of the regions with the hottest weather anywhere on Earth according to a 2020 study published in the journal Science Advances.

A risky — but attractive — job

Mohammed Amer says that he’s well aware that the work in oil and gas is a “dangerous environment.” He was willing to take the job in the hope for better pay.

“I had been suffering for four years working in the heat and not getting anything in return. I moved to this work because even if I am still suffering, at least I will get something in return,” says Amer. “All work is risky here.”

A worker at an oil and gas project in Abu Dhabi leaving the site. (Photo: anonymous based in UAE)

The Adnoc health and safety officer says that the UAE’s oil and gas sector offers relatively better living standards to migrant workers, but more risk.

“Accidents can be catastrophic if they occur. This might be why they also offer relatively better living conditions for workers,” the officer said. “Whatever company is working on an Adnoc project, for example, must provide accommodation, food, and other basic facilities of a certain standard that are far superior to what is being offered elsewhere in the UAE.”

But workers who are directly employed with large companies are the primary beneficiaries of these living conditions. Large, well-established firms like NPCC and Adnoc have to answer to a range of stakeholders that include shareholders and the government. Third-party companies are rarely held to the same standards. Most companies also hire third party contractors for construction and engineering.

“The high rate of deaths among the migrant workers who migrate to major destination countries such as the Gulf after passing rigorous medical examinations in Nepal has been a sign of considerable concern,” Anurag Devkota, a human rights lawyer, specialising in labour migration in Nepal.

“It is quite concerning that the majority of causes of death are either unknown or are being reported without a full postmortem. These deaths can be prevented with greater effort from both employers and the government of the country of destination.”

Varun Jangir, a migrant oil rig worker at gas fields and off-shore rigs in the UAE has been working for a third-party contractor for about a decade. His monthly salary is AED1700 ($460) but he does experience wage delays regularly.

“I have never been hired by the company I am working for directly, they always just rent us out from our agency,” he says. “I don’t know if working for big companies is better, I have never experienced it but I know that nobody cares if we are paid or not, or if we live or die, and our employer will never even get in trouble for our deaths.”

The post Migrant workers face risks building Europe’s new gas supplies in the UAE appeared first on Climate Home News.

The bank announced a deal last week to finance the Néstor Kirchner pipeline, a project that would allow the country to export gas from the Argentinian Patagonia’s Vaca Muerta field, which campaigners have described as a ‘carbon bomb’ due to huge emissions potential.

Vaca Muerta currently holds the world’s second-largest shale gas deposit and could lead to “record oil and gas production,” according to Argentina’s president Alberto Fernández.

Sergio Massa, minister of economy, said in the past that Argentina did not have the finance to carry the project forward, but now they have an “opportunity for Chile, Argentina, Bolivia, Brazil and Uruguay to access the world’s largest reserves of gas, which we have at our disposal”.

The move could contribute to pushing global temperature rise beyond 1.5C – a threshold above which climate impacts will be significantly worse for people and ecosystems. The International Energy Agency stated in a 2021 report that new oil and gas projects are incompatible with international climate goals.

Chinese coal boom a ‘direct threat’ to 1.5C goal, analysts warn

Carbon bomb

Activists are critical of the initiative due to its impact on carbon emissions. However, the national government points to Vaca Muerta as an economic hope.

According to 350.org in Latin America, the project is a “carbon bomb” that threatens to use up more than 11% of the world’s remaining carbon budget to reach 1.5C.

Talks to expand gas exports from Vaca Muerta date back to the early 2000s, but were abandoned after Argentina focused its gas production for domestic use. But a 2010 discovery found large gas reserves and led to initiatives to boost exports.

Currently, 31 oil and gas companies have contracts to operate in Vaca Muerta, among them Shell, ExxonMobil and Argentinian company YPF.

To transport shale oil and gas from Vaca Muerta, the Néstor Kirchner pipeline will run more than 570 kilometers from Tratayén, in the shale fields, to northern Argentina’s Santa Fé province.

A map of the Vaca Muerta field in the Argentinian Patagonia. (Photo: Ministry of Economy of Argentina)

Ilan Zugman, 350.org Latin America managing director, said the fracking technique used in the oil and gas extraction is dangerous to the environment. Chemicals used in the process are polluting rivers.

According to 350.org estimates, costs from healthcare, stranded assets and oil spills from Vaca Muerta’s operations could reach between $2.2 and $5.6 billion, compared to the estimated project profits of $2.1 billion if all the oil and gas is exploited.

The first stretch of the pipeline is set to be inaugurated by the middle of this year. At the same time, Argentina is experiencing its hottest recorded summer. The combination of heatwaves and drought is affecting agricultural yields, causing economic losses and negative health impacts.

The high temperatures and drought sparked fires that affected critical energy infrastructure. For several days, about half of Argentina faced blackouts.

Help from abroad

Zugman said Argentina does not have sufficient resources to bring to market all of Vaca Muerta’s oil and gas by itself. As a result, the government is seeking deals overseas to finance critical export infrastructure.

President Fernández discussed the issue with a number of European leaders. Meanwhile, state-owned oil and gas company YPF has landed a deal with Malaysia’s Petronas to develop an LNG terminal at the port of Bahia Blanca, in Buenos Aires.

In January, during a meeting between Fernández and Brazilian president Lula da Silva, the latter  considered financial support for the project. “We’re going to create the conditions to finance within our possibilities and help the pipeline,” Lula said.

EU agrees diplomatic push for fossil fuel phase out ahead of Cop28

Earlier this year, the Argentinian government sent a delegation to Brazil to secure gas sales from Vaca Muerta.

President Lula has promised to gradually reduce fossil fuel use, but he said he will support oil and gas production in Brazil.

Zugman said Brazil’s support for the pipeline would contradict Lula’s environmental policies.

While Lula’s government claims to prioritise the protection of indigenous people, supporting Vaca Muerta represents a threat to the Mapuche people in Patagonia, he said.

The Brazilian National Bank for Economic and Social Development (BNDES) told Climate Home that it currently has no plan to finance oil and gas projects outside Brazil.

The post Argentina secures funding boost to kickstart gas exports from ‘carbon bomb’ appeared first on Climate Home News.

The study published in the journal Nature found that a typical 1.5C energy transition model expects nations like China, India and South Africa to get off coal faster than any country has ever got off any energy source before.

But these models ask for much slower reductions in oil and gas – fuels that tend to be produced and used more in wealthy countries.

The study’s lead author Greg Muttitt told Climate Home that these models are amplified by the Intergovernmental Panel on Climate Change’s (IPCC) scientific reports and guide decision-makers’ policies across the world.

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“The models currently are asking so much more of India and South Africa than they are of Canada and France and that’s a problem”, he said.

What are these models?

To work out how to limit global warming to 1.5C, academics make integrated assessment models (Iams). They use formulas and spreadsheets to model factors like how much forest must be saved, how quickly cars must become electric and how fast use of different fossil fuels must drop.

The IPCC takes these models and puts them in its regular reports, which are then signed-off by governments. With this stamp of approval from governments and scientists, the findings of these reports become benchmarks for decision-makers across the world.

Muttitt, who worked with University College London-based modellers on the study, said that estimates tend to be based in rich nations and to therefore have subconscious biases.

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Modellers based in the UK, he said, will be aware of the factors limiting how fast polluting vehicles can be replaced with electric ones. “You will be more sensitised to that than you will the difficulties of closing down a coal power plant in India,” he adds.

What do the models say about coal?

Last year, the IPCC published a report based on the models, concluding that to limit global warming to 1.5C coal use should fall by nearly three-quarters between 2020 and 2030 while oil and gas use goes down by around a tenth.

The modelled transition away from coal is even faster in the power system. The IPCC says coal use for electricity should fall 88% between 2020 and 2030.

Muttitt’s study compared this scenario with previous rapid energy transitions like South Korea’s move away from oil after the 1973 Opec crisis and the USA’s transition away from coal during its 2010s boom in home-grown fracked gas, but results were not realistic.

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He found that, to reach an 88% fall, coal-reliant nations like China, India and South Africa would have to move off the fossil fuel twice as fast as the previous world records, relative to the size of their energy systems.

“This raises questions about socio-political feasibility,” the study says. It adds that coal phase-out dates of 2030 for wealthy countries and 2050 for developing ones are better targets as they are “difficult but possible”.

What limits the speed of coal phase-out?

Coal tends to be dug up and burned for power in geographically concentrated areas, where the fuel happens to be abundant. The communities in these areas come to rely on coal for their local economy.

Environmentalists in South Africa’s coal heartland told Climate Home recently that coal “is the backbone of our economy” and so, despite their concern for climate change, they were wary of a rushed, unfair transition away from the fuel.

Avantika Goswami, the climate change lead at Indian think-tank the Centre for Science and Environment, said renewables must be paired with grid-scale battery storage and that “currently grid-scale battery storage can’t compete yet with coal-based power in terms of cost”.

She added that, for developing countries, borrowing money to invest in renewables is more expensive than for richer nations.

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But Pieter de Pous, head of E3G’s fossil fuel transition programme, said that emerging economies could break previous records. “Lets not rule out the [Global] South being able to go faster than anyone thinks is conceivable”, he said.

He said that Europe’s experience is there is no trade-off between a fast transition away from coal and a fair one. Spain and Portugal had phased coal out fast while looking after coal communities, he said.

IPCC author Joeri Rogelj agreed that the transition could happen faster than previous examples “because there is a fundamental difference dynamic between accidental emissions reductions in the past that happened as a side effect of societal disaster and disruption, and targeted policy driven emissions reductions that set out a positive development path over multiple decades”.

He added: “The same differences exist for the pace of technology phase-outs and therefore require careful consideration.”

What do models say about oil and gas?

If coal is phased out slower than the IPCC envisions then oil and gas will have to be phased out faster to meet the 1.5C target. Muttitt suggests oil and gas should be phased out 50% faster than the IPCC’s figures propose.

This would place more responsibility on rich nations like the US and Europe. In particular, the use of oil to power cars, trucks and ships would have to fall particularly fast.

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“The pace of oil and gas phase out is very gentle in these models,” said Muttitt, “and it’s very gentle because a lot of the work of emissions reduction is done by phasing out coal”.

Only a handful of nations have promised to stop producing oil and gas. At Cop27, a group of producers including Saudi Arabia, Iran and Russia blocked a commitment to phase out all fossil fuels.

Why are models important?

It’s hard to prove a link between these models and real-world decisions but climate policy, particulary in rich countries, has prioritised global reductions in coal use over oil and gas.

In climate talks, coal has been singled out. As Cop26 hosts, the UK said the summit was about “coal, cars, cash and trees”. At the summit, governments committed to phasing down coal use but did not mention oil or gas.

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Many big and wealthy nations, multilateral development banks and private banks ended finance for overseas coal before they ended it for oil and gas. China, Japan and South Korea all announced in 2021 they would end support for overseas coal but have yet to extend this to oil and gas.

Only a handful of nations have joined an initative, led by Denmark and Costa Rica, to end oil and gas production.

This article was updated on 20th February to include Joeri Rogelj’s comments.

The post Study: IPCC asks emerging countries to drop coal faster than rich nations did appeared first on Climate Home News.

Last year, the Brazilian congress proposed building 8GW of gas power plants in Brazil’s north-east and a network of pipelines to supply them.

In a legislative trick known as “jabuti” or “tortoise”, the congress successfully made this a condition of them supporting Bolsonaro’s privatisation of Brazilian utility Electrobras.

The project was criticised for environmental and economic reasons. Campaigners said that building the pipelines would cost taxpayers R$100bn ($20bn) and would only benefit a businessman called Carlos Suarez whose company would carry out the project.

A reversão da contratação de usinas termelétricas e a construção de gasodutos que vão ser benefício direto para um empresário monopolista de distribuição de gás em algumas regiões do país é uma ideia que está sendo pensada na equipe de transição de governo. pic.twitter.com/nYaUFuluvn

— Marina Silva (@MarinaSilva) November 28, 2022

Marina Silva is likely to be made environment minister by newly elected president Lula Da Silva, who takes office on 1 January. Silva was his environment minister between 2003 and 2008 and travelled to Cop27 alongside him. Another former Lula environment minister Izabella Teixera told Climate Home that returning to government was “not in [her] plans”.

On Monday, Silva tweeted that the plants and pipelines would benefit a gas monopoly entrepreneur and that cancelling them “is being considered by the government transition team”.

She said the gas plants would cost around R4.3bn ($800m) a year to run and the thousands of kilometres of pipelines would cost another R100bn ($19bn). So the Lula administration would save R$117bn ($22bn) during its four-year term, she said.

Vanuatu publishes draft resolution seeking climate justice at UN court

Most of Brazil’s electricity is produced by hydropower, giving it one of the cleanest electricity systems in the world. According to Global Energy Monitor, it has 14GW of gas power plants – so these 8GW of plants would almost double that.

Claudio Angelo, a spokesperson for Climate Observatory, told Climate Home: “The fiscal situation is the single biggest challenge of the new government right now, so when the president sees a chance to save R117 billion, he will probably jump on it.”

While Lula has promised to clamp down on deforestation in the Amazon and gradually reduce fossil fuel use, he says he will support oil and gas production in Brazil. The state-owned oil company plans to explore 16 oil wells in Brazil’s north.

The post Brazil’s incoming government set to scrap gas pipelines and power plants appeared first on Climate Home News.

