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Gas is not green for transition finance.

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TLDR:

  • Gas is not a sustainable transition fuel due to its high emissions and environmental impact.
  • Asian countries are embracing gas in their transition finance frameworks, which may lock the region into a high-emissions future.

In the article “Gas should not be eligible for transition finance,” Christina Ng discusses the controversial decision by many Asian countries to include gas in their transition financing frameworks. While some countries like Singapore and Thailand have taxonomies that require gas producers to lower emissions, the overall cost of generating electricity from gas is typically higher than coal. The global push for electrification, as well as increasing investment in renewable energy, has seen investors viewing oil and gas as a sunset industry. The International Energy Agency has discredited gas as a transition fuel, projecting a decline in demand for coal, oil, and gas by 2030. Green finance deals, focused on renewable energy, have overtaken investments in oil, gas, and coal.

Despite the push towards sustainability, Asian markets still see gas as a key player in meeting energy demands. However, the inclusion of gas in sustainable finance taxonomies raises concerns about locking the region into a high-emissions future. Countries like Singapore and Thailand have taxonomies that consider zero or low-emission gas-fired energy as green or transition investments, putting the onus on companies to invest in emissions-free technology like carbon capture and storage. Japan and South Korea’s looser stance on gas as a transition fuel is criticized for not prioritizing emission reduction measures.

While gas may be seen as a transition fuel in some markets, the overall environmental impact and long-term consequences of investing in gas-powered projects are concerning. Gas developers and power operators may face challenges in sourcing capital as investors increasingly focus on sustainable investments. The inclusion of gas in taxonomies risks perpetuating a high-emissions future and delaying the transition to cleaner energy sources.

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