Several African nations made it clear at the ongoing COP27 talks in Egypt that they intended to develop their fossil fuel resources in order to alleviate local fuel shortages and develop critical export markets. –Reuters
POWER producers across Asia that are looking to cut emissions are likely cheering the warmer reception that delegates from the gas sector have received at this year’s United Nations climate summit in Egypt.
Fossil fuel producers got the cold shoulder at previous rounds of climate talks, and have frequently been berated for being major contributors to the global climate crisis due to the pollution resulting from the fuels they extract and sell.
But several African nations made it clear at the ongoing COP27 talks in Egypt that they intended to develop their fossil fuel resources in order to alleviate local fuel shortages and develop critical export markets.
Climate activists hoping for cuts in fossil fuel use will be disappointed by plans to boost supply.
In top power-consuming region Asia, however, natural gas is viewed as a cleaner alternative to high-polluting coal, so the prospect of increased supplies from Africa will be welcome news.
Natural gas emits roughly 40% to 50% less carbon dioxide than thermal coal per megawatt hour of power produced, according to data from energy think tank Ember.
Top polluter Asia relies on coal for roughly 57% of electricity production, BP Statistical Review of World Energy data shows, so switching out coal for gas offers a potential way for power producers there to cut emissions without drastically overhauling current power supply systems.
Power producers looking to make the switch from coal to gas can often replace the boilers and add gas turbines to existing power plants, thereby keeping much of their current power generation and distribution infrastructure intact.
In contrast, firms looking to develop large amounts of renewable energy capacity must frequently make costly alterations to the footprint of their energy installations, including securing land for solar or wind farms in remote locations and expanding their power grids to link that supply to consumer hubs.
A major capital-intensive aspect to the development of a gas-based power system is the need for an extensive pipeline system that can distribute the gas to where it is needed at the lowest possible cost.
Asia currently has a relatively sparse pipeline network compared with Europe and North America, with a vast majority of existing pipelines located in China and India. However, power producers across the region are planning to expand existing networks and link major consumer hubs to distant suppliers.
According to a Global Energy Monitor study released in February 2022, more than 70,000km of gas pipelines are under construction globally, with more than 45,000km in Asia.Countries across East Asia alone – including China – have committed close to US$100bil (RM451bil) to construct the pipelines, which may take years to complete.
Global gas markets have been drastically disrupted by Russia’s invasion of Ukraine since the Global Energy Monitor study was published, and surging gas prices have clearly cooled Asia’s near-term appetite for gas in some areas.
However, many of the pipeline networks are already substantially constructed, and authorities in India and China in particular view the build-out of energy infrastructure as an essential component of broader economic competitiveness.As a result, a majority of the planned pipeline projects are expected to be completed, especially those within China and India, which together accounted for 48% of Asia’s gas consumption in 2021, according to BP.
Ripple effect
As extensive as the planned pipeline network may be, none will likely directly link suppliers in Africa with consumers in Asia.
Instead, any exported gas from Africa will likely be fed into Southern Europe and the Middle East, displacing gas in those markets that in turn may be redirected to Asian consumers.
In addition, some of the gas that Russia formerly sent to Europe may be rerouted to Asian buyers, which are less likely than some of their European counterparts to reject Russian shipments on political grounds.
As Russian gas supplies are currently heavily discounted compared with gas from elsewhere in order to generate revenue for Moscow, any increase in Asian purchases may drain some of the cheapest gas off the global market and result in higher prices for other consumers.
Asian buyers are also likely to increase purchases of liquefied natural gas (LNG) as more coal- powered plants across the region are shut down as part of broader efforts to reduce coal emissions.
This combined increase in pipeline consumption and LNG imports into Asia will likely outweigh the impact of higher potential supplies out of Africa, and potentially result in a broad tightening in overall gas supplies even as alternative sources of power are rolled out.
However, more Asian gas supplies and use will also allow power producers to lower emissions, which for many of the attendees of the COP27 talks is of greater consequence for global energy markets. — Reuters
Gavin Maguire writes for Reuters. The views expressed here are the writer’s own.
