The “golden age of gas” has not turned out quite as the forecasters and the gas producers who promoted the slogan a few years ago expected. Gas was supposed to be the irresistible fuel of the future. After the disaster at Fukushima, nuclear power stations across Japan were closed and natural gas imports surged with the result that prices in the north Asian market more than doubled, at times touching $20/mmbtu. Gas was the safe, reliable fuel and it was cleaner than coal – making it the obvious replacement as the world became more serious about tackling the risks of global warming and climate change. In addition, what was traditionally mainly a pipeline business within three regional markets was being made global by LNG – the process through which gas is liquefied and then transported to distant markets in tankers. A thriving world market was in the making. To meet the promised growth in demand much greater volumes would be needed – and that led to a rush of investment in highly expensive LNG projects. After hubris comes nemesis. Global gas demand has increased but by much less than predicted. The shale revolution in the US has dramatically changed the electricity sector there, with gas providing a degree of direct competition to the long-established coal industry that even Donald Trump cannot reverse. But in Japan nuclear is reviving and in Europe both gas and coal are losing out to renewables, led by wind. Subsidies and mandated market shares started the process but now wind, on and offshore, is achieving cost reductions to the point where suppliers can compete without help. The low prices for offshore wind agreed in this year’s capacity auctions in the UK are the strongest signal of the shape of things to come. Gas demand in Europe is 12 per cent lower than it was 10 years ago. Chinese and Indian demand continues to grow but the dramatic gains by solar power, where costs have fallen 85 per cent since 2009, are opening up the market while in both countries the strongly entrenched position of coal – a source of millions of direct and indirect jobs – will be very tough to break down.
FT 11th Dec 2017 read more »
Environmental campaign groups have accused many of the world’s largest banks of actively undermining the Paris agreement on climate change by pouring billions of dollars into coal plant developers. Between January 2014 and September 2017 international banks channelled $630bn to the top 120 companies planning to build new coal plants around the world, according to research by campaign groups including the Rainforest Action Network, BankTrack and Friends of the Earth. The researchers highlighted Beijing-based Industrial and Commercial Bank of China as the biggest underwriter for bond and share issues of coal plant developers, providing more than $33bn over that period.
FT 11th Dec 2017 read more »