PUBLIC FINANCING for COAL and FOSSIL FUELS

CCUS, Hydrogen and Ammonia Have no Place in a Rapid, Just and Equitable Transition Out of Fossil Fuels Towards 100% Renewable Energy Systems 

The Intergovernmental Panel on Climate Change have come out with the  Synthesis of its Sixth Assessment Report (AR6)  on March 20, 2023.  No doubt the Report will highlight once again the urgency of decisive and ambitious climate action to save people and planet from the horrifying and profound impacts of climate catastrophe.  At the center of real solutions to the climate crisis is the rapid, just and equitable transition out of fossil fuels and the accelerated establishment of 100% renewable energy systems.  

However,  governments all around the world are failing to act decisively and instead many are promoting so-called solutions that not only delay but undermine climate action.

Last March 3, 2023  ministers from Southeast Asian countries, alongside ministers from Japan and Australia, convened as part of the Asia Zero Emission Community.  The participating  governments included Australia, Brunei Darussalam, Cambodia, Indonesia, Japan, Lao PDR, Malaysia, the Philippines, Singapore, Thailand, and Viet Nam. 

This new initiative supposedly aims to bring countries in the region closer together in finding common solutions to decarbonize their economy. As a result of the ministerial meeting, a joint statement and a chair’s summary was released. 

Hydrogen, ammonia, and carbon capture utilization and storage were mentioned as  part of priority business and technologies in the Joint Statement. The Chair’s Summary refered to liquefied natural gas (LNG) as a transition energy source and underscored the importance of using carbon capture utilization and storage (CCUS) technologies, hydrogen, and ammonia in decarbonizing the power generation, transportation sector, and hard-to-abate sectors.

The results of the ministerial meeting is part of an alarming trend in the region – the aggressive push for natural gas as a zero emission energy source, and CCUS, hydrogen and ammonia as clean energy technology.  

Natural gas is not a transition fuel. It is a fossil fuel and should be included in the rapid, just and equitable phase-out of fossil-based energy systems.

While natural gas produces less CO2 compared to coal, it still expels a sizable amount of carbon into the atmosphere. Furthermore, natural gas production emits enormous amounts of methane, a greenhouse gas with a global warming potential 21 times higher than carbon dioxide over a 100-year period. This greenhouse gas is leaked out and intentionally vented as part of the process, and the lack of global regulatory mechanism to police this makes building more LNG plants a dangerous venture.

Building more gas plants would massively lead member countries saddled with ever increasing capital expenditures and would continue to expose dangerous chemicals to the nearby communities. Take for example the Meghnaghat Gas Power Plant currently being constructed in Bangladesh. Estimates compute that not only will the power plant generate electricity thrice more expensive than solar power (BDT 19.1 for gas and BDT 6.37 for solar), it will also emit 47-66 million tonnes of CO2e in its lifetime, preventing Bangladesh from achieving its Paris Agreement target.

Any new investment in natural gas completely contradicts the declaration of the International Energy Agency (IEA) in its report that there should be no new investments in oil and gas.

Especially  at this time when gas prices have soared to new highs, governments should not even consider natural gas. New investment in natural gas is only for unambitious states who are careless in taking on future stranded assets, and care even less for their people who will be suffering even worse impacts from climate change. 

Carbon Capture, Utilization, and Storage technologies are unreliable, inefficient, and costly. These only serve to extend the use of fossil fuels and  allow more fossil-based technologies to proliferate.

The myth of carbon capture, storage and utilization has long been touted by industry experts as the panacea that could make their facilities carbon neutral. Despite decades of development and billions of publicly funded money funneled for investment, the industry has little to show for it. IEA has reported that out of the 32,581 Mt Co2 emitted in 2017, only 8 Mt were captured by CCUS.  Dozens of projects have been scrapped and have failed or underperformed in their targets. 

Estimates show that every year, capture capacity goes up by 3 million tonnes of CO2, which is a far cry from the estimated 1.6 billion tonnes needed in 2030 to align with a 2050 netzero pathway. The role of CCUS in decarbonizing the industry is massively exaggerated by the fossil industry eager to use it as a loophole to continue polluting more. 

Hydrogen and ammonia technologies will not be fossil-free and further investment will facilitate longer life spans for fossil fuel plants.

Hydrogen and ammonia technology is still in its infancy stage, but has already proved to be economically uncompetitive with solar and wind. While green hydrogen, which is hydrogen made using electrolysis powered by renewables, supposedly does not emit any carbon throughout its life cycle, the majority of hydrogen currently being produced comes from reforming fossil fuels, resulting in massive leaks and emissions. And even if these emissions were captured in CCUS facilities, the whole process can create 20 percent more GHG compared to burning natural gas for the same amount of fuel. 

Both ammonia and hydrogen are seen as carbon neutral as  their use supposedly does not produce any harmful byproduct in the power generation phase, but their production is anything but clean. Production of hydrogen involves six percent of global natural gas and two percent of global coal, while ammonia production generates one percent of global carbon dioxide emissions. The fossil industry also is keen to use ammonia and hydrogen to co-fire existing power plants, extending their lifespan while negligibly reducing their emissions. A study showed that fully transitioning a previously coal-fired plant into an co-fired ammonia plant only resulted in 21 percent decrease in CO2 emissions annually as other emissions were generated in an earlier stage in the supply chain. 

It is absurd to invest in technologies that are more inefficient and polluting than the simple alternatives we have today. It is also a fact that efficiency losses take a huge toll off the energy produced at every step of the production process. The chief engineer of the Energy Technology Institute described the current strategy as “grossly inefficient.” Despite all the promotion as a cleaner fuel, ammonia and hydrogen would only serve to further entrench fossil fuels in our power systems. 

The urgent and only investment that must be done is advancing the technologies of renewables and battery storage in order to secure a safe, just and equitable future.

Asian government leaders argue that renewable energy is not enough to meet growing Asian energy demand due to the high cost and difficulty of developing and distributing renewable energy technologies.  Renewables have actually become the cheapest power option in almost the majority of Southeast Asia, and research has shown that Southeast Asia can meet its energy demand with renewables.

There is  huge  potential and opportunities  in the Asia region to rapidly build 100% renewable energy systems. China is well placed to  play a huge leadership role as it is the world’s largest producer of wind and solar energy  accounting for 72% of global solar manufacturing and 50% of global wind turbines. Japan and Korea can and should rapidly scale up its investments and financing of Renewable Energy projects domestically and overseas. However, financing and investment arrangements must be  fair, just, equitable and sustainable.

In 2020,  IEA reported that  wind and solar power could have overtaken gas in 2023 and would overtake coal in 2024, and renewables can replace coal as the largest source of power globally in 2025. Despite setbacks set by the invasion of Ukraine and high persistent energy prices, renewables are ready to dominate new installed power projects in the coming years. 

Asian leaders must not include fossil gas, hydrogen, ammonia and CCUS in their roadmap towards a just transition. These are false solutions that are being promoted to pave the way to extract more oil and gas from the ground, hide the lack of climate ambition, and will leave countries worse off. Public funds should not be used to prolong the life of fossil fuels and instead should be invested in a rapid just and equitable  phase-out of fossil fuel plants towards 100% renewable energy systems.