In June, the country signed a deal with the European Union and Israel to boost LNG sales to Europe, as part of the continent’s dash for gas to replace Russian energy imports.

The Egyptian government announced it would ration gas use and replace it with other fuels at home. At a press conference in August, prime minister Moustafa Madbouly said Egypt expected to export 15% of its gas production.  

The main alternative fuel is mazut, a blend of heavy hydrocarbons that contains toxins like sulfides and heavy metals. It can be broken down to produce diesel.

A whistleblower from the Egyptian Ministry of Electricity and Renewable Energy told Climate Home News mazut was previously being phased out due to its harmful health impacts.

‘Oil and gas trade show’ promotes carbon capture at Cop27

Official data issued by the Egyptian Electricity and Consumer Protection Regulatory Agency shows the trend. In October 2022, the percentage of mazut consumption in power plants reached 20.95%, while the same month in 2021 it was 3.67%.

“The use of mazut currently in stations instead of natural gas is in complete contradiction with the climate conference,” said the whistleblower, speaking on condition of anonymity. “How do we talk about the climate and reducing pollution, and the percentage of diesel use increases every day?”

Plant closures

On Friday at Cop27 climate talks, Germany and the US announced support for Egypt to close 12 “inefficient” gas plants with an installed capacity of 5GW. That will not automatically end the use of mazut, as Egypt has 28MW of installed capacity designed to run on mazut or gas.

Asked about the fuel switch, Cop27 envoy Wael Aboulmagd told Climate Home: “In our [national climate plan] we have made commitments that we intend to move forward on in all aspects, adaptation but also on reduction of emissions…

“As a developing country, we have the prerogative to continue to grow and for our emissions to continue to increase, but cognizant of the emergency.”

Egypt seized the opportunity to increase gas exports to Europe. The country promoted gas as a “perfect solution” ahead of hosting the UN climate talks in Sharm el-Sheikh and discussed gas deals on the sidelines of Cop27.

Europe’s dash for gas could lead to an oversupply of around five times the size of Russian gas imports by 2030, Climate Action Tracker estimates. This would be a “serious threat” to the Paris Agreement’s global warming limit of 1.5C, the report warns.

Going into reverse 

Over the last five years, Egypt reduced the use of mazut, aiming to drop it completely by 2021. In September of 2021, the country got less than 1% of its electricity from burning mazut.

“Three years ago, we held a meeting to improve the performance of electrical networks and stations, and the most negative point raised was that we still use [mazut],” said the government source.

UN cancels African energy finance initiative over fraudster’s role

The Egyptian Electricity Holding Company switched at least 20 power plants from mazut to gas. Gas is still a fossil fuel with a significant climate impact, but is less harmful to health when burned. After Russia invaded Ukraine, this progress went into reverse.

“We were surprised that less than a year ago, the use of mazut increased by a large percentage, and it turned out that this is the country’s strategy to export gas to Europe,” the source said.

The power plants are not entirely converted to mazut, explained the source, but only partially. For example, in a 500 MW plant, “you may find that gas is used to generate 300 MW and mazut to generate 200 MW”.

The other element of Egypt’s gas export plan is rationing consumption. Local advocacy group EgyptWatch said that has involved reduced street lighting and a 25C minimum temperature on air conditioning in public venues.

“Harmful in all respects” 

The switch back to mazut brings increased pollution. A 2013 study conducted by Assiut University found the power plants belch out smoke and radioactive ash that settles on the ground.

Another study by the Ain Sharms University found that air pollution from mazut has “an adverse effect on the respiratory system and the liver”.

Mazut is “harmful in all respects,” the whistleblower said. “It is polluting, uneconomical and damages machines and [power] stations.”

Campaigners said Egypt’s gas strategy was “shortsighted”, wasting an opportunity to lead on a faster deployment of renewables in Africa.

“It’s disappointing that Egypt has decided to prioritize Europeans’ demands over the legitimate needs of its citizens that are still struggling to access clean and reliable energy,” said Landry Ninteretse, Africa Team Lead at 350.org.

The story was edited on November 16 to include a 2013 peer-reviewed study by Assiut University instead of a 2019 paper that was not peer-reviewed.

This story is part of an investigative series looking into the impacts of Europe’s dash for gas in developing countries, reported in collaboration with Floodlight News.

The post ‘Complete contradiction’: Egypt burns dirtier fuel to sell more gas to Europe appeared first on Climate Home News.

At a meeting in Cairo on Wednesday of the Gas Exporting Countries Forum (GECF), Egypt’s petroleum minister Tarek el-Molla said: “As the cleanest hydrocarbon [fossil] fuel, natural gas is seen as the perfect solution that strikes the right balance, and will continue to play a key role in the future energy mix.”

The International Energy Agency (IEA) has said that if the world is to have an even chance of limiting global warming to 1.5C then there should be no new gas fields. Launching its annual World Energy Outlook on Thursday, it said the use of unabated gas in the electricity system should fall 97% between 2021 and 2040.

The 17 ministers and civil servants gathered for the forum said that “Cop27 and Cop28 present a great opportunity to make a case for gas in the energy transition”, according to an official summary of the talks. Cop27 is in Egypt while Cop28 is in the United Arab Emirates next year. Both nations are involved in the forum.

His Excellency Abdel Fattah El Sisi, President of the Arab Republic of #Egypt gave an audience today to the #Energy Ministers of the #GECF Member Countries participating in the 24th Ministerial Meeting of the Forum.

Ministerial Statement https://t.co/MnBsRAF4HG pic.twitter.com/vEyJqelK0h

— Gas Exporting Countries Forum (@GECF_News) October 25, 2022

Egypt’s president Abdel Fatah el-Sisi addressed the summit. According to Egyptian government-run media, Sisi “stressed the need for utilising natural gas to [ensure] fair transportation of energy”.

The Cop27 president Sameh Shoukry has previously called gas “a transitional source of energy”. In February, the European Commission controversially said the same.

When burned, gas is a little over half as polluting to the climate as coal. However, methane venting and leaks from gas infrastructure can cause a huge amount of pollution.

Egypt’s plans to promote gas at Cop27 can already be seen on the conference’s website. The hosts boast that “Egypt also seeks to provide sustainable transport for COP 27 participants by providing 260 electric and natural gas buses” to ferry participants around Sharm el-Sheikh.

The website’s description of the Cop27 “decarbonisation day” says it will discuss a “shift towards a low-carbon economy” rather than a zero-carbon economy.

The role of unabated gas (purple), oil (red) and coal (brown) in the IEA’s net zero scenario.

The IEA’s 2021 report found that per person income from oil and gas in producing economies would fall by about three-quarters by the 2030 if the world gets on course for 1.5C.

The money each country makes from these fossil fuels would reduce from $1,800 to $450 per person, they found, “which could have knock-on societal effects”.

The IEA proposes these countries minimise these effects by committing early to the energy transition. “The expertise of the oil and natural gas industry fits well with technologies such as hydrogen, [carbon capture and storage] and offshore wind,” it said.

The forum members pledged to cooperate on carbon capture and storage and hydrogen made from fossil gas - not renewables. They did not mention offshore wind.

The world's governments are not on course to meet the 1.5C target or to reduce gas use at the rate meeting 1.5C would require. UN Climate Change said on Thursday that national pledges would see the temperature rise by 2.5C on pre-industrial levels by the end of the century.

The use of gas for electricity has been growing steadily in every world region except Europe. In 2019, it generated 24% of electricity.

But the IEA's latest report says "the era of rapid growth in natural gas seems to be drawing to a close". Under governments' stated policies, gas use will rise slowly until 2030 before plateauing until 2050. If governments meet their policies and pledges, gas use should fall faster - 8% by 2030.

E3G gas analyst Maria Pastukhova told Climate Home: "Gas will no doubt continue to play a role in the global energy mix under every one of these scenarios, but this role is now more of a 'risk to manage' instead of a 'driver of growth' or a 'transition fuel'."

Carbon Tracker founder Mark Campanale said: "For the first time, all scenarios within the [IEA's report] now show a peak or plateau for all fossil fuels. The writing is on the wall for investors, and there is no longer any doubt about the long-term prospects for fossil fuel production businesses, including new gas."

The post Cop27 host Egypt plans to push gas as ‘the perfect solution’ appeared first on Climate Home News.

In her annual state of the union speech before the European Parliament in Strasbourg on Wednesday (14 September), Commission president Ursula von der Leyen said negotiation would be a more efficient way to lower gas prices, which are set on the global market.

EU energy ministers, meeting last week in Brussels, expressed reservations about a gas price cap, saying it risked undermining the EU’s ability to negotiate supply deals with alternative suppliers.

A new task force will be set up to negotiate deals with Norway and other gas suppliers so that “we lower in a reasonable manner the price for gas,” said von der Leyen, the former German defence minister who took the helm of the EU executive in December 2019.

The move was welcomed by Simone Tagliapietra, a senior fellow at the Bruegel economic think tank in Brussels.

“She is right: this is the way to go – possibly with via EU joint action to leverage the size of the European gas market,” he told Euractiv.

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In parallel, von der Leyen announced the creation of a new gas market benchmark to reflect the EU’s rapid shift from imported pipeline gas to liquified natural gas (LNG), which is traded on the global market and shipped from faraway places such as Qatar and the United States.

“We have to diversify away from Russia,” she insisted, noting that pipeline gas supplies from Moscow have now fallen to 9% of EU gas consumption from around 40% last year.

In the face of soaring gas prices, EU countries have poured billions into social protection measures in order to shield the most vulnerable households.

To help finance this, von der Leyen announced the creation of a windfall tax on the “revenues of companies that produce electricity at a low cost” – typically renewables and nuclear. A draft proposal, seen by Euractiv, puts the limit at €180/MWh, the same level that has been introduced in Spain.

A separate “solidarity contribution” will be demanded of oil and gas companies, which have reaped extraordinary profits from soaring prices on global energy markets.

“Our proposal will raise more than €140 billion” for EU member states to cushion the blow of the energy crisis on European consumers, von der Leyen announced.

European Hydrogen bank

At the same time, the Commission president warned against repeating the mistakes of the 1970s oil crisis by investing too much in new fossil fuel infrastructure.

“Only a few visionaries realised the problem was the fossil fuels themselves – not their price”, she said. “We kept driving on the same road” and “fossil fuels were massively subsidised,” she warned. “That was wrong and we are still paying the price for that.”

To ensure investments in future clean energy infrastructure, von der Leyen announced the creation of a “European hydrogen bank” that will “guarantee” the purchase of hydrogen thanks to funds drawn from the EU carbon market, the Emissions Trading Scheme (ETS).

The new bank “will be able to invest €3 billion to help build the future market for hydrogen,” von der Leyen said.

It is expected to be modelled on the German H2-Global foundation, financed with €900 million, which is expected to enter operation soon. The bank offers a guaranteed price for hydrogen for up to ten years by covering the difference between production costs and the sales price.

Electricity market reform

Turning to the power market, von der Leyen emphasised the need to “decouple the dominant influence of gas on the price of electricity ” in order to ensure consumers “reap the benefits of low-cost renewables”.

Prices on the EU electricity market have soared more than tenfold since Russian gas supplies started decreasing last year.

“My diagnosis is that the current electricity market design based on the principle of merit order, is not fit anymore, it’s not fit for consumers anymore,” von der Leyen said, confirming plans announced earlier this year to fundamentally redesign the EU’s electricity market.

This article was produced by Euractiv and republished under a content sharing agreement.

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The plan was published on a purpose-built website and launched by vice president Yemi Osinbajo during an online event last week supported by Sustainable Energy For All. The Rockefeller Foundation and the Global Energy Alliance for People and Planet provided funding.

It aims to provide electricity to an estimated 90 million people who lack it by the end of the decade, while putting the country on a path to achieve net zero emissions by 2060.

To deliver, Nigeria is relying on gas as a transition fuel. It expects to significantly increase gas consumption during “the decade of gas” declared by president Muhammadu Buhari. It estimates the price tag at $410 billion by 2060.

“For Africa the problem of energy poverty is as important as our climate ambition. The current lack of power hurts livelihoods and destroys the dreams of hundreds of millions of young people,” said vice president Osinbajo.

Climate and energy experts welcomed high level political attention on the issue. Some criticised the focus on gas, while oil and gas workers complained they had not been consulted.

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Nigerians able to afford it have been relying on polluting diesel and petrol generators as backup to frequent power outages – something the government wants to end by 2050 by massively expanding solar generation capacity.

By 2060, it would replace all polluting cookstoves with electric or biogas ones and electrify 100% of passenger vehicles.

Gas consumption is set to double in the power sector in the 2020s and significantly increase in the cooking and industrial sectors before nearly phasing out by 2050. Oil and gas refining capacity will massively expand.

Ovigwe Eguegu, a Nigerian policy adviser at consultancy Development Reimagined, praised the package. “I think the energy transition agenda that the vice president is championing is rooted in the realities of the ground,” he said.

But while gas power stations burn cleaner than household diesel generators, they still rely on fossil fuel, which generates greenhouse gas emissions.

“This is a missed opportunity for more ambitious near-term action,” Carley Reynolds, of Climate Analytics, told Climate Home. It “risks Nigeria investing in stranded assets and locking into carbon-intensive infrastructure, when it should be investing in ever-cheaper renewables”.

