Why there is a ‘gold rush’ with the world’s fossil fuels (despite calls against climate change)

A report published this week on the impact of that war on the fight against climate change confirms that there is currently some global gold rush To create the infrastructure to produce, transport or process fossil fuels, especially liquefied natural gas (LNG).

The document was prepared by the Climate Action Tracker (CAT, for its English acronym), an independent scientific project that monitors governments’ actions to tackle climate change and compares them with the Paris Agreement goals to “keep warming well below 2°C and make efforts to limit warming to 1.5°C” .

The report highlights, among other things, plans to build new LNG plants in Germany, Italy, Greece and the Netherlands, while countries such as the United States, Canada, Qatar, Egypt and Algeria plan to increase their exports of this fuel.

At the same time, it highlights that many fossil fuel producers They increased their productionWhile governments in more than a dozen developed countries lower taxes on fuel or on energy consumption, and thus encourage their consumption.

BBC Mundo conversó con Niklas Höhne