A $200bn wave of new gas projects could lead to a “climate bomb” equivalent to releasing the annual emissions of all the world’s operating coal power plants, according to a report.
Large banks have invested $213bn into plans to build terminals that export and import gas that is chilled and shipped on ocean tankers. But a report has warned that they could be more damaging than coal power.
The report, by the climate group Reclaim Finance, found a sharp rise in projects to boost the global trade of gas in recent years, driven by a shift from coal to gas in developing countries and Russia’s war on Ukraine, which caused pipeline imports into Europe to dry up.
It found that there were eight liquefied natural gas (LNG) export terminal projects and 99 import terminal projects completed in the past two years, which increased the world’s export capacity by 7% and the global import capacity by 19%.
In addition, LNG developers are planning 156 new LNG terminal projects worldwide to be constructed by 2030, of which 63 are export terminals and 93 import terminals, according to the report.
It warned that due to methane leaks these terminals could produce an estimated 10 gigatonnes of greenhouse gas emissions by the end of the decade, or almost as much as the annual emissions of all the coal plants in operation worldwide.
Justine Duclos-Gonda, a campaigner at Reclaim Finance, said: “Oil and gas companies are betting their future on LNG projects, but every single one of their planned projects puts the future of the Paris agreement in danger. Banks and investors claim to be supporting oil and gas companies in the transition, but instead they are investing billions of dollars in future climate bombs.”
The latest findings are expected to fuel growing fears that unchecked investments in the global gas market could lead to an oversupply of gas that would threaten the world’s climate targets.
The International Energy Agency warned In October that the global LNG markets are heading towards an unprecedented glut of gas supply that would contribute to putting the world on course for a rise of 2.4C (4.32F) above pre-industrialised levels by 2100, “well above the Paris Agreement goal of limiting global warming to 1.5 °C”.
It warned that the world’s LNG capacity was on track to grow by almost 50% by 2030, greater than the world’s forecast demand for gas in all three of the agency’s modelled scenarios.
This glut is expected to lead to falling fossil fuel prices, which could encourage a greater reliance on cheap gas in favour of renewable energy technologies and energy efficiency improvements, throwing climate targets further into doubt.
The IEA has predicted that the price of gas imported into the EU is expected to plunge from a record average high of more than $70 (£54) per million British thermal units (MBtu) in 2022 to $6.50 (£5) by the end of the decade, following a boom in planned gas projects in recent years.
“LNG is a fossil fuel and new projects have no part to play in a sustainable transition,” Duclos-Gonda said. “Banks and investors must take responsibility and stop supporting LNG developers and new terminals immediately.”
Although most major banks have set targets to move towards “net zero” banking, the report warned that none have a specific policy on financing LNG projects meaning that investments have been allowed to go ahead despite climate targets.