Fossil gas expansion seen to worsen energy security

MANILA, Philippines — Southeast Asia is becoming Asia’s fossil gas and liquefied natural gas (LNG) hub, with the Philippines having one of the largest planned gas power expansion and LNG import terminals.

However, this massive fossil gas expansion is seen as a threat as it will worsen the region’s energy security and dependence on imported fuel, based on a new report by think tank Center for Energy, Ecology, and Development (CEED).

According to  the report, “Financing a Fossil Future: Tracing the Money Pipeline of Fossil Gas in Southeast Asia,” the region has 117 gigawatts (GW) of new fossil gas capacity in the pre-construction stage, which is the largest concentration more than else in the world.

The report said Vietnam and Philippines ranked as the top countries in terms of planned gas power expansion of 56.3 GW and 29.9 GW, respectively.

At home, diversified conglomerate San Miguel Corp. (SMC) has 14.1 GW of proposed projects, accounting for more than half of the planned gas expansion in the country and making it the leading developer of gas-fired power plants in the region.

CEED said SMC has swiftly added eight fossil gas power plant projects to its pipeline in just one year.

In terms of LNG import terminal development, Thailand and the Philippines have the largest planned projects with import capacity of 40.3 million tons per annum and 36.5 mtpa, respectively.

With a massive pipeline on the way, 123 financial institutions have channeled $34.8 billion into the fossil gas industry in the region, the report said.

CEED found that the three biggest financiers of fossil gas across the region include Japan’s Sumitomo Mitsui Financial at $13 billion, Mizuho Financial at $10.9 billion and Singapore’s DBS Bank at $8.2 billion.

The think tank said banks are funding the gas industry despite pledging to decarbonize the global economy after the 2015 Paris Agreement.

Of the total, 30 financiers are signatories of either the Net-Zero Banking Alliance, Net-Zero Asset Owner Alliance, or Net-Zero Asset Managers Initiative, which form part of the larger Glasgow Financial Alliance for Net Zero (GFANZ), the report said.

And out of the 30 signatories, 15 supported $1.7 billion in fossil gas financing despite signing the commitment, it said.

“The name ‘natural gas’ may fool many, but it is still a fossil fuel. More appropriately referred to as fossil gas, it has triggered increased methane emissions over the years. From drilling and extraction of fossil gas from wells, to transportation in pipelines or tankers, up to its combustion – all lead to leaking methane into the atmosphere – the primary component of fossil gas that is 34 times stronger than carbon dioxide at trapping heat over a 100-year period and 86 times stronger over 20 years,” CEED said.

Moreover, the gas expansion will worsen Southeast Asia’s energy security and dependence on imported fossil fuels.

“Countries without a local supply or with a depleting supply of fossil gas will need to import LNG and build the necessary infrastructure to receive it instead of making room for renewable energy facilities,” the think tank said.

In a statement, CEED called on SMC to rethink its energy development plans and opt to advance sustainable energy instead of leading the acceleration of fossil gas in the Philippines, to the detriment of power consumers.

“We are gearing towards a fossil gas lock-in as if we are blind to the lessons that the experience with the Ukraine-Russia crisis offers: that building dependence on gas means exposure to volatile power supply and prices, and vulnerability to geopolitical shocks globally – on top of an already catastrophic climate crisis triggered by fossil fuels,” CEED executive director Gerry Arances said.

The think tank also urged banks to adopt a Paris-aligned policy that pursues a 1.5-degree Celsius pathway to reach 45 percent decline global carbon emissions by  2030, and net zero carbon emissions by mid-century.

It also called on banks to withdraw and prohibit financing for fossil gas projects, particularly those that violate human rights, endanger critically important and biologically diverse ecosystems and habitats.

Banks are also called on to disclose all financial services provided to fossil gas-related operations and companies, as well as adopt full recommendation of the Task Force on Climate-related Disclosures so they can “support shareholders and stakeholders in appropriately assessing and pricing climate-related risks, and to ensure that overall effects of climate change become routinely considered in business and investment decisions.”