Vice president Osinbajo said he was seeking an initial $10 billion from rich countries to support the plan, along the lines of the package offered to help South Africa pivot away from coal. Coal is largely absent from Nigeria’s energy mix.

Osinbajo is visiting the US this week to make the pitch.

Comment: Sri Lanka food crisis has its roots in the globalisation of the 1970s

Afolabi Olawale, general secretary of the Nigeria Union of Petroleum and Natural Gas Workers, told Climate Home the union hadn’t been properly engaged in discussions about the transition. “You cannot make a plan without talking to those being impacted. We are finding it quite difficult to see how the plan will work,” he said.

By 2030, the government anticipates 140,000 jobs in the oil and power sectors to be cut compared with 2020 levels. By 2050, that number would increase to 260,000, including job losses in the gas sector.

Shifting to cleaner energy sources would overall create more jobs: 340,000 by 2030 and up to 840,000 by 2050, largely in the power, transport and cooking sector. But Olawale said these involved different skills to oil work and no plan had been laid out to retrain those poised to lose their livelihoods.

Chukwumerije Okereke, a professor in environment and development at Reading University, said “reputable” international consultants had provided the “ground thinking” for the plan “but the process hasn’t been very inclusive and open” and broad stakeholder consultation hadn’t taken place.

This “may mean the plan isn’t workable because of a lack of a sense of ownership,” he said.

Oil not charcoal the biggest threat to Congo rainforest, top researcher warns

Okereke has previously warned that overreliance on international consultants undermines the development of expertise in poor countries. For example, Nigeria still lacks robust monitoring, reporting and valuation systems for greenhouse gas emissions.

Sustainable Energy for All works to deliver affordable, reliable and sustainable energy to all by 2030 and has backed a pro-gas approach in Africa. It has set up an energy transition office under Osinbajo to implement the plan. Consultancy McKinsey also advised on the initiative.

The Global Energy Alliance for People and Planet provided funding to set up the office and for data collection and modelling tools. It told Climate Home that it considers consultations “very important” but doesn’t prescribe the policy or the approach.

“We strongly believe that developing countries must own their transition plans”, said Joseph Nganga, who heads the alliance in Africa.

There is a tension between building local capacity, which takes time, and producing credible energy transition plans that can be supported by the international community and accelerate climate action in the short term, he added.

The alliance and the Rockefeller Foundation are partnering to identify capacity gaps in the region and propose long-term funding arrangements to address them.

SE4All said it was unable to respond to Climate Home’s questions. The Nigerian government didn’t respond to a request for comment.

The post Nigeria plans gas-led transition to full energy access and net zero emissions appeared first on Climate Home News.

After meeting with Germany’s leader Olaf Scholz, Canada’s prime minister Justin Trudeau announced Canada would work towards exporting green hydrogen to Germany by 2025.

Energy experts swiftly criticised the idea as unrealistic. A call by Scholz for Canada to expand its fossil fuel infrastructure got less attention.

Bloomberg New Energy Finance founder Michael Liebreich called the alliance “hilarious”. “No more than homeopathic quantities of [hydrogen] will ever move by ship,” he said.

Hilarious. Any engineer can tell you hydrogen is not like LNG. 30% energy lost in liquefaction; 38% of the volumetric energy density; 6x the boil-off; embrittles; -253C; etc. Transport cost 2-3x production cost? No more than homeopathic quantities of H2 will ever move by ship. https://t.co/qZojKtSyH7

— Michael Liebreich (@MLiebreich) August 24, 2022

On his trip to Canada, Scholz urged Trudeau’s government to build shipping terminals on its east coast to export liquefied natural gas (LNG) to Europe.

“As Germany is moving away from Russian energy at warp speed, Canada is our partner of choice,” he said in Toronto. “For now, this means increasing our LNG imports. We hope that Canadian LNG will play a major role in this.”

Electrical engineering professor Arvind Ravikumar said: “This is more an LNG export deal than a hydrogen one, at least in the short term… Because transporting [liquified hydrogen] like [liquified natural gas] is an expensive, leaky, & uneconomic endeavor.”

It follows a pattern in Scholz’s recent energy diplomacy. He’s encouraged an LNG terminal in Argentina, gas production in Senegal and a pipeline to bring gas from Algeria through Spain and France to Germany. At home, Scholz supports the building of two terminals to import LNG from overseas.

Canada’s east coast has no operating gas exporting terminals (brown dots) but several proposed ones (orange) (Photo: Global Energy Monitor)

Experts warn this infrastructure will take too long to build to help with Germany’s immediate gas demand crunch. In the long run, it will either worsen climate change by prolonging gas use or become worthless as Germany phases gas out of its electricity system by 2035.

Scholz is in coalition with the German Green Party. He has tried to reconcile his support for gas infrastructure with climate action by claiming that the terminals and pipelines can be converted from fossil gas to zero-carbon hydrogen made from renewables.

Hosting a recent G7 summit, he told the press: “When it comes to financing fossil sources of energy, this is something that is to come to an end. But of course, in this very specific situation we are now in, we will be helping many countries, if they need to make investments for being hydrogen-ready.”

Germany has no LNG import terminals (brown dots) but several proposed ones (orange) and two under construction (red) (Photo: Global Energy Monitor)

Hydrogen has different properties to methane gas and switching infrastructure from one to the other is no simple matter. E3G gas analyst Maria Pastukhova told Climate Home: ““There is no such thing as a ‘hydrogen-ready LNG terminal’”. It is cheaper to build a hydrogen terminal from scratch than convert an LNG one to hydrogen, she said.

Scholz and EU Commission chief Ursula Von Der Leyen have claimed that gas pipelines in Europe can be converted to hydrogen.

Over the rainbow: The role of hydrogen in a clean energy system, explained

While conversion is possible, Stanford University engineering professor Mark Jacobson told Climate Home that hydrogen in a gas pipeline leaks at seven time the rate of gas, as the molecules are smaller and escape easier. Hydrogen leaks are expensive and dangerous.

We are also ready in case Russia uses energy as a weapon.

Several countries are ready to step up their exports of LNG to the EU.

We already reinforced our pan-European pipeline and electricity interconnector network.

This will also be the backbone of green hydrogen supply. pic.twitter.com/cxRfDzz0Lq

— Ursula von der Leyen (@vonderleyen) February 16, 2022

Jacobson said green hydrogen should be produced near to where it is needed in places like “airports, steel factories, ammonia factories, shipping ports, and truck stops”. The renewable electricity needed to make green hydrogen can be moved by cables. Pastukhova agreed, adding that 85% of hydrogen is currently produced near to where it used.

Another option is to use green hydrogen to make ammonia, which is easier to transport and can be used as fuel or in fertilisers. But converting ammonia back to hydrogen for use as a gas is inefficient, Pastukhova said.

The post Germany hypes green hydrogen alliance while shopping for Canadian fossil gas appeared first on Climate Home News.

A motion to veto the European Commission’s proposal to include nuclear and gas in the EU’s sustainable finance taxonomy was defeated by 328 votes to 278.

A minimum of 353 votes was needed to reject the plan, which means it is now officially approved by the European Parliament.

Objection to the inclusion of nuclear and gas in EU green finance taxonomy is rejected: 278 votes in favour, 328 votes against.

This means the proposal goes through: nuclear and gas are now officially recognised as “transitional” activities under the taxonomy. pic.twitter.com/G6se90ZUoi

— Frédéric Simon (@FredSimonEU) July 6, 2022

Before it becomes law, the proposal to include nuclear and gas in the EU’s green finance taxonomy must also face a vote in the EU Council of Ministers representing the EU’s 27 member states.

However, a majority of 20 countries is needed to veto the proposal in the Council, which makes a rejection highly unlikely.

Reacting on Twitter, the energy minister of Luxembourg said he would challenge the decision before the EU Court of Justice.

“Luxembourg and Denmark will press legal charges and the Court will rule about its legality,” wrote Claude Turmes, saying he deeply regrets the Parliament’s decision.

Protestors in the hemicycle reacted immediately after the vote, wearing T-shirts reading “betrayal” and calling MEPs “traitors”.

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Michael Bloss, a German Green MEP, denounced the “madness” of labelling nuclear and gas as sustainable investments, saying it will keep Europe addicted to Russian fossil fuels for many more years.

“France’s nuclear reactors and waste dumps will be renovated and new fossil gas infrastructures created,” Bloss said in a statement. “No serious bank will trust this taxonomy,” he added, saying the Greens were now preparing to take legal action against the decision.

Greta Thunberg, the teenage activist who started the Fridays for Future movement, reacted coldly on Twitter, saying the vote will delay the green transition and “deepen our dependency on Russian fuels”.

“The hypocrisy is striking, but unfortunately not surprising,” she wrote.

The European Parliament just voted to label fossil gas as “green” energy. This will delay a desperately needed real sustainable transition and deepen our dependency on Russian fuels. The hypocrisy is striking, but unfortunately not surprising.
This is still #NotMyTaxonomy

— Greta Thunberg (@GretaThunberg) July 6, 2022

Pascal Canfin, a French MEP who chairs the Parliament’s environment committee, sought to assuage the concerns of green activists, reminding them that the taxonomy does not give a blank cheque to all gas investments.

“The conditions set by the taxonomy for gas are precise: gas is only possible to replace coal, until 2030, under emission thresholds that are not considered dangerous and with reinforced transparency obligations,” he wrote on Twitter.

Nuclear Europe, an industry association, congratulated MEPs after the vote, saying Parliament had taken a “science-based decision” to include nuclear in the taxonomy.

“It is fantastic to see that a majority in the European Parliament has decided to listen to the experts and take the right decision,” said Yves Desbazeille, director-general of Nuclear Europe.

“We have less than 30 years left to decarbonise our economy in a sustainable way. By listening to the science, these MEPs have strengthened the EU’s chances of achieving this ambitious goal.”

Eurogas, an industry lobby group, was also cheerful, saying the Parliament’s decision “provides a decent framework” for future investments.

However, it said the European Commission’s taxonomy proposal “could have done more to promote coal phase-out and the adoption of best-in-class technologies” such as hydrogen and renewable gases.

“It is also crucial that we overcome bottlenecks for imports of diversified natural gas and LNG [liquified natural gas], and renewable hydrogen,” said James Watson, secretary-general of Eurogas.

This article was produced by Euractiv and republished under a content sharing agreement.

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Argentina’s president Alberto Fernández met German leader Olaf Scholz in May and Italian prime minister Mario Draghi at the G7 summit this week.

In both meetings, Fernández discussed support for a gas liquefaction facility which would allow Argentina’s fracked gas to be stored and transported by sea to Europe. Both Scholz and Draghi agreed to further talks on the issue, he said.

Con el presidente del Consejo de Ministros de Italia, Mario Draghi, dialogué sobre la posibilidad de que su país participe en los proyectos existentes en la Argentina para instalar plantas de licuación de gas y exportarlo.

Seguiremos potenciando los intercambios. pic.twitter.com/LO3O75GV5o

— Alberto Fernández (@alferdez) June 27, 2022

Germany and Italy are among developed countries that committed to end their support for overseas fossil fuel projects by the end of 2022 during the Cop26 climate talks in Glasgow. But at the G7 leaders’ summit this week, both Berlin and Rome pushed the group to water down this commitment.

In a joint communique, the group of wealthy democracies “stress[ed] the important role increased deliveries of LNG [gas] can play” in accelerating the phase out of their dependency on Russian energy and “acknowledge[d] that investment in this sector is necessary in response to the current crisis”.

“In these exceptional circumstances, publicly supported investment in the gas sector can be appropriate as a temporary response,” the statement adds.

Speaking to reporters at the summit, Scholz said “the future does not lie in gas” but “in the short-term, gas is going to be necessary and there can be investments in the transitional phase which are going to have to be supported”.

Draghi echoed his German counterpart’s comments, telling the press: “It’s quite clear that in the present situation, we’ll have short-term needs that will require large investments in gas infrastructure in developing countries and elsewhere.”

Dutch government issues world-first cap on flights from European hub

But analysts told Climate Home News the gas facilities the Argentinian government wants to develop will take too long to build to meet Europe’s short-term need for alternatives to Russian gas.

E3G oil and gas campaigner Euan Graham said: “New public finance for LNG facilities is the dangerous act of a [German] government in crisis mode. By the time it comes online, EU member states could have already eliminated Russian gas.”

For Argentina to export its gas to Europe, it will need a pipeline from the Vaca Muerta gas field to the coast and a liquefaction facility to turn the gas into a liquid known as LNG which can be transported on ships for export.

The Nestor Kirchner pipeline, linking Vaca Muerta with a port on the Atlantic coast, was announced in 2018 but has been hit by political scandals and construction has yet to begin.

Indonesia is learning lessons from South Africa’s tough energy transition deal talks

Mike Fulwood, of the Oxford Institute for Energy Studies, told Climate Home that liquefaction facilities usually take about four years to build. “Argentina may take longer,” he added.

According to E3G analysis of the European Union’s recent REPowerEU energy plan, the EU will require 50 billion cubic meters a year of additional LNG up to 2025. After that, the bloc should begin to reduce its LNG demand by replacing it with clean technology like renewables and heat pumps.

The EU’s ‘fit for 55’ package to meet the union’s climate objectives this decade entails reducing gas demand 30% by 2030 on 2021 levels, the E3G analysis found. Italian think-tank Ecco, which did the same analysis but included more recent public statements from the European Commission, put the number at more than 40%.

