Environment ministers from the Group of Seven Nations (G7) are currently meeting to prepare an updated agreement on how to battle climate change. Several leaks, or potential trial balloons, over the last few days, said that the G7 may endorse new natural gas investments. Environmentalists were not happy about this as they thought this was a lock after last year’s pledge to end international fossil fuel support.
Specifically, environmentalists want natural gas to be targeted for phasing out, along with oil and coal. The risk to them is that natural gas is gaining momentum as developed nations have started to reference it more often as a cleaner long-term fuel, instead of previous language that would use the term “bridge fuel” as a qualifier. Even a NextEra executive, representing the largest renewable company in the U.S., recently said “its just putting your head in the sand to believe that the energy transition that this country is embarking on will work without natural gas power generation.” Natural gas complements intermittent renewables extremely well and this is only improving, as major investment continues to focus on capturing emissions throughout the gas supply chain.
Despite the data supporting natural gas, the cries for gas to be phased out continue. One of the most surprising things about this though, other than the fact it doesn’t make sense, is that the phase-out of coal, which is significantly worse, has yet to even be decided on. Governments continuously debate peak oil and gas, when they haven’t even stopped growing coal demand. Countries can’t even commit to a date to stop using coal but are already waving their hands on what to do about gas. It reminds me of when I’m behind on a chore around the house, so I try to tell my wife about what my plans are for an even more audacious chore simply as a distraction. They borrowed my playbook.
These discussions are ironically, or sadly, happening on a day when Germany is shutting down its last three nuclear plants, with the baseload power gap to largely be met by everyone’s favorite’s coal and natural gas. The world still has yet to reach peak coal, with new plants being announced even now. Everyone needs to get serious promptly about reducing coal dependencies and the noise around natural gas, which is a very viable substitute for baseload coal power, is not helping countries move away. To understand how quickly substantial action on coal growth is required it is worth noting that UK coal use peaked in 1979 and the country still uses some to this day.
Countries use coal because it is cheap and abundant. Impairing natural gas development, or export, does not help natural gas compete with these inherent advantages that coal has vs intermittent or expensive power sources. Hopefully, the communique out of the G7 is favorable to gas, and with a strict timeline on coal, as you likely need one to achieve the other. The worry is that it just ends up being a lot of noise with little rational progress.
Source: https://www.forbes.com/sites/markledain/2023/04/15/g7-nations-argue-about-peak-oil-and-gas-but-havent-even-solved-peak-coal/