A study by Global Energy Monitor found that at least 20 of 45 worldwide projects to build LNG export terminals are facing threats of climate change concerns and the COVID-19 pandemic. These threatened projects represent $292-billion in investments. They are currently in the pre-construction phase and are facing delays to their financing.
The financing delays indicates investors’ swift shift from the LNG market toward low-carbon energy. Demand for renewable energy is growing and posing competition to LNG. Meanwhile, rising awareness of climate change also puts extra pressure on the LNG industry, which previously had been viewed as a promising fuel market.
Companies committed up to $170 billion to new LNG export terminal construction globally last year, compared roughly $65 billion committed in 2018. However, many projects are now in jeopardy as investors seek to reduce their exposure to fossil fuels.
Andrew McDowell, the vice president of the European Investment Bank, said the report highlighted that Investing in new fossil fuel infrastructure, including LNG posed unacceptable risks and is increasingly an economically unsound decision. Last year, the bank decided to stop funding fossil fuel projects by the end of 2021.
In many countries, LNG projects receive strong support from the government. Producers also aim to increase exports over the next decade. This results in growing concerns that the fast development of the LNG industry can jeopardize the target to achieve the temperature goals in the 2015 Paris climate accord. Compared to coal, LNG emits less carbon when used. However, natural gas production is associated with the leak of methane, a potent greenhouse gas.
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Published on July 9, 2020 5:50 PM (GMT+8)Last Updated on July 9, 2020 5:50 PM (GMT+8)