Ecco policy adviser Annalisa Perteghella told Climate Home: “These projects have long payback periods, meaning that either we are locking-in new gas infrastructure or we are creating stranded assets”.

EU and UK will end investment protection for fossil fuels in 10 years

Alejo Di Risio, from the Argentinian Association of Environmental Lawyers, echoed the concern that an expensive pipeline and liquefaction facility risk being built and not be used for their whole intended lifespan. “Stranded assets are highly likely,” he said.

If the facilities are built, this will encourage production in Vaca Muerta, one of the world’s “carbon bombs” which, if fully exploited, will contribute to blowing the world’s carbon budget, he added. According to the US Energy Information Administration, Argentina has the third-biggest shale gas reserves of any country in the world.

It will cause local environmental and social damage too, Di Risio said. A report by the Socio-Environmental and Energy Justice Alliance last year found that fracking at Vaca Muerta had caused tremors, multiplied landfills, damaged farming yields and that the waste was burnt by fossil fuel companies.

Waste ponds containing toxic fracking chemicals are putting the northern Patagonia ecosystem at risk (Photo: Greenpeace)

An influx of well-paid oil workers into rural Patagonia has caused a ‘gold rush effect’, the report found. It has pushed up the price of food and housing and brought prostitution and the trafficking of women and drugs. “Families with scarce resources [have] pile[d] up on the edge of towns,” it adds.

Oil jobs are well-paid but the conditions are “dire,” Di Riso said. That’s “because of the wind, because of the weather, because [workers] have to go really far from the cities…it’s a harsh climate and pretty desolate,” he said.

Asked for a message for Scholz and Draghi, Di Risio said: “What people don’t want to carry out in their own territories shouldn’t be carried out in other territories that are turned into sacrifice zones”.

A German government spokesperson declined to comment. At the time of publication, the Italian government had not responded to Climate Home’s request.

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At Cop26 last year, six G7 countries agreed to end public finance for fossil fuel projects overseas by the end of 2022 – a commitment which was reaffirmed by G7 environment ministers at a meeting in May, when hold-out Japan joined them.

But G7 leaders meeting in the Bavarian Alps in Germany this week introduced new loopholes to the pledge. In a joint communique published Tuesday, they “stress[ed] the important role increased deliveries of LNG [gas] can play” in accelerating the phase out of their dependency on Russian energy and “acknowledge[d] that investment in this sector is necessary in response to the current crisis”.

“In these exceptional circumstances, publicly supported investment in the gas sector can be appropriate as a temporary response,” the statement adds.

German chancellor Scholz told a press conference: “When it comes to financing fossil sources of energy, this is something that has to come to an end. The future does not lie in gas.” But, he added: “In the short-term, gas is going to be necessary and there can be investments in the transitional phase which are going to have to be supported”.

To stop funding Russia’s war on Ukraine, European countries have sought to boost gas supplies from non-Russian sources including the US, Qatar, Algeria, Norway, Egypt and Israel.

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Climate campaigners reacted angrily. Laurie van der Burg, campaigner at Oil Change International, said: “Today, the G7 under the leadership of chancellor Scholz has prioritised filling the pockets of the fossil gas industry over protecting peoples’ lives.”

On the other hand, she said the language makes clear that support for gas must be temporary, consistent with climate objectives, including the 1.5C goal, and not create a lock-in effect.

These conditions shouldn’t allow new gas investments to happen, Van der Burg argued. That’s because new gas infrastructure takes years to build, doesn’t provide a viable solution to rapidly wean off the G7 from Russian gas and isn’t consistent with climate goals.

The International Energy Agency has warned that new investments in coal, oil and gas beyond 2021 were incompatible with a pathway to limit global heating to 1.5C.

Luca Bergamaschi, director of the Italian climate think tank ECCO, agreed that the climate conditions and competition from clean alternatives “mean there is little to no investment case for new gas” without them being “artificially subsidised”.

For Gareth Redmond-King of the UK-based Energy and Climate Intelligence Unit, the statement reflects G7 nations’ “responsibility to feed people and keep the lights on”. “Short-term surges in fossil fuels can, as the EU is showing, be trumped by more ambitious emissions pledges in the medium-term,” he said.

Japanese and Korean industry push gas on Vietnam amid campaigner crackdown

An earlier version of the text, seen by Climate Home News, shows a proposal to describe new gas investments as “can/could be necessary”. Sources close to the talks, told Climate Home Scholz had directly proposed the wording, backed by Italy and opposed by the UK and France.

On a recent visit to Senegal, Scholz said that supporting the West African country’s gas production plans was “a matter worth pursuing intensively“. Senegal’s leader Macky Sall was invited to the G7 summit along with the president of gas-producing Argentina Alberto Fernández and the leaders of India, Vietnam and Indonesia.

Italy’s president Mario Draghi told a G7 press conference: “It’s quite clear that in the present situation, we’ll have short-term needs that will require large investments in gas infrastructure in developing countries and elsewhere. But we have to make sure that they can be retrofitted to carry hydrogen so that’s a way to reconcile short-term needs with long-term climate needs”.

On the sidelines of the summit, Draghi met with his Argentinian counterpart Fernández. The two men discussed the possibility of Italy “participating in existing projects in Argentina to install gas liquefaction plants and export it,” Fernández said in a tweet.

The G7 further confirmed it was pursuing ‘just energy transition partnership’ agreements with India, Vietnam, Indonesia and Senegal as well as previously-announced talks with South Africa.

Con el presidente del Consejo de Ministros de Italia, Mario Draghi, dialogué sobre la posibilidad de que su país participe en los proyectos existentes en la Argentina para instalar plantas de licuación de gas y exportarlo.

Seguiremos potenciando los intercambios. pic.twitter.com/LO3O75GV5o

— Alberto Fernández (@alferdez) June 27, 2022

Climate finance watcher Joe Thwaites noted that countries which have pledged to end international fossil fuel finance currently spend around $33bn a year backing coal, oil and gas projects abroad. OECD data suggests that that this $33bn would be enough to plug the gap to the $100bn a year rich countries have promised to support developing countries in addressing climate change.

Transferring the fossil fuel finance to clean climate finance would close the gap, Thwaites said, adding: “Hard to think of a better deal: end fossil fuel financing that’s driving the climate crisis and use it to increase funding for clean energy access in developing countries. A genuinely rare win-win.”

In the communique, G7 leaders promised to “intensify our efforts” to deliver on the $100bn goal “as soon as possible”.

A recent Overseas Development Institute (ODI) report found that “the US is overwhelmingly responsible for the climate finance gap”. In 2020, it gave just $2bn in climate finance when its “fair share” is $43bn, according to calculation that includes the size of its economy and historical emissions.

ODI’s research found that Italy, the UK and Canada were each $3bn short of their fair share. Germany, France and Japan give more than their fair share but the report questions the quality of France and Japan’s finance, as much of it is loans.

This article was amended on 4 July 2022 to clarify the gap to the $100bn climate finance target.

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Across Africa, gas is at the heart of a development versus decarbonisation challenge.

“We might see in gas a transitional source of energy with certainly less emissions,” Egypt’s foreign minister and Cop27 president Sameh Shoukry told the Associated Press in Davos on Monday.

What that transition should look like dominated talks at the Sustainable Energy for All (SE4All) forum held in Kigali, Rwanda, last week.

“We need to plan now to be able to power Africa’s future industries sustainably but without slowing down our development,” said host Rwanda’s president Paul Kagame.

For ministers of at least 10 African nations, the answer lies in gas.

In a seven-point communique, they called on the international community to “support Africa in the deployment of gas as a transition fuel and the long-term displacement of gas by renewable energy and green hydrogen for industrial development, if financially and technically sustainable”.

This, they said, would help “address development gaps” and “put Africa on a pathway to economic prosperity and net zero”.

The Democratic Republic of Congo, Ghana, Kenya, Malawi, Morocco, Nigeria, Rwanda, Senegal, Uganda, and Zimbabwe signed on to the statement.

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African nations’ appetite for exploiting untouched gas reserves contradicts UN secretary general António Guterres’ repeated call for phasing out fossil fuels, including gas.

He described investing in new fossil fuel infrastructure as “moral and economic madness” following the publication of the latest Intergovernmental Panel on Climate Change report which showed that expanding coal, oil and gas production puts global climate goals at risk.

But African leaders have found sympathy from high-powered Nigerian women at the UN: Guterres’ deputy and former environment minister Amina Mohammed and head of SE4All Damilola Ogunbiyi.

Ogunbiyi is responsible for delivering on a 2030 sustainable development goal for everyone to have access to affordable, reliable and sustainable energy. She joined SE4All at the start of 2020 with a firm opinion on the question.

“Gas, for me, in Africa, probably has to be part of the equation for a bit longer as a transitionary fuel because gas also affects cooking. I’m here in New York cooking with gas. It’s going to be very strange to tell the whole of Africa ‘don’t use gas because it’s a fossil [fuel] and continue using fuel wood’,” she told the BBC.

“If people that don’t have electricity in Africa got powered by gas today, it would increase Africa’s… emissions by 2-4%. That’s what we’re talking about. So it’s not fair to keep identifying Africa’s fossils as the problem,” she added, defending gas infrastructure projects on the continent.

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A statement on the SE4All website, published following her appointment, says the organisation “recognises that interim solutions, including natural gas and liquefied petroleum gas, must be deployed urgently in some settings where they can best reduce human suffering and save lives”.

Mohammed has been less vocal on the issue but supports gas-powered development behind the scenes, sources close to the UN have told Climate Home. She did not respond to a request for comment.

Damilola Ogunbiyi, CEO of Sustainable Energy for All, speaking at the organisation’s forum in Kigali, Rwanda (Photo: Rwanda’s ministry of enviornment/Flickr)

An estimated 90 million people are without power in Nigeria alone, according to 2019 data. Across Africa, 592 million people lack access to electricity. The Covid-19 pandemic led to a reversal of some of the earlier gains in energy access.

Ovigwe Eguegu, a Nigerian policy adviser at consultancy Development Reimagined, told Climate Home that ahead of a presidential election next year, “the national discourse is not even about gas as a transition fuel but rather ‘we need energy first and then we can discuss if it’s clean’.”

At the time of the interview, Eguegu’s home had been seven hours without power. Many middle-class Nigerian households use polluting diesel generators as backup for frequent grid outages.

“No candidate can come to Nigeria and argue against gas,” said Eguegu, adding that it would be “shocking” if Nigerians in high-powered UN jobs didn’t support gas as part of the solution.

A SE4All spokesperson added that the organisation “strongly supports” reaching global net zero emissions by 2050 and gas that displaces diesel use would need to be phased out from 2030.

“If we want these countries to move away from gas sooner, then they will need a great deal of additional support, particularly finance and technical support, from the global north,” they added.

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Youba Sokona, of Mali, a vice chair of the IPCC and special advisor for Sustainable Development at the South Centre, said gas had become “dilemma” for the African continent. While current renewable deployment isn’t sufficient to power the continent’s industrialisation, developing new gas infrastructure risks leaving them stranded, he explained.

“The question is will Africa jumpstart electrifying its development or will it invest in fossil with all various risks associated it will have to face?”

For climate campaigners the road ahead is clear. Those “arguments for gas exploration and gas-fired power infrastructure in Africa are robbing us of vital time to switch to clean energy,” Ugandan youth activist Vanessa Nakate wrote in Al-Jazeera ahead of the SE4All summit.

“We need massive investment from the global north in clean energy in Africa. Climate justice for Africa does not mean following the mistakes of the rich countries who got us into this crisis,” she told Climate Home.

In fact, SE4All identifies off-grid renewable solutions such as solar mini-grids as the cheapest, quickest and most sustainable way to electrify Africa. Yet oil and gas companies have continued to pitched gas as a reliable and cleaner alternative to coal than can support developing countries’ economic growth.

And arguments about energy access obscure the reality that much of the gas production under development in Africa is destined for export. That includes to European countries that talk tough on fossil fuels, yet since Russia invaded Ukraine have been scrambling to secure gas supplies from other sources.

Comment: Russia’s war is no excuse for G7 ministers to duck their climate responsibilities

On the first stop of an African tour on Sunday, chancellor Olaf Scholz said Germany would “intensively” work to support offshore gas production in Senegal – a project developed by BP and embroiled in a corruption scandal.

Senegalese president Macky Sall said he was “dancing with joy” at the prospect of cooperation with Germany. LNG production and export to Europe “is an issue that is really close to our hearts,” he said.

Germany’s support for Senegal’s gas exploitation appears to violate a Cop26 pledge signed by Berlin and more than 30 other countries to end international public finance for unabated fossil fuels, including gas, by the end of this year – a pledge that angered West African leaders.

A climate ministry spokesperson insisted Germany stood by its commitment.

But these mixed messages have led to fresh accusations of European hypocrisy. “If Europe is using gas as a transition fuel or for political calculations, why shouldn’t we?,” asked Eguegu.

Aki Kachi, of the New Climate Institute, told Climate Home the prospect of a deal “undermines Germany’s international credibility to live up to its promises”. Starting on Wednesday, Germany is hosting a G7 meeting of climate ministers, where ending public finance for fossil fuels is on the table.

