Could climate change deal undermine Myanmar’s gas wealth?
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