The world, and specifically Canada and the United States, are at risk of overbuilding capacity for natural gas exports, according to "The New Gas Boom: Tracking Global LNG Infrastructure", a report from Global Energy Monitor (formerly CoalSwarm), an organization that tracks energy development worldwide.
If the projections are true, expect one of two mutually-exclusive consequences: one, the world will confront the financial impact of $1.3 trillion of worthless investment in liquefied natural gas (LNG) infrastructure; or two, greenhouse gas emissions will continue to climb as cheap and plentiful natural gas elbows aside lower-emitting sources of energy.
The energy industry has fired back, citing other research and drawing upon reports of international agencies. In a statement, Tim McMillan, President of the Canadian Association of Petroleum Producers, calls the claims nonsense. The International Energy Agency forecasts a growth in natural gas demand of 43% by 2040, he says, by which time it will supply a quarter of the world’s energy. Renewables will account for only seven percent of global demand, he says. The world needs more, not less, natural gas.
According to Global Energy Monitor, that’s what it’s going to get. LNG projects currently under construction or in pre-construction will more than triple global export capacity, and 32.8% of that new capacity is slated to be built in Canada. But it says investors should take heed. The price of renewable energy is plummeting, it warns, making it a true competitor to natural gas. The impact is being felt already, it says. In 2019, General Electric wrote down the value of its investment in the power and grid division of Alstom by $23 billion, in part because of falling demand from the thermal power sector.
Natural gas could follow the same trajectory as coal, Global Energy Monitor warns. A decade ago coal producers were bullish about prospects, citing the rapid growth of Asian markets. Instead, overinvestment, price competition and the emergence of new sources of energy led to the collapse of several top coal producers.
If the LNG energy sector doesn’t collapse under its own weight, the climate can expect to take a hit, Global Energy Monitor warns. It says new LNG terminal capacity that is being proposed will lock in global warming impacts roughly equal to all the new coal plants currently on the table. That’s because new calculations of emissions from natural gas, particularly from fracking, reveal much higher levels of fugitive emissions of methane, a very potent greenhouse gas. Natural gas, once held out as a transition fuel from coal to renewables, turns out to be not much better than the coal it is intended to replace.
But the energy industry disputes the new calculations. More recent, and independent, research has challenged those findings. And besides, they’re not relevant to Canada, counters McMillan. Canada is a global leader in emissions reduction from natural gas production. “Canadian LNG has less than half the carbon emission intensity compared to LNG from the U.S. Gulf Coast,” he says.