“These European nations know that fossil fuels like gas are not the future and once they have their renewables up to speed, they will drop these new gas agreements,” Mohamed Adow, director of Power Shift Africa, told Climate Home.

“For Africa, it would be idiotic to invest our little resources to expand gas production just to help Europe in the short term when we could be investing in our own sustainable renewable energy,” he said.

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Gas and oil are commonly found together and the gas can either be captured and sold, burned as waste (known as flaring) or allowed to leak (known as venting). All these options lead to greenhouse gas emissions. Oil producers flare and vent gas when they don’t think capturing and selling it would be profitable.

In 2015, then Mexican president Enrique Peña Nieto was one of 31 world leaders to promise to end routine flaring by 2030. Three years later, president Andrés Manuel López Obrador was elected on a promise to support Mexico’s state-owned oil industry and World Bank data shows flaring has shot up 67% from 3.9 billion cubic metres a year in 2018 to 6.5 billion cubic metres in 2021.

Mexico’s flare volumes have risen while oil production declined (World Bank)

The World Bank described this as a “worrying increase”. In its annual gas flaring report, the bank said: “Mexico’s focus over the last few years has been on energy security, however the increase in gas flaring has occurred while Mexico has also steadily increased natural gas imports, highlighting the potential flare gas recovery could play in its energy independence.”

This increase in flaring took place “despite oil production declining” the World Bank said. Mark Davis, CEO of flaring analytics company Capterio, said the rise was “due to higher poorer operational performance with much higher ‘flaring intensity’ (flaring per barrel of production)”.

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According to Capterio’s analysis, two oil fields stand out with dramatically higher flaring in 2021 – the Perdiz/Ixachi field in Veracruz and La Venta in neighbouring Tabasco. Both are on Mexico’s oil-producing Caribbean coast and are operated by state-owned Pemex.

Perdiz (left blue dot) and La Venta (right blue dot) are both in Mexico’s oil hub. (FlareIntel Pro by Capterio)

“What’s particularly striking is that the flaring at the Perdiz flare changed from regularly flaring less than 5 million [cubic feet] a day in 2020 to regularly flaring around 100 million [cubic feet] a day from late January through to late November in 2021”.

The reduction in flaring from 28 November, Davis said, appears to have coincided with bringing online a new plant which conditions the gas so it can be sold for power or cooking. There has been no such drop in flaring at La Venta.

The La Venta flare is visible from Google Earth and just a few hundred metres from peoples’ homes.

Globally, flaring volumes have risen and fallen with levels of oil production over the last few years. Progress in reducing flaring in countries like Nigeria, Kazakhstan and the US has been cancelled out by setbacks in Russia, Iran and Venezuela.

If the world is to eliminate routine flaring by 2030, Capterio analysis suggests it needs to be reduced by 44% a year from 2022 onwards. Progress so far has been “woefully inadequate”, Capterio says.

The World Bank says there has been “mixed progress” and signatories like Russia, Iraq and Mexico have “tremendous opportunities for improvement” as their flare volumes and flare intensity has increased.

But some environmentalists criticised the World Bank’s “problematic” framing of capturing gas as a climate solution. Friends of the Earth’s Luisa Abbot Galvão told Climate Home: “The [bank] frames the issue as gas being ‘needlessly’ flared, but bringing gas to market and potentially expanding countries’ gas infrastructure still contributes to climate change.”

She added: “Yes we need to reduce this pollution, which is harming frontline communities first and foremost, but the [bank] should be helping countries do this in the context of supporting their equitable phase-out of oil and gas more broadly.”

Galvão criticicised the bank’s energy director Demetrios Papathanasiou for suggesting that oil and gas production can be “decarbonized”. She called this a “dangerous narrative”.

Pemex did not immediately respond to a request for comment.

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Justin Trudeau’s government announced its emissions reduction plan on Tuesday, outlining how it plans to meet its target to reduce emissions by 40-45% between 2005 and 2030.

It predicts that oil production will continue to grow while emissions from oil production fall. Campaigners said this “doesn’t add up” and “bets too heavily on [carbon capture technology]”.

At Cop26, Trudeau told world leaders that the town of Lytton had burned down because of climate change and promised “we’ll cap oil and gas sector emissions today and ensure they decrease tomorrow at a pace and scale needed to reach net zero by 2050”.

“That’s no small task for a major oil and gas producing country,” he said. “It’s a big step that’s absolutely necessary.”

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But Tuesday’s plan did not include a cap on production emissions from oil and gas. Environment minister Steven Guilbeault said earlier this month that this policy will be deferred to late 2022 or early 2023.

Announcing the plan in Vancouver, natural resources minister Jonathan Wilkinson explained: “We committed to the [oil and gas] sector that we would work with them in a collaborative basis to establish the cap”.

He added: “We will be working with them over the coming months to ensure we put in place an appropriate cap that’s going to work in a manner that will continue to employ people but that will allow us to get at those emissions”.

The way in which the cap is implemented is still up for debate. Guilbeault has said that a cap and trade system is one of the options. This is when a limited number of pollution permits are issued in key sectors and companies that cut their emissions faster can sell unused allowances to those emitting more.

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The government projects that emissions from oil and gas production will decline 42% on 2019 levels, while oil production will rise 22% between 2020 and 2030.

The emissions reduction plan states: “The intent of the cap is not to bring reductions in production that are not driven by declines in global demand”.

Catherine Abreu, director of Destination Zero, told Climate Home it was good that Canada is “finally moving to address the glaring gap in all of its previous climate plans – the oil and gas sector”.

But, she said: “Increasing oil production while trying to reduce oil and gas emissions doesn’t add up… Canadian governments need to ask whether it makes sense to keep ramping up extraction in this critical decade of decarbonisation.”

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Measures to reduce emissions without reducing production include tax credits for carbon capture technology and potentially domestic and international carbon offsets for “a small portion of the reductions”, the plan says.

Julia Levin, from the Environmental Defence Canada, said the plan “bets much too heavily on [carbon capture]”.

Jan Gorski, from the Pembina Institute think tank said that the projected oil and gas emissions reductions for 2030 were not ambitious enough. He said that the industry’s fair share was a 45% reduction from 2005 levels by 2030 not the plan’s 31% projection.

His analysis suggests this can be achieved through stopping methane leaks and venting, electrification, carbon capture, facilities reaching their end of life and “other decarbonisation activities for which we do not yet have adequate information”.

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While campaigners criticised it, the oil and gas industry welcomed the plan. The Canadian Association of Petroleum Producers said that it “acknowledges that global demand for natural gas and oil will continue for decades and Canada has a role to play in providing lower emission resources to the world’s energy mix”.

According to the International Energy Agency, if the world is to reach net zero by 2050 then oil demand should fall by 75% between 2021 and 2050. Gas demand should decline by 55% over the same period.

Guilbeault said last November that the federal government doesn’t have the constitutional right to cap oil and gas production – that’s in the power of Canada’s provinces. But the federal government can cap production emissions.

Canada is the only G7 country whose emissions are still growing. This is largely because of the growing emissions from its oil and gas production and growth in polluting forms of transport like SUVs.

Canada’s Greenhouse gas emissions (kt of co2e) since 2005, compared with G7 European countries. Japan and the US have not been included for visual clarity but their emissions have also fallen. (Source: World Bank)

The emissions reduction plan includes C$9bn ($7bn) of new green investments in electric vehicles, green buildings, farming, restoring nature and a community air pollution fund. This is in addition to Canada’s rising carbon price on pollution.

The plan set interim targets for phasing out the sale of new internal combustion engine passenger vehicles. By 2026, 20% of new vehicle sales should be zero-emission. By 2030, this should be 60% and by 2035 it should be 100%.

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Europe’s gas storage tanks are low because a lot of gas was used to heat homes in an especially cold winter and spring. Russia did not increase gas supplies over the summer to refill the tanks.

This low supply of gas, coupled with rising demand from Asia, has pushed up the price of gas and therefore the price of electricity across Europe.

On 7 September, gas was trading at €52/MWh at Europe’s main benchmark hub, more than triple the price at the same time last year. Electricity prices have topped €100/MWh in many markets.

This has left many Europeans worried about whether they will be able to afford to heat their homes this winter.

While some commentators have blamed climate policy for rising energy costs, most experts say the crisis reinforces the case for switching to clean energy and reducing reliance on a volatile commodity.

After a mild start to last winter, European temperatures plummeted in January 2021. Parts of central Spain saw their heaviest snowfall in decades.

It has been a historic snowstorm #filomena in #Madrid with massive traffic disruption. Accumulations between 20cm-40cm (and more with drifted snow) were recorded in the city ,the greatest since January 1952. Record still stands in November 1904 with 50cm-100cm. #Filomenamadrid pic.twitter.com/9qRhrLXKsd

— Extreme Temperatures Around The World (@extremetemps) January 9, 2021

This cold weather continued until late spring, leading Europeans to use more gas to heat their homes and draining Europe’s gas storage tanks to unusually low levels.

Gas storage tanks are usually filled up over the summer. But Russia refused to send more gas than it was legally obliged to. Russian exports to Europe were down from their pre-pandemic 2019 level.

This is partly because Russian gas supplies were low too after a similarly harsh winter.

Geopolitical analysts have also suggested that Russia wanted to pressure Germany to approve the Nord Stream 2 gas pipeline against fierce opposition from the US and Ukraine.

The NordStream 2 gas pipeline bypasses Ukraine, costing them money. (Photo: Samuel Bailey/WikiCommons)

Europe’s situation was made worse by a lack of alternatives to Russian gas.

As well as moved through pipelines, gas can be liquified and transported on ships around the world. Known as LNG, this product can go wherever prices are higher – which at present is Asia.

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In a number of European countries, sceptics of climate policy have argued the crisis is the result of politicians prioritising sustainability over affordability and security of supply.

For example, the Daily Mail newspaper gave columnist Matt Ridley a two-page spread to rail at the “eco self-harm” of the UK’s net zero target and “unreliable” wind power.

The Daily Mail has, predictably, cleared its pages today for a climate sceptic.

Funny, though, that it doesn't find space to mention the author has made £££ from coal mining on his land.

Or – talking of "devastating audits" – remind readers he was chair of, er, Northern Rock pic.twitter.com/6NcTFghcYQ

— Leo Hickman (@LeoHickman) September 21, 2021

A dip in the supply of wind power in recent weeks due to weak wind speeds did contribute to the rising electricity price, according to the International Energy Agency, but were not the main driver.

“Recent increases in global natural gas prices are the result of multiple factors, and it is inaccurate and misleading to lay the responsibility at the door of the clean energy transition,” said IEA chief Fatih Birol in a statement.

Sarah Brown, an electricity analyst at think-tank Ember, said wind availability had only a “very marginal” effect on the electricity price. “Blaming low wind is clutching at straws,” she said.

A rising carbon price on the EU market is another factor, but again it is secondary to the effect of gas shortages. More coal is likely to be burned this winter, increasing demand for carbon allowances to cover these extra emissions.

In August 2021, according to Ember analysis, carbon costs were 20% of the total cost of gas generation.

Data from before the recent rise in the gas and carbon price shows that carbon costs are only 20% of the total gas generation costs (Sarah Brown/Ember)

Simone Tagliapietra and Georg Zachmann of the Bruegel Institute argue that investment in renewables is the solution to energy price volatility.

They write: “Investments in fossil assets aren’t sustainable long-term. But governments have not yet committed clearly enough to a low-carbon future.”

“So,” they add, “the energy supply-demand balance in the EU will be volatile depending on how quickly fossil fuels are phased out and green energy is phased in.”

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Some politicans have accepted this. Spain’s ecological transition minister Teresa Ribera blamed fossil fuels and said the direction of structural reform to support clean energy must stay the same, with temporary measures to relieve costs on families and efficient industry.

Austrian climate and energy minister Leonore Gewessler said a faster shift to renewables would make the EU “more resilient to price fluctuations in the long term.”

Slovenian infrastructure minister Jernej Vrtovec concluded “we need to decrease our dependency on fossil fuels”.

Robert Tomaszeski, an energy analyst at Warsaw-based think-tank Polityka Insight, said populist politicians in Poland had blamed the EU and its climate policies.

“On the other hand,” he said, “the government is preparing an information campaign on rising energy prices, which may calm the situation down a little bit.”

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In the UK, the crisis has sparked calls for the government to use its upcoming strategy on heat and buildings to insulate homes and transition them away from gas heating and cooking.

The government’s “green homes grant” subsidy scheme was scrapped in March after just six months, after the company running the scheme failed to make it work.

Sam Hall, director of the Conservative Environment Network, tweeted: “Vouchers for heat pumps and insulation are… needed to reduce gas for heating.”

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Pemex said a lightning storm ignited a gas leak from an underwater pipeline. “There was no oil spill and the immediate action taken to control the surface fire avoided environmental damage,” the company said in a statement.

Campaigners disagree, demanding an investigation into the environmental and climate damage caused by the fire. But with little faith in the Mexican authorities, they are looking to regional allies to hold Pemex to account.

Greenpeace Mexico accused Pemex, the state-owned company operating the pipeline, of causing “ecocide” in the Gulf of Mexico, citing the toxic properties and climate impact of methane gas. It blamed the rupture on ageing, poorly maintained infrastructure.

