Could cli­mate change deal un­der­mine Myan­mar’s gas wealth?

Mizzima Business Weekly - - CONTENTS - Gor­don Brown

De­vel­op­ing coun­tries such as Myan­mar will face in­creas­ing dif­fi­culty ex­pand­ing their elec­tric­ity sup­ply us­ing con­ven­tional fos­sil fu­els oil, gas and coal, it emerged last week dur­ing the global cli­mate change con­fer­ence in France. An agree­ment on curb­ing global warm­ing could un­der­mine the po­ten­tial na­tional wealth from hoped for nat­u­ral gas be­neath Myan­mar’s ter­ri­to­rial wa­ters of the Bay of Ben­gal, where 20 blocks have been leased to in­ter­na­tional oil com­pa­nies for ex­plo­ration.

If the UN-led con­fer­ence agrees on tough mea­sures to hold global warm­ing be­low a 2C in­crease the com­mer­cial vi­a­bil­ity of hun­dreds of bil­lions of dol­lars’ worth of planned in­vest­ments in fos­sil fu­els in Asia would be un­der­mined, some ex­perts as­serted.

It would also un­der­mine bank and in­sti­tu­tional in­vestor sup­port for coal-fu­elled power plants – the favoured quick fix be­ing sought by coun­tries from the Philip­pines to In­dia to over­come acute elec­tric­ity short­ages, a spe­cial re­port in the Asia Power Mon­i­tor said.

A study by the Lon­don-based Car­bon Tracker Ini­tia­tive (CTI) warned that more than US$300 bil­lion worth of fos­sil fuel in­vest­ments in Asia is at risk of be­ing wasted if the UN con­fer­ence agrees on global CO2 lim­its.

The in­de­pen­dent re­search think tank sug­gests that plans by nu­mer­ous com­pa­nies and coun­tries for oil, gas and coal devel­op­ments would be ren­dered ob­so­lete.

Busi­ness history is lit­tered with in­vestors who failed to see a tran­si­tion com­ing, CTI chief ex­ec­u­tive An­thony Hob­ley said in a for­ward to the study timed to co­in­cide with Paris.

“China, the US, Aus­tralia, In­dia and In­done­sia have the great­est ex­po­sure, ac­count­ing for over 90% of un­needed in­vest­ment. Ex­port mar­kets are in struc­tural de­cline as China seeks to peak its coal de­mand and In­dia aims to be­come more self-suf­fi­cient in en­ergy, threat­en­ing big ex­porters like Aus­tralia and In­done­sia, CTI said.

Aus­tralia, In­done­sia and Malaysia have the great­est ex­po­sure to in­vest­ment “folly” in nat­u­ral gas pro­duc­tion. Two-thirds of planned new coal bed methane projects and half of the sup­ply in new LNG projects will be un­needed, ac­cord­ing to CTI.

“This sounds like bad news for South Asia and South­east Asia,” the weekly Mon­i­tor said. “Coal or gas are the nat­u­ral re­sources most favoured to fuel eco­nomic growth and to bring ba­sic grid elec­tric­ity to hun­dreds of mil­lions of peo­ple still liv­ing with wood fires and paraf­fin for cook­ing and light.”

The CTI dis­agrees. Tech­ni­cal devel­op­ments in clean en­ergy, big­ger and more ef­fi­cient stor­age bat­tery science and a trend to elec­tric cars are the fu­ture, ac­cord­ing to CTI.

How­ever, this seems to miss the point that all those peo­ple from In­dia to the Philip­pines sat round the wood fire cook­ing pot are a long, long way from wor­ry­ing about whether they should buy a petrol-driven car or an elec­tric bat­tery model. It over­looks the fact that al­though In­dia is making big strides in en­cour­ag­ing the de­vel­op­ment of re­new­able power plants – aim­ing for 40% of to­tal power de­mand by 2030 – more coal and or gas will still also be nec­es­sary.

Myan­mar has made small in­roads into tap­ping non-fos­sil re­sources to gen­er­ate elec­tric­ity, but so­lar en­ergy-trap­ping projects are costly, land con­sum­ing and prob­a­bly too so­phis­ti­cated for the coun­try’s ex­ist­ing un­der­de­vel­oped in­fra­struc­ture.

