Energy Economics Show Renewable Energy Generation Is Less Capex Intensive Than Fossil Fuels

Renewable energy generation has made strides over the past few years, but several South and Southeast Asian countries are pressing ahead with natural gas development. They argue that gas is the perfect bridge fuel for more renewable energy development.

Unfortunately, that logic is misplaced since gas remains a major greenhouse gas (GHG) emitter, along with large amounts of methane leakage.

Despite evidence from a growing body of analysts, the global oil and gas sector is pushing this gas narrative even further. It argues that gas isn’t only the ideal bridge fuel but that gas is part of the solution to battle climate change.

Adding to the fray, oil and gas giants Shell, Chevron, Eni and others have recently upped the gas ante. Contrary to scientific research, climate warnings and a growing list of activist investors, these fossil fuel behemoths are aiming to keep accelerating investments in gas and liquefied natural gas (LNG) infrastructure well into the 2030s. This misguided acceleration comes as the International Energy Agency (IEA) continues to sound the alarm over continued gas and fossil fuel development.

Renewable Energy Sources

Asia, home to around 60% of the world’s population, has a choice to make. Countries in the region can either stay on course with more gas development or pivot to build solar and wind power more cheaply and quickly.

This situation is particularly poignant for four developing South and Southeast Asia countries, including Bangladesh, Pakistan, Vietnam and the Philippines. These countries continue to invest heavily in gas infrastructure and LNG import deals as part of their respective energy plans.

Bangladesh 

In Bangladesh, over-reliance on LNG recently created a domestic energy crisis. Meanwhile, nearly 60% of the country’s energy demand is met by gas. The country already operates two LNG import terminals, with more under consideration.

Pakistan 

Some 49% of Pakistan’s energy is derived from oil and gas. However, it also has two operational LNG import and regasification terminals.

Unfortunately, Pakistan and Bangladesh have suffered both price volatility and supply constraints due to more LNG import procurement. This, in turn, has led to severe economic downturns for both of these countries, along with corresponding political fallout.

Vietnam 

According to its newly released energy plan, domestic gas and imported LNG will form the backbone of Vietnam’s energy mix by 2030. The total capacity of Vietnam’s gas power production is expected to reach 37,630 MW by 2030.

The Philippines 

In the Philippines, gas is around 16% of the country’s energy mix. The government has approved at least seven LNG import terminals that will escalate that percentage.

Not a Net Zero Pathway 

Moreover, it has to be asked. How can these countries reach net zero? The state of affairs is worrying, especially since gas emits at least half of the CO2 emissions when used for power production in comparison to coal – the dirtiest-burning fossil fuel.

For these countries, reaching net zero seems unlikely.

Methane Emissions

Scientific measurement campaigns have also shown methane emissions from gas operations are much higher than originally estimated. Methane emissions are around 84 times more potent than CO2, when measured over 20 years. Even worse, over a short period, combusted methane is a more significant greenhouse gas than CO2. These findings undermine the narrative that gas is a “better” fossil fuel.

False Climate Change Mitigation Narrative

The global gas sector is ignoring gas usage emissions warnings, and it has developed an entrenched gas development playbook largely centred on carbon capture and storage (CCS) technology. Yet, research shows the fallacy of this premise as well.

CCS technology doesn’t adequately address enormous emissions across the entire gas and LNG value chain and is ripe with inherent problems. These include underground storage leakage, the high cost of operating a CCS facility and a dismal track record. To date, no CCS project has been employed at the necessary scale.

As such, gas and CCS investment is increasingly seen as a false climate change mitigation solution that should be discontinued soon.

Energy Economics Support Renewable Energy

Energy economics also support solar and wind power development over gas development. A World Economic Forum (WEF) report finds that solar and wind power projects have already reached cost parity with fossil fuels. Moreover, in many cases, they have become cheaper than their fossil fuel power project counterparts.

Between 2010 and 2020, the cost of large-scale solar projects had plunged by 85%. Of the wind, solar and other renewables that came on stream in 2020, nearly two-thirds, some 62%, were less expensive than the cheapest new fossil fuels.

Moreover, renewables are on track to become less expensive. By 2030, technological improvements could slash wind’s capex by 25% and solar by half.

Scientific evidence and energy economics support renewables over gas development. However, it’s up to each respective Asia-Pacific government to determine if they have the political will and insight to heed this call for a cleaner planet. To date, however, self-determination is generally lacking.