Pablo Ramirez, an energy and climate campaigner for Greenpeace Mexico, told Climate Home News that it was impossible to calculate the carbon footprint of the gas leak because there is no public information about the amount of gas usually transported by the pipeline. He described the lack of transparency in Mexico’s energy sector as “very problematic”.

Lorne Stockman, senior research analyst at Oil Change International, said the pipeline could have been leaking for a while before the gas caught fire. The global heating impact of methane is 84 time higher over 20 years than that of carbon dioxide, which is produced when it is burned. “Until and unless we get more information from Pemex, we won’t know how bad this was,” he said.

“This is just the latest example of how the oil and gas industry pollutes with impunity, and why we must work to shut it down as soon as possible,” said Stockman. “If this gas had not caught fire and caused this visual spectacle, most people would not have heard about it… But it’s clear that we cannot end the fossil fuel age quickly enough to mitigate the damage it is causing.”

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At a local level, Greenpeace raised concerns about the harm leaked methane could have caused to marine life. 

“The gas can rapidly penetrate the bodies of fish, doing direct damage to gills, skin, chemoreceptors and eyes, and filling up the gas bladder, making the fish unable to control its buoyancy,” Ramirez said. “Shellfish are also killed by exposure to gas.”

If fish are exposed to gas concentrations of 1 mg per litre they show signs of acute poisoning within 20 minutes and die within two days, he added.

Shocking footage of the enormous fireball, dubbed “eye of the fire”, sparked international criticism on social media, including from youth activist Greta Thunberg. 

“Meanwhile the people in power call themselves ‘climate leaders’ as they open up new oilfields, pipelines and coal power plants – granting new oil licenses exploring future oil drilling sites. This is the world they are leaving for us,” she wrote on Twitter.  

Mexico’s president Andrés Manuel López Obrador has bet heavily on the fossil fuel industry, describing oil as “the best business in the world.” He has dismissed renewable energy sources, referring to wind turbines as “visual pollution.”

The head of Mexico’s oil and gas safety regulator ASEA, Angel Carrizales, tweeted that the incident “did not generate any spillage”.

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Energy analyst Poppy Kalesi told Climate Home News that it was unlikely that Pemex would be held accountable by Obrador’s government or ASEA. 

Mexico has one of the most comprehensive regulatory frameworks for methane emissions on paper, but in practice it remains difficult to implement, Kalesi said. “ASEA has neither the authority nor the competence or capacity to conduct environmental audits on Pemex’s platforms and equipment.”

As a state-owned company with close ties to the government and without investor pressure, Pemex has no interest in building up competence to evaluate its methane performance, she added. 

Kalesi said the US and Canada could exert pressure on the Mexican government to hold Pemex accountable under the 2016 “three amigos” energy deal, in which the three countries pledge to produce 50% of their power by 2025 from renewable energy sources. 

“What the US and Canada can and should do is to use both their purchasing power and political pressure to give a hook to the Mexican government to hold Pemex accountable,” Kalesi said.

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Friends of the Earth is challenging the decision by the UK’s export credit agency to contribute funding towards the $20 billion development in one of the world’s poorest and most climate vulnerable countries, which is gripped by an Islamic insurgency.

Campaigners will argue the UK government’s support for the project is inconsistent with its obligations under the Paris climate agreement.

They say the development by French oil major Total will emit 116 million tonnes of CO2 each year when the methane gas is burnt – equivalent to the annual emissions of the EU’s aviation sector. Construction alone is anticipated to increase Mozambique’s greenhouse gas emissions 10% by 2022.

The government of Mozambique hopes the development will generate billions of dollars in revenue and catapult the country to middle income status by the mid-2030s – a big gamble at a time when the coronavirus pandemic has hit gas demand.

Residents told Climate Home News last year they hoped the project would bring jobs and investment to the area, but instead came instability and violence.

As it happened: US, Japan, Canada pledged deeper emissions cuts at Biden summit

Campaigners say the UK government’s decision to support the project undermines its leadership credentials as host of the Cop26 climate summit in Glasgow in November. 

“How can Boris Johnson expect the rest of the world to pull the plug on fossil fuels when his government is giving such enthusiastic support to a development that could have the same climate impact as the entire EU aviation sector?” asked Will Rundle, head of legal at Friends of the Earth.

“The UK government should be supporting the building of a cleaner, safer future – not projects that will continue to fuel the climate emergency for many years to come,” Rundle added. 

Last month, the UK government ended overseas fossil fuel subsidies, ruling out support for another Total project – a $3.5 billion oil pipeline in East Africa. 

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Lawyers at Friends of the Earth recently claimed that the gas development has worsened conflict in Cabo Delgado, northern Mozambique, where armed militants have killed an estimated 2,500 people and displaced almost 700,000 since 2017.

The construction stage of the project alone displaced more than 550 families from their land, destroyed the local fishing industry and attracted radicalised militants looking to cash in on the development, the lawyers said. 

Total was forced to suspend work on the project in March following an attack near the town of Palma. The company shut its operations in early April and evacuated all workers due to ongoing violence in the region. Earlier this month, Mozambique’s military recently said they had regained full control of the coastal town. 

Contractors fear it could be more than a year or more until work resumes at Total's Mozambique LNG site at Afungi.

One adviser warns the evacuation of the site may prevent drawdowns on the $15bn project finance debthttps://t.co/BFpx2D0hCX

— Leigh Elston (@LeighElston) April 14, 2021

The US is also backing the $20 billion methane gas development. The US Export-Import Bank (Exim) has provided a $4.7bn loan to the project.

President Joe Biden confirmed at the leaders’ climate summit on Thursday that the US will end public finance investment for “carbon-intensive fossil-fuel based energy projects”.

Campaigners have expressed concern that the phrase “carbon-intensive” leaves the door open to continue funding methane gas projects and the plan is silent on how the policy applies to Exim. 

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“To put it mildly, gas is over,” Werner Hoyer said at a press conference on the EIB’s annual results.

“This is a serious departure from the past, but without the end to the use of unabated fossil fuels, we will not be able to reach the climate targets,” he added.

The EU aims to reach net zero emissions by 2050 and is expected to adopt a new carbon reduction target of -55% for 2030. However, gas has remained a grey area, with the  European Commission saying it will still be needed to help coal-reliant EU member states transition away from fossil fuels.

Under its climate bank roadmap published in 2020, the EIB plans to use 50% of its activity to support climate and environmental sustainability, unlocking €1 trillion for green funding by 2030. It will also ensure that all activity is aligned with the Paris Agreement.

Gas has limited support under the EIB’s climate roadmap. Only power plants emitting less than 250 grammes of CO2 per kilowatt-hour are currently eligible for support under the bank’s rules and the EIB intends to pursue its decarbonisation policy by phasing out all funding for fossil fuels before the end of the year.

Joe Biden is sworn in as US president, promising climate action

Funding for large-scale heat production based on unabated oil, natural gas, coal or peat, upstream oil and gas production or traditional gas infrastructure will all be stopped by 1 January 2021, the EIB explained.

Instead, more finance will go towards energy efficiency projects, renewable energy projects, green innovation and research, Hoyer said.

The roadmap also outlines the EU bank’s intention to support both green hydrogen – generated from renewable electricity – and so-called “low-carbon hydrogen” produced either from nuclear power or natural gas with carbon capture technology.

However, while the EIB aims to end its support for fossil fuels by the end of the year, there is more that needs to be done for it to be the EU’s climate bank, according to CEE Bankwatch, a network of environmental NGOs operating in central and eastern Europe.

“In the transport sector, for instance, the EIB could still support motorways and expressways at a time when private vehicles with internal combustion engines urgently need to be restricted, not encouraged,” said Anna Roggenbuck, policy officer at CEE Bankwatch.

Roggenbuck also criticised the roadmap for lacking guidance on the selection of trustworthy clients and financial intermediaries. A previous Bankwatch analysis showed that between 2013 and 2019, the EIB provided €4.7 billion of EU public money to companies with high shares of coal in power and heat generation.

“This policy loophole needs to be closed to ensure the EIB is no longer bankrolling the climate crisis, even if indirectly,” she said.

Rich nations accused of inflating climate adaptation finance figures

2020 was a “difficult and crucial” year, according to Hoyer. Brexit was expected to be the biggest hurdle, but the Covid pandemic is what challenged the EIB in its ambition to become “Europe’s climate bank”.

Despite this, the share of climate and environmental financing rose from 34% to 40% of the EIB’s total, bringing the bank closer to its 50% target.

“We have achieved unprecedented impact on climate, preparing the ground for much more. But the risk of a recovery that neglects climate and the environment remains,” said Hoyer.

“The fight against climate change cannot wait until the pandemic is over. The Covid crisis is not a reason to stop tackling the climate and environmental challenges facing humanity,” he added.

The EIB warns there is a growing investment gap, which threatens the EU’s ambition for a green recovery. According to a report due to be published on Thursday, 45% of EU companies expect to reduce investment because of the pandemic.

“The European Union is in danger of losing ground in the global competition if it does not mobilise more money for innovation,” Hoyer said.

This story was produced by Climate Home News’ media partner Euractiv. 

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The decision was met with widespread anger by environmental campaigners, who say that it will increase greenhouse gas emissions, destroy biodiversity in the Pilliga forest and damage groundwater supplies used by farmers.

It comes as the Australian government pursues a “gas-fired recovery” from the coronavirus crisis. In September, prime minister Scott Morrison described gas as a “critical enabler of Australia’s economy”.

“To help fire our economic recovery, the next plank in our JobMaker plan is to deliver more Australian gas where it is needed at an internationally competitive price,” he said. 

After a decade-long campaign, Santos was given the green light by NSW’s independent planning commission on Wednesday. “Following its detailed deliberations, the commission concludes the project is in the public interest and that any negative impacts can be effectively mitigated with strict conditions,” the commission said. 

In its pitch to the commission, Santos said the A$3.6bn project ($2.6bn) would deliver “more affordable, secure, cleaner energy” and supply up to half of the energy needs in New South Wales, the country’s most populous state.

Tracker: Which countries have a net zero carbon goal?

Around half of Australia’s gas reserves need to stay in the ground if global warming is to stay below 2C this century, according to analysis from the Australian National University.

Gas is commonly touted as a cleaner fuel than coal, because it emits around half the carbon dioxide when burned for energy. But methane leaks – or fugitive emissions – during extraction, processing and transport can worsen the fuel’s climate impact.

Glen Klatovsky, energy strategist at Climate Action Network Australia, told CHN that fugitive emissions are a big concern. “If fugitive emissions are around 3%, then gas becomes as bad as coal,” he said.

The Narrabri project, which involves drilling down on around 850 coal seam gas wells across a 95,000 hectare area, could lead to large volumes of saline, contaminated water, and the destruction of native vegetation, Klatovsky said. Gas drilling also introduces weeds and pest species to the region, he added. 

Richard Denniss, chief economist at The Australia Institute, told Climate Home that plans for a gas-driven recovery are driven by “the government’s political need to simultaneously signal that it is moving away from coal but not moving away from the extractive industries more generally”.

In August, minister of energy and emissions reduction Angus Taylor introduced a bill to change the investment mandate of the Clean Energy Finance Corporation (CEFC) which would enable Australia’s green bank to use its Grid Reliability Fund for gas power projects by defining them as “low-emissions technologies”.

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In Morrison’s national energy address in September, he said there was “no credible energy transition plan for an economy like Australia that does not involve the greater use of gas”. Morrison said that Australia would expand its renewable capacity by adding 12.6 GW but the primary focus of the recovery would be unlocking more gas, describing it as “the perfect complement to solar and wind”.

The government continues to back controversial coal mine expansion, with Morrison saying in his address that “coal will continue to play an important role in our economy for decades to come”.

Coal is Australia’s second-largest export industry – in 2019 the country exported A$14bn ($10bn) worth of coal to China alone. But China’s recent carbon neutrality pledge leaves Australia economically vulnerable, Australia’s former top climate diplomat Howard Bamsey told the Sydney Morning Herald.

This week the Queensland government announced that it had signed a deal with mining company Adani to defer royalty payments of A$271 million ($195 million) on a mine in central Queensland.

“Yet again we see Adani being given a free ride and a secret deal,” said Rod Campbell, research Director at The Australia Institute, said in a statement on Thursday. “Subsidising new coal is the last thing Queensland should be doing as global coal demand declines in the wake of the pandemic and in response to climate action.”

Australia came under fire earlier this week for not taking part in the UN biodiversity summit or signing a leaders’ nature pledge which outlined a 10-point plan to halt global biodiversity destruction. A government spokesperson said Australia would not agree to environmental targets “unless we can tell the Australian people what they will cost to achieve and how we will achieve it”.

“Australia is in a biodiversity crisis. The recent bushfires resulted in the death of approximately 3 billion native animals. Australia refuses to be held responsible for our global responsibility,” said Klatovsky.

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On 10 September, California governor Jerry Brown signed a bill which would require 100% of the state electricity’s to come from carbon-free sources.

That would have no immediate effect on most gas generators, according to a report by Standard & Poor’s (S&P) analyst Michael Ferguson this month. However, he said: “We believe that over the long term, with the growth of renewable energy, these utilities face a significant threat to their market position, finances, and credit stability.”

Within a fortnight of the California bill, S&P had revised its ratings outlook for Middle River Power, an equity firm backing a natural gas-fired plant providing electricity for 500,000 people in San Bernadino, from stable to negative. On top of increased competition from renewables, the credit agency cited “a more challenging (…) regulatory environment for natural gas-fired assets over the long term because of aggressive renewable energy goal”.

