S-E Asia’s gas expansion plans could hurt efforts to mitigate climate change: Report

At least 118 liquefied natural gas (LNG) terminals are being proposed or being built in South-east Asia. PHOTO: REUTERS

SHARM EL-SHEIKH, Egypt - Countries in South-east Asia have ambitious plans to expand the use of gas, with 138 gigawatts (GW) of gas power plants in the pipeline, a report said on Monday.

The total estimated cost of these projects is expected to reach up to US$102 billion (S$140 billion), surpassing that of projects in East Asia, which has 77GW of gas plants under development at an estimated cost of US$84 billion.

But these projects could set back the fight against climate change by speeding up global warming and harming marine biodiversity, the report by the Centre for Energy, Ecology and Development (Ceed) in the Philippines warned.

It noted that at least 118 liquefied natural gas (LNG) terminals are being proposed or being built in South-east Asia.

If all planned gas expansions are carried out, the gas-fired operating capacity in South-east Asia will increase more than twofold, with Vietnam leading the region’s planned expansion with 56.3GW in the pipeline, and 29.9GW in development in the Philippines, the report said. 

Countries like Indonesia and Malaysia are aggressively expanding their LNG terminals for the export of gas, while Thailand, the Philippines and Vietnam have been increasing imports of gas due to depleting gas fields.  

According to the report, which was updated in October, Thailand constitutes almost a third of new LNG import capacity in development in the region, at 40.3 million tonnes per year.

“Over the years, LNG has become a more popular fuel option for countries that seek to improve energy sufficiency while avoiding further exposure to coal investment risks,” said Ceed executive director Gerry Arances. 

The scale of methane emissions from the use of gas is expected to grow exponentially, the report said. Methane has a global warming potential of 28 to 34 times higher than carbon dioxide.  

This would reduce the chances of the world limiting global mean temperature rise to 1.5 deg C above pre-industrial levels, the benchmark set by the United Nations’ science panel to avert the catastrophic consequences of climate change.

The report also highlighted the threat to marine biodiversity in the region as a result of gas expansion plans. For example, marine biodiversity hot spots include the Verde Island Passage in the Philippines, which is home to over 1,700 fish species, 338 coral species and thousands of other marine organisms.

“This globally significant marine biodiversity hot spot is threatened by massive fossil gas proposals – eight new gas power plants and seven new LNG terminals in the pipeline, on top of the already existing coal and gas fleet in the area,” the report added. 

Mr Nithi Nesadurai, regional coordinator of the Climate Action Network South-east Asia, said all these investments in natural gas could instead be channelled to renewable energy. 

“The more we get into this (LNG) pathway, the more we will be locked in, especially with stranded assets further down the line.  It is very dangerous and it’s not going to help Asean countries meet their 1.5 deg C targets,” he added. 

Since the signing of the Paris Agreement, 123 financial institutions have channelled US$33.4 billion into the natural gas industry in South-east Asia between January 2016 and March 2022. 

Based on the total number of transactions with the banks’ participation, the three biggest financiers of natural gas in the region are Japan’s Sumitomo Mitsui Financial (US$13 billion) and Mizuho Financial (US$10.9 billion), and Singapore’s DBS Bank (US$8.2 billion).  

They are followed closely by Singapore’s OCBC Bank, Japan’s Mitsubishi UFJ and Malaysia’s CIMB Bank, which have each funnelled at least US$8 billion into the gas industry.

In response to queries from The Straits Times, DBS said it continues to ramp up support towards the renewables sector as evidenced by its increased exposure to renewable energy projects of $5.9 billion in 2021, up from $4.2 billion in 2020.  

The bank added that it has a “clear intent” to support the pathway to net zero for Asian economies and beyond. In particular, DBS said, an absolute emissions reduction target has been set for the oil and gas sector. By 2030, it is looking to reduce by 28 per cent the absolute emissions in this sector that are attributable to it. 

OCBC did not respond to ST’s queries by press time.

A separate report from Oil Change International published last week found that Japan has contributed US$10.6 billion to overseas gas, oil and coal projects per year between 2019 and 2021 through its export credit agencies and development finance institutions.

It also leads global public finance for gas, averaging US$6.7 billion per year during the same period. 

The report also states that Japan is pushing ahead with support for new gas infrastructure despite opposition from local communities and corresponding project delays. 

“Projects in Mozambique, the Philippines and Australia, for example, threaten rich biodiversity, the livelihoods of people reliant on local ecosystems, and communities who are facing relocation,” it added.

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