Why gas isn’t a transition energy?

Today, gas has a positive image among financial institutions. It is seen as a “low-carbon” source of energy which could be used to decarbonize many sectors of the economy. Reclaim Finance has analyzed six commonly-cited arguments which are used to justify continued financial support for gas expansion, despite scientific recommendations to the contrary.

“Gas provides a backup when renewables cannot meet demand,” “gas is a transition fuel,” “converting gas infrastructure will extend their lifespan”… Many misconceptions circulate about gas, and it is often difficult to separate fact from fiction. These six fact sheets aim to serve as a reference for financial institutions, providing them with clearer information about the role of gas in the energy transition.

• Which reference scenario for which sectoral policy?
  Numerous scenarios aim to limit global warming to 1.5°C. The International Energy Agency’s Net Zero Emissions scenario has already been adopted by many financial stakeholders and sets out a scenario for achieving net zero with little to no overshoot. In this scenario, the development of upstream gas projects and liquefied natural gas (LNG) export terminals is incompatible with the 1.5°C target.

• Are new fossil gas projects needed to meet future demand?
  Scientific projections are clear: global gas demand is expected to peak in 2030. The projected decrease in demand makes the development of new gas infrastructure unnecessary, especially as some of the facilities currently in operation have excess capacity.

• What is the place of fossil gas in a sustainable energy mix?
  Gas is often portrayed as a flexible solution to address the variability of sustainable energy sources. However, some gas power plants are not suited to operating flexibly, and sustainable alternatives are available.

• What are the hidden flaws of fossil gas?
  Although gas is presented as a “low-carbon” transition energy, its emissions are substantial and can even be equivalent to those of coal, due to its high leakage rate during production. Burning gas also causes air pollution that can lead to severe respiratory health issues.

• What are the risks associated with the development of liquefied natural gas (LNG)?
  The war in Ukraine triggered an energy crisis in Europe which resulted in a lot of LNG infrastructure being developed in Europe, despite declining gas demand in recent years. LNG, however, is even more polluting than pipeline-transported gas, and its expansion presents significant economic risks.

• Can gas infrastructure be converted to extend its lifespan?
  New gas assets could become stranded assets as gas demand declines. These assets cannot be repurposed to operate with other fuels, except in two specific cases: the long-distance transportation of hydrogen to industrial sites or its long-term storage.