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“This gas plant is going to have to be refinanced,” Ferguson told Climate Home News, “and it’s going to get more and more difficult to refinance over the long-term because they are going to be facing increasing renewable penetration… Longer-term the prospects for [all] gas generation are going to be weaker.”

S&P’s report largely echoes an assessment by its rival Moody’s, released in September. According to Moody’s, the state’s new legislation was “credit negative” for companies Calpine Corporation, NRG Energy, Pacific Gas & Electric Company (PG&E), Southern California Edison Company, Los Angeles Department of Water and Power.

CHN contacted the above companies for comment, only PG&E responded. A spokesperson told CHN the company had concerns about the affordability and reliability of sourcing 100% electricity from renewables. Battery capacity, in particular, may need have to increase 200-fold to meet the 100% goal, according to the S&P report.

Gas generators could become carbon neutral if fitted with carbon capture and storage (CCS) technology. But little research had been carried out into CCS up to date and it was unlikely to become commercially successful in California, said Ferguson.

Brazil’s Jair Bolsonaro is the environmental story of 2018.

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Henrik Jeppesen from Carbon Tracker, a think tank focusing on the financial impact of the global energy transition, said fossil fuel generators risked becoming stranded assets. Most new energy infrastructure has a lifetime of 40 to 50 years. With a hard date of 2045 for all gas generation to end, that would mean companies would be left with plants that “can not be utilized to the full and they will not be able to generate a financial return on the asset,” he said.

“The companies prioritising an energy mix from coal and gas will have the greatest difficulty figuring how they want to structure their business going forward,” Jeppesen said.

Renewables account for roughly 44% of the state’s power, with gas producing 33%. Coal generation in-state is negligible, although some electricity imports are coal-fuelled. California’s last nuclear power plant, Diablo Canyon, is set to shut in 2024. As older plants languish and face closure, some California gas companies have already ditched plans for new generation capacity.

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“The implementation of the Southern Gas Corridor is already a reality. True, there are those who want to prevent us. It is natural. We came across these ten years ago,” said Aliyev, as reported by the Azerbaijan Press Agency on Tuesday.

The Southern Gas Corridor is one of the world’s largest fossil fuel projects, with a projected construction cost of $46bn.

It is opposed by environmental and human rights groups on the basis it will lock in fossil fuel dependence and its construction across Georgia, Turkey, Greece, Albania and Italy will expose communities to forced relocations and disruption.

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Last month, Azerbaijan was suspended from the Extractive Industries Transparency Initiative (EITI), a global watchdog that sets standards for human rights in countries where the fossil fuel industry operates. Aliyev’s autocratic government had failed to ease pressure on civil society groups, despite repeated warnings from the EITI board.

Speaking to ministers at a quarterly review of the Caucasus nation’s economy, Aliyev said: “I remember at the time when the Baku-Tbilisi-Ceyhan oil pipeline was built, the forces who sought to attack our policy, as well as the Armenian lobby and some circles having a negative attitude to the project, in a variety of ways, mostly with the environmental pretexts tried to thwart our work.

“To a certain extent, they have achieved this. I remember that at that time even some international financial institutions delayed loans. But despite this, in 2006 Baku-Tbilisi-Ceyhan was opened. And today, some circles, outside forces are again trying, under the pretext of ecology, to delay work in some segments of the Southern Gas Corridor.”

Late in March, the Italian government approved the final section of the pipeline, where it crosses the Adriatic into Puglia. Activists immediately launched protests.

Preparations are being made for the pipeline in the southern Balkans, with Greece and Albania’s governments acquiring land from farmers. In Turkey the Trans Anatolian Pipeline (Tanap) section is already well underway.

Grassroots movements are preparing to resist the construction of the pipeline along its course, but in Turkey the risk of suppression is likely to quell real resistance.

Watchdog suspends Azerbaijan, EU gas pipeline loans threatened

Billions in public finance for the pipeline are already approved from the World Bank and Asian Infrastructure Investment Bank. Several other development banks are considering loans. All are being targeted by activist groups to reconsider or reject their support.

Aliyev said their criticisms had “no grounds” and that all environmental standards would be observed.

“I am confident that 2017 will be decisive in this respect, and next year we should mark the opening of the Tanap project,” he said.

The project is proceeding with strong support from within the European Commission, which argues that it will diversify the bloc’s gas supply away from Russian gas. (Although last month Russian state gas company Gazprom and Italy’s Eni signed a deal that paves the way for the Russian company to access to the pipeline).

What is the Southern Gas Corridor?

BP calls it “arguably the global oil and gas industry’s most significant and ambitious undertaking yet”. It is a three-part pipeline that, if completed, will carry gas from the Shah Deniz 2 oil field in Azerbaijan’s Caspian Sea through Georgia, Turkey, Greece, Albania into southern Italy.

The pipeline is supposed to reduce the EU’s dependence on Russian gas. Campaigners argue that it is likely to become a stranded asset as gas demand in Europe is predicted to remain stagnant. Many have raised concerns about deepening Europe’s financial and political cooperation with the autocratic Aliyev regime.

Total cost: Estimated at US$46bn

Timeframe: Construction is underway, due to be completed by 2020

Sections:

• South Caucasus Pipeline (SCP) – Azerbaijan, Georgia
• Trans Anatolian Pipeline (Tanap) – Turkey
• Trans Adriatic Pipeline (Tap) – Greece, Albania, Italy1

Source: TAP

Ownership: At least 11 different companies are involved in the corporate ownership structures of the various sections. Major players include BP, Azerbaijan’s state oil company SOCAR, Turkish Petroleum, Petronas, Lukoil, Total and Snam.

Public finances: The European Bank for Reconstruction and Development, European Investment Bank and Asian Development Bank and are all considering publicly-backed loans for the development in excess of $500m each. The World Bank and Asian Infrastructure Investment Bank have approved loans totalling $1.4bn.

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That’s the warning in a new report from the Green Alliance, a London-based NGO.

Annual auctions to make sure there is enough power on the system in four years’ time are skewed towards gas generators, the think-tank says. Cheaper, greener demand management technology is being overlooked.

The next round, in December, could see the construction of up to three large-scale gas plants, Green Alliance projects. Outlay is set to rise from £833 million (US$1.0bn) in 2015 to £2.6bn ($3.3bn).

That means guaranteeing further millions of state funding through the next decade to power plants that would have to close or use carbon capture technology to meet 2030 carbon goals.

Report: Paris climate deal close to entry into force after EU vote

Amy Mount, head of the Greener UK unit at Green Alliance said the policy conflicts with the aspirations of business and energy secretary Greg Clarke to upgrade and clean the UK’s energy network.

“If the capacity market ends up predominantly giving payments to fossil fuel assets and continues to neglect flexible energy technologies, which our analysis suggests is likely at least in the upcoming auction this December, this will undermine the modernisation of the energy system,” she said.

“It’s hard to see how that escapes counting as fossil fuel subsidy.”

A spokesperson from the UK energy department said the capacity market was an “insurance policy” and did not favour gas over other sources of energy.

“A wide range of energy providers and technologies are able to participate as well as giving users the opportunity to turn down their electricity consumption at peak times,” they said.

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Under the G7 pledge the governments of Canada, France, Germany, Italy, Japan, the US and UK said they were “committed to the elimination” of fossil fuel subsidies.

According to the IMF, US$5.3 trillion is spent by governments around the world supporting oil, gas and coal use, although the Paris-based OECD more conservatively estimates the sum at $160-200 billion.

Under the IMF methodology, which includes things like the public health costs of air pollution, the UK supplies £26 billion ($33bn) to the fossil fuel sector on an annual basis.

Of that coal received £18 billion, a figure that is likely to fall as the UK continues its phase-out of coal power plants by the mid-2020s.

Analysis from the Carbon Brief website this week shows UK coal use plummeted though 2016, with solar installations generating more electricity between April and September.

The UK energy department was contacted for a response before this story was published.

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(Pic: Ken Doerr/Flickr)

By Michael Lazarus and Kevin Tempest

The shale gas boom has transformed the U.S. power sector, providing an abundance of low-cost natural gas that has enabled many electric utilities to switch from coal to gas.

It has upended US coal markets, and reduced air pollution and carbon dioxide emissions.

US experience has heightened interest in using natural gas as a “bridge” to a low-carbon energy future. Many argue that renewable energy and other non-carbon energy sources simply cannot ramp up fast enough to stem the continuing rise in global coal use, particularly for power generation.

Absent new policies and actions, the International Energy Agency expects more than 1,000 GW of new coal power capacity in the next two decades.

Once built, these plants could “lock-in” hundreds of billions of tonnes of CO2 emissions over their operating lifetimes, a significant fraction of the remaining global carbon budget for remaining within a 2°C warming path.

Cleaner and efficient natural gas plants can produce electricity with half the carbon and far less local pollution than coal. What then, if, globally, natural gas production and trade were scaled up? Would it put us on a path to a low-carbon future?

We considered these questions for the New Climate Economy project, an international initiative that identifies actions to strengthen economic performance while reducing climate risk. We examined the literature, consulted experts, and found the implications far from straightforward.

War on coal?

Expanding natural gas use can, indeed, help to avoid “locking-in” new coal power. But significant emission reductions are only possible if gas is predominantly used to displace coal in the power sector, and if the gas doesn’t leak excessively.

Methane, the primary constituent of natural gas, has 34 times the climate impact of CO2 over 100 years, and leaks during extraction, processing, transportation, storage and distribution could be significant enough in some cases to negate the overall emissions benefit from gas.

Low-cost technologies and management practices can minimize leaks, but they have yet to be fully adopted.

There is also no guarantee that any new gas supply would flow into the power sector.

Part of the appeal of natural gas is that it can be used across the economy: for building heat, in industry, and increasingly in transportation – mostly buses so far in the US, but also for cars in several countries (e.g. Peru and Argentina) with far more limited climate benefit.

There are also supply-side challenges, from lack of technical capacity, to financial risks, to local opposition.

Rising consumption

As the US experience with hydraulic fracturing (“fracking”) has shown, responsible production requires expertise and capacity to drill and service thousands of wells, combined with strong legal and regulatory frameworks.

In most other countries, so far, attempts to expand shale and tight gas (which require fracking) have languished for lack of these factors, or faced outright bans.

Producers also need infrastructure to get the gas to market – pipelines, liquefied natural gas (LNG) processing facilities and terminals.

All of this is very capital-intensive, often requiring long-term take-or-pay contracts that create significant lock-in risks. And to the extent that low natural gas prices encourage added energy consumption, emissions could rise.

There are ways to mitigate these risks. Policy-makers who want to use natural gas as a “bridge” can add “guardrails” to limit added demand, to manage and reduce methane leakage, to steer added gas supplies to where it directly displaces coal in the power sector, and to enhance rather than slow the growth of renewable energy.

Key policy tools include carbon pricing, energy efficiency standards, methane regulations, and renewable portfolio standards.

A bridge to where?

Yet the bigger question is: Does it make sense to build this bridge at all? Natural gas may be a major improvement over coal, but it is still a fossil fuel.

If carbon capture and storage (CCS) can be scaled-up fast enough, we might be able to keep using natural gas for decades and still keep global warming below 2C.

Without large-scale implementation of CCS – which looks increasingly unlikely given its slow pace of progress – natural gas use must plateau and decrease within 20–30 years.

The evidence also suggests that the recent U.S. experience with natural gas may have been unique in terms of delivering significant benefits to both the climate and the economy. Even in the U.S., it is unclear that this “win-win” will endure, and elsewhere, it may be difficult to achieve in the first place.

Where policy-makers wish to pursue a natural gas bridge, they should be proactive in setting up the “guardrails” needed to ensure benefits to the economy, the climate, local communities and overall well-being.

If we’re going to build a bridge, let’s make sure it takes us to a destination we want to reach.

Michael Lazarus is a senior scientist and U.S. Center director at the Stockholm Environment Institute (SEI), and Kevin Tempest is a staff scientist at SEI. Both are based in Seattle. Their paper, Natural Gas: Guardrails for a Potential Climate Bridge, is available here.

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Heavy pollution shrouds sunset in Beijing (Pic: Theis Kofoed Hjorth/Flickr)

By Ed King

Subsidies for fossil fuels that cause climate change have soared since 2013, a new study from the International Monetary Fund has revealed.

Oil, gas and coal costs will be subsidised to the tune of US$5.3 trillion a year in 2015. The last time the IMF ran the data it calculated they were worth $1.9 trillion.

Economists say the latest figures are more accurate as they represent the “true” cost of energy, which includes the environmental, health and climate impacts of burning fossil fuels.

“Over half of the increase is explained by more refined country-level evidence on the damaging effects of energy consumption on air quality and health,” IMF officials Benedict Clements and Vitor Gaspar wrote in a blog.

The figure is larger than the health spending of all the world’s governments combined, a reckoning the pair called “shocking”.

(Pic; IMF)

Coal is the biggest recipient of polluting subsidies, the IMF found, given its combined impact on air quality and high carbon emissions.

“The most dramatic difference, compared with the pre-tax figures, is for coal which is the biggest source of post-tax subsidies, amounting to 3.0% of global GDP in 2011 and rising to 3.9% in 2015,” says the study.

The World Bank and IMF have been campaigning hard for countries to stop subsidising fossil fuels, arguing it can help stimulate stronger and more inclusive growth.

In the past three year’s leaders at the Major Economies Forum, G20 and G7 have all called for an end to harmful subsidies.

Report: European Commission drops demand to cut fossil fuel subsidies

Earlier this year US secretary of state John Kerry said coal subsidies were “simply destructive”, but the IMF research suggests high levels of funding are still common around the planet.

The largest national offender is China, which when pollution is taken into account, offered a $2.3 trillion subsidy to its one billion energy consumers this year.

It’s followed by the United States (US$699 billion), Russia (US$335 billion), European Union ($330 billion), India (US$277 billion), and Japan (US$157 billion).

UN talks

The news comes as leading economies meet in Berlin to discuss plans for a global climate treaty, due to be signed off in Paris later this year.

Slashing subsidies this year could cut carbon emissions 20% and boost government revenues $2.9 trillion says the IMF, and raise what it terms “economic welfare” by $1.8 trillion.

“Conditions are ripe to decisively engage in energy taxation and energy subsidy reform, further favored by lower international oil prices and low inflation,” said Clements and Gaspar.

“Steps at the national level could hasten progress at the global level ahead of the Paris climate change summit in December.

“By acting local, and in their own best interest, policy authorities can contribute significantly to the solution of a global challenge.”

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(Pic: BP)

By Kieran Cooke

Companies and governments responsible for 40% of global gas flaring have made a commitment to stop their climate-damaging activities within the next 15 years.

Announcing the “Zero Routine Flaring by 2030” initiative at a meeting in Washington DC, the UN Secretary-General, Ban Ki-moon, said its supporters are demonstrating real action in the run-up to the all-important UN conference on climate change in Paris later this year.

“Reducing gas flaring can make a significant contribution towards mitigating climate change,” he said. “I appeal to all oil-producing countries and companies to join this important initiative.”

The World Bank (WB), which launched a Global Gas Flaring Reduction Partnership in 2002, estimates that each year 140 billion cubic metres of natural gas produced together with oil are burned or flared at thousands of oil fields worldwide − adding 350 million tonnes of carbon dioxide emissions to the atmosphere.

Generate power

If the flared gas was used to generate power, the Bank says, it would produce more electricity than is at present consumed throughout the African continent.

Flaring – much of which can even be seen from outer space − takes place when there are no facilities to harness the gas, or when oil producers decide it is uneconomical to process or pipe the gas.

Russia is at present the world’s largest flarer − the other big flaring nations being Nigeria, Iraq, Iran, Algeria and Venezuela.

Those committed to ending flaring by 2030 − at the latest – include nine countries, 10 oil companies and six development institutions.

Among the oil companies are Royal Dutch Shell, ENI of Italy, and the Norwegian Statoil group. The countries that say they will end flaring by 2030 include the Russian Federation, Kazakhstan, Gabon and Angola.

Report: Use fossil fuel subsidies for climate aid – World Bank envoy 

And the state oil companies involved include SOCAR of Azerbaijan, Petroamazonas of Ecuador, and the Kuwait Oil Company.

A number of financial institutions and development organisations have also joined the scheme, including the Islamic Development Bank, the African Development Bank, and the European Bank for Reconstruction and Development.

Although the WB says many other countries and oil companies are considering joining the no-flaring initiative, such commitments have been made before – and not fulfilled.

The issue of flaring is particularly contentious in Nigeria’s Niger Delta, the country’s main oil-producing region. Shell, Chevron and other companies, including the Nigerian National Petroleum Company, have made repeated announcements about putting an end to flaring, but the practice is still widespread.

Toxic chemicals released in the flaring process can cause serious health problems, and can damage crops and the environment in surrounding areas.

Nigeria has not so far joined in the WB initiative, and neither has the US, which flares gas from thousands of shale oil production sites.

Beyond money

Faith Nwadishi, a representative of various Nigerian civil society groups, says that those involved in the no-flaring initiative had to make a real commitment to end what she called the evil of gas flaring.

“The issue of gas flaring goes beyond the amount of money that can be saved or how much money people can get out of the business,” she told the Nigeria-based Business News.

“We really have to think about the fact that people are not sensitive to the plight of the people who live in active gas flare sites.”

The WB says that by endorsing the no-flaring initiative, governments, oil companies and development institutions are acknowledging that routine gas flaring is unsustainable – both from resource management and environmental perspectives.

“Gas flaring is a visual reminder that we are wastefully sending CO₂ into the atmosphere,” says Jim Yong Kim, the WB president.

“We can do something about this. Together we can take concrete action to end flaring and to use this valuable resource to light the darkness for those without electricity.”

This article was produced by the Climate News Network

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(Pic: Utenriksdepartementet UD/Flickr)

By Ed King

The Arctic’s vast gas reserves will not remain untouched even if the world agrees a global climate change pact in Paris later this year, Norway’s foreign minister has said.

“It is safe to assume that Arctic gas will have its day,” Børge Brende told an Economist conference on the Arctic in Oslo on Thursday.

“The key challenge will be to strike right balance between utilisation and protection.”

The “fate” of the region depended on the type of deal reached in the French capital later this year, he said, revealing he would travel to Paris to discuss those negotiations next week.

Gas should be used as a “bridge” fuel to a low carbon future, Brende said, but stressed that any drilling operations in the Arctic should respect its fragile environment.

According to the US Geological Survey, the Arctic region is home to an estimated 1,669 trillion cubic feet (47 trn cubic metres) of natural gas and 44 billion barrels of natural gas liquids.

Scientists say two thirds of known global fossil fuel reserves cannot be burnt if the world is to avoid dangerous levels of global warming.

This means more than 80% of coal, a third of oil and half of gas stocks need to stay in the ground.

Low oil prices have caused some companies to suspend plans to drill in the Arctic, but Norway’s state-owned company Statoil says it will maintain its long term programme.

Some of these will not be realised until 2030, when the EU and Norway say they plan to have cut emissions 40% on 1990 levels.

Brende dismissed fears of a race for resources between Norway, Denmark, Canada, Russia and the US. All committed to dialogue over how the region should be developed, he said.

Last December, US scientists warned the Arctic was warming twice as fast as anywhere on Earth, with above-average melt of the vast Greenland ice sheet.

This has opened up the region to oil and gas companies, and raised the prospect of an ice-free North East passage around Russia rivaling the Suez canal as a summer route for cargo vessels.

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A shale gas boom helped to cut US emissions, but worldwide the picture is more complex
(Source: Flickr/Daniel Foster)

By Megan Darby

Natural gas burns more cleanly than coal and advocates say it can provide part of the answer to climate change.

In the US, a glut of cheap shale gas has driven a switch away from coal, helping to cut its carbon emissions.

New techniques such as hydraulic fracturing, or fracking, to get gas out of the ground have opened up new areas of exploration.

But researchers across five countries have found a global dash for gas will not, on its own, slow global warming.

“The upshot is that abundant natural gas alone will do little to slow climate change,” said US-based economist Haewon McJeon.

“Global deployment of advanced natural gas production technology could double or triple the global natural gas production by 2050, but greenhouse gas emissions will continue to grow in the absence of climate policies.”

The study, published in Nature, showed abundant gas would undercut nuclear and renewable energy sources as well as coal.

REPORT: World of clean energy is possible by 2050

A gas boom would push energy prices down, encouraging higher consumption.

And while gas emits roughly half the carbon dioxide of coal when burned, “fugitive emissions” in the production stage undermine some of those benefits.

These are leaks of methane, a more potent greenhouse gas than carbon dioxide, from gas wells.

The findings came from five independently produced models in the US, Australia, Austria, Germany and Italy.

“We were surprised how little difference abundant gas made to total greenhouse gas emissions even though it was dramatically changing the global energy system,” said James Edmonds, chief scientist on the US team.

“When we saw all five modeling teams reporting little difference in climate change, we knew we were onto something.”

The results were coordinated by researchers at the US Department of Energy’s Pacific Northwest National Laboratory.

Exploiting more natural gas could still have benefits for economic growth, local air pollution and energy security, said McJeon.

“There’s been some hope that slowing climate change could also be one of its benefits, but that turns out not to be the case.”

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(Pic: G7/Flickr)

By John McGarrity

The G7’s support for UN climate talks and efforts to cap a rise in global CO2 are contradicted by  moves to beef up energy security using domestic supplies of gas and coal, green groups said following a summit in Brussels on Thursday.

Leaders from Canada, France, Germany, Japan, Italy, UK and the US said the crisis in Ukraine meant that energy security would be placed at the centre of the bloc’s agenda, but campaigners claim the G7 will favour gas over renewables, and promote the use of coal by promising to install carbon capture and storage.

“Energy dependence drives dangerous climate change as much as it fuels conflicts. G7 leaders might sound like they agree, but they’re bluffing. Their plan for energy security focuses on swapping Russian oil and gas for dirty and risky energy from elsewhere,” Greenpeace said in a statement.

It added: “Let’s not kid ourselves: timid steps by Obama and the EU to cut carbon emissions are not enough.”

However President Obama on Wednesday that the US had shown its determination through a plan announced earlier this week to cut emissions from power plants by 2030, calling on other countries to participate in a “global effort”.

He added that energy diversification and energy efficiency could be combined to make the US and EU “not only more politically secure and economically secure but also more environmentally secure.”

Nuclear potential

Building on an EU summit in Rome last month, the G7 said  the world’s most economically powerful democratic countries should develop domestic sources of energy, such as gas, and make it easier to import and export the fuel through pipelines and LNG terminals.

While the G7 called for increased use of renewable energy, it added that countries should encourage the use of technologies that work as “a baseload energy source”, which would leave the door open to coal as well as nuclear.

“Only a shift to an efficient energy system run fully on renewables can free our economies from the shackles of energy dependence,” Greenpeace said, against growing concerns that the spat between G7 countries and Russia will be a boon for the fossil fuel industry in North America and the EU.

Critics of renewable energy say intermittent supply of wind and solar are an unreliable and a very expensive alternative to Russian gas, imports of which the EU wants to steer away from in the wake of the Ukraine crisis.

The US and the UK have argued that exploiting indigenous supplies of shale gas and an expansion of gas trading would lessen Russia’s clout in international energy markets.

The UN has asked countries that make up the G7 – all major emitters of greenhouse gases – to say by the first quarter of next year how much CO2 they are prepared to cut in future decades and what policies and changes in energy use will be deployed to meet these targets.

The submissions are intended to form the basis of negotiation at a climate summit in Paris at the end of 2015, where a successor to the Kyoto Protocol could be agreed.

Divisions?

The G7’s call for countries “that are ready to do so,” to communicate the measures in the first three months of next year reflects tensions within the grouping and the G20 about when submissions to the UN’s climate arm, according to Jake Schmidt, an expert on global climate policy.

G7 countries reaffirm commitment to propose #climate targets in early 2015-Canada & Australia were blocking http://t.co/6W11yzqOTh

— Jake Schmidt – NRDC (@jschmidtnrdc) June 5, 2014

Australia, which hosts a G20 summit In July, has blocked climate policy from the official agenda, reflecting the scepticism of Prime Minister Tony Abbott, while Canada is keen to defend its plans to ramp up exports of oil from tar sands at UN climate talks.

G7 and G20 summits will be soon followed by a high-level meeting organised by UN secretary-general Ban Ki-moon in September, which aims to speed up co-operation ahead of the Paris climate summit.

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(Pic: MHX/Flickr)

By Gerard Wynn

“Deep renovation” of buildings could slash EU dependence on energy imports, according to energy consultants Ecofys.

Dependence on Russian gas is a critical political issue in the European Union in the wake of the Ukraine crisis, which has limited the bloc’s room for foreign policy manoeuvre.

The European Commission is presently drafting a note on how to reduce energy dependence; a draft version says that efficiency improvements could energy use in the building sector by up to three quarters.

Ecofys looked specifically at natural gas consumption, and estimated that building upgrades could cut the sector’s gas use by 95% by 2050.

It estimated that the alternatives, such focusing domestic renewable energy supply or increasing domestic shale gas production, would be more expensive, in its report, titled “Deep renovation of buildings – an effective way to decrease Europe’s energy import dependency”.

Demand in the building sector is responsible for about 40% of energy consumption in the EU, including a third of natural gas.

“Deep renovation is a suitable way forward, not only for reduction of EU’s dependency on imports, but also for generating significant greenhouse gas emission reductions and energy savings, while providing a strong impetus for economic recovery and job creation,” said the report.

It defined deep renovation as a steady annual improvement in the efficiency of building envelopes and the use of decentralised renewable power.

The building sector consumes about 60% of all imported gas, the Ecoys report calculated.

Deep renovation could cut gas consumption in particular through a switch to electric heating powered by renewable power, displacing gas and coal, and through massive improvements in efficiency to reduce overall energy use.

By 2040, indigenous supplies of natural gas within the EU, as of 2011 levels, would be sufficient to cover all building sector needs.

The report compared the costs of deep renovation, at 2-9 euro cents per kilowatt hour (kWh) saved, with the generation costs of renewable power at 5-18 cents, to suggest that efficiency was a more cost-effective technology.

The Ecofys report was commissioned by Eurima, the European Insulation Manufacturers Association which represents the interests of producers of insulation materials in Europe.

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