Increased reliance on natural gas risks emissions lock-in and substitutes for clean investment

These are the key findings from a new report published today by the Climate Action Tracker (CAT) initiative, a coalition of independent scientific analysis headed by Climate Analytics, Ecofys, and the NewClimate Institute, entitled Foot off the gas: increased reliance on natural gas in the power sector risks an emissions lock-in. Specifically, the new report warns that natural gas needs to be phased out alongside coal, not afterwards, if the world is to limit the warming to 1.5°C. Further, the CAT report predicts that natural gas will inherently begin to drop off in use through the middle of this century — not only because it must, if we are to adhere to the long-term temperature goals of the Paris Climate Agreement, but also due to the growth in and reliance upon renewable energy technologies.

Maybe one of the most important aspects of this report is its role in challenging the current business-as-usual thinking. Many outlooks project that natural gas consumption will continue to increase this century. However, even though these projects have proven repeatedly to be overly bullish, governments and companies are nevertheless relying heavily on them and investing strongly in natural gas infrastructure, ignoring the role that we have seen low-carbon alternatives grow to play, and the need to reduce carbon dioxide emissions to combat climate change.

“On the future of gas in the power sector, we find that many projections, including from the IEA, and expectations of some investors — including many governments — not only fail to consider the need for complete decarbonisation within three decades, but also ignore the increasing role and potential of low and zero carbon alternatives,” the authors of the report detail.

“Current investment in new gas infrastructure increases the risk of stranded assets, paving the way to a fossil fuel dependency that runs contrary to the Paris Agreement.”

The global share of electricity generated from natural gas increased from 15% in 1990 to 22% in 2014 (and it is likely that figure has only grown over the last several years). Unsurprisingly — given all we know about the country’s drop-off in coal generation and transition to natural gas — the United States saw the biggest change, with a 54% increase in natural gas usage over 10 years, which resulted in 2016 in natural gas surpassing coal as the leading source of power for the first time in the country. In Japan, the world’s largest liquefied natural gas (LNG) importer in the world, natural gas served to replace the sudden drop-off in nuclear energy due to the Fukushima nuclear disaster of 2011.

However, as the authors of the report note, “Even though gas has played an important role in modestly improving the carbon intensity of the power sector over the last decade, it is not a viable long-term solution to mitigating climate change.”

“Natural gas is often perceived as a ‘clean’ source of energy that complements variable renewable technologies,” said Bill Hare of Climate Analytics.  “However, there are persistent issues with fugitive emissions during gas extraction and transport that show that gas is not as ‘clean’ as often thought. Natural gas will disappear from the power sector in a Paris Agreement-compatible world, where emissions need to be around zero by mid-century.”

The report also concludes that, while emissions from gas plants can be reduced by up to 90% with Carbon Capture and Storage (CCS) technologies, this is still not sufficient for full decarbonization, which is what is needed as we move forward.

“The idea of a continuing role for natural gas as a bridging technology is not consistent with the reality of advances in flexibility enabling technologies, such as grid expansion, supply and demand response, as well as storage,” said Yvonne Deng of Ecofys, a Navigant company.

CAT also takes aim at many of the projections made by big-name organizations and companies — including the International Energy Agency, investors, and many governments — which continue to perpetuate a false role for natural gas.

“One example is China, where in 2016 the IEA projected renewables would rise to 7.2% of the power supply by 2020 — but by the end of 2016 they had already reached 8%,” explained said Niklas Höhne from NewClimate Institute. “Additionally, India and the Middle East are also seeing renewables rising much faster than mainstream projections.”

By Joshua Hill

A new report published this week by the OECD has concluded that, while many countries are making progress on environmental productivity in terms of carbon, energy, and materials, and the growing consensus that carbon dioxide emissions and fossil fuel use have decoupled from economic growth, progress is still too slow if we are to meet the targets outlined in recent international treaties and commitments.

The Organisation for Economic Co-operation and Development (OECD) is the intergovernmental economic organization representing 35 member countries dedicated to democracy and the market economy. Published on Tuesday, the OECD released its latest Green Growth Indicators report for 2017, which uses a range of indicators that cover everything from a country’s land use to CO2 productivity and innovation, and actually analyzes 46 countries on balancing economic growth with environmental pressures between 1990 and 2015.

Investigating the growing decoupling between economic growth and reliance on fossil fuel and the subsequent energy emissions has been an interesting study over the past few years, as we’ve moved from “it’ll never happen — it’s simply impossible” to “Western countries might be able to manage it, but definitely not emerging economies” all the way to where we currently sit at, “Oh, looks like everyone can with the right policies.” A report from the Energy & Climate Intelligence Unit published earlier this year showed that the United Kingdom has been the most successful G7 nation over the last 25 years at decoupling its economic growth from emissions: in 2014, the last year we currently have enough data for, UK per-capita greenhouse gas emissions were down 33% on 1992 figures, while UK per-capita GDP had grown by more than 130%. Meanwhile, in China — arguably the world’s most emissions-intense economy — the country’s total energy consumption increased by 1.4% in 2016 while its coal consumption declined by 4.7%. Further, China’s national energy consumption per 10,000 yuan worth of GDP dropped a further 5% — following a years-long trend of such decoupling activity.

In fact, academic exercises attempting to disprove the viability of focusing on economic growth and green growth at once have failed to pass muster, as we saw back in February. The reality is simply — economic growth coupled with green growth is not only viable, but economically advantageous.

However, the new OECD report highlights that, while a number of countries are making strong headway, it is simply not yet enough — more so if emissions embodied in international trade are rolled in to the equation, at which point any advances that are seen to be made are made more modest by comparison. Denmark, Estonia, the United Kingdom, Italy, and the Slovak Republic have made the most progress on green growth since 2000, but the OECD report concludes that no country is performing well across the board — often performing well on one or two of necessary green growth metrics, but not the others.

“While there are signs of greening growth, most countries show progress on just one or two fronts and little on the others,” said OECD Environment Director Simon Upton. “We need much greater efforts across the board if we are to safeguard natural assets, reduce our collective environmental footprint and sever the link between growth and environmental pressures.”

The report found that all OECD and G20 countries have made progress on their overall environmentally-adjusted productivity since the 1990s, with half of the 35 OECD member countries decoupling their emissions from economic growth. These are all great things, but when trade flows are factored into the equation, and emissions are considered from the perspective of final demand, the reality becomes much clearer and less impressive. Specifically, the report found that, when CO2 emitted during production stages of goods or services is included, only 12 OECD countries are considered to have successfully decoupled their emissions from GDP.

The full report is available to read here, and it delves deeper into wider issues such as renewable energy growth and share, pollution, and raw materials; however, I thought it important to focus solely on the story behind the decoupling of emissions and economic growth.