Mean­while, op­po­si­tion to hy­dro­elec­tric projects that in­volved damming rivers is strong in Myan­mar.

Sin­ga­pore’s state-linked Sem­b­corp In­dus­tries this week signed a US$300 mil­lion agree­ment to build one of the big­gest power projects in the coun­try, a 225 megawatt plant to be fu­elled by nat­u­ral gas. Sem­b­corp will own 80% of the plant, which is not ex­pected to be op­er­a­tional be­fore 2018.

In the near term, Myan­mar’s do­mes­ti­cally pro­duced gas sup­ply will suf­fice for such projects, but the CTI be­lieves find­ing the plant con­struc­tion fi­nance will be­come in­creas­ingly dif­fi­cult.

Ma­jor in­ter­na­tional fi­nance in­sti­tu­tions and banks are al­ready turn­ing their backs on some fos­sil fuel projects. One of the world’s big­gest planned coal mines, in Aus­tralia, has been re­fused loans by a num­ber of banks which pre­vi­ously sup­ported such devel­op­ments.

The 60 mil­lion tonnes a year mine is planned by In­dia’s Adani Group in­dus­trial con­glom­er­ate, pri­mar­ily to fuel new power plants in Myan­mar’s neigh­bour In­dia.

In­dia’s plans for coal fuel growth have met a lot of crit­i­cism at the UN con­fer­ence over the last 10 days, caus­ing anger in New Delhi.

“Why is In­dia in the crosshairs and not, for ex­am­ple, the US, which has one-quar­ter of the South Asian na­tion’s pop­u­la­tion, but more than twice the level of harm­ful car­bon emis­sions?” asked two lead­ing In­dian sci­en­tists com­ment­ing in Time mag­a­zine this week.

Why is China, a slightly more pop­u­lous coun­try than In­dia which ac­counts for about 28% of an­nual global emis­sions ver­sus In­dia’s 6% not the sub­ject of more crit­i­cism in Paris, said Navroz Dubash and Rad­hika Khosla of the Cen­tre for Pol­icy Re­search in New Delhi.

“Our re­view of mul­ti­ple re­search stud­ies sug­gests a vir­tual con­sen­sus that to meet In­dia’s en­ergy needs, coal use will have to in­crease …[but] sig­nif­i­cantly, even with added coal, In­dia’s emis­sions per per­son in 2030, at about 4 to 5 tonnes per capita, are likely to be less than the cur­rent global av­er­age of 6.6 tonnes per capita,” Dubash and Khosla said.

“Im­por­tantly, the pro­jected in­crease in In­dia’s emis­sions is far less than the cor­re­spond­ing fig­ure of 12 tonnes per capita in 2030 for the US and China,” they said.

The dev­as­tat­ing floods that have in the past two weeks en­gulfed In­dia’s southern city of Chennai, for­merly called Madras, and Tamil Nadu State have been like manna from heaven for the anti-fos­sil fuel lobby. The rain storms were caused by cli­mate change, they in­sist.

That’s as maybe. Chennai sits on the Bay of Ben­gal, no­to­ri­ous for ex­treme mon­soon sea­son weather. There is lit­tle proof that the flood­ing was ac­tu­ally the re­sult of global warm­ing, nat­u­ral or man-made, but if it was in­deed the lat­ter then it fol­lows that this was most likely caused by the 19th Cen­tury in­dus­tri­al­i­sa­tion of coun­tries now wag­ging fin­gers at In­dia and other de­vel­op­ing coun­tries for want­ing to burn coal, the Mon­i­tor sug­gested.

“Surely com­pro­mise is needed on a global compact on fos­sil fu­els consumptio­n to en­able de­vel­op­ing coun­tries to im­prove their lot,” the Mon­i­tor said. “This might then al­low them to bring their elec­tric­ity sup­ply some­where closer to that en­joyed in homes in the US, Bri­tain, Ger­many and Ja­pan full of en­ergy con­sum­ing con­ve­nience gad­getry. House­holds in those coun­tries long ago aban­doned cook­ing the evening meal on a wood fire or read­ing by fume-leak­ing paraf­fin lamp.”

A cli­mate change deal has been struck in Paris. But what will it mean for gas ex­plo­ration? Photo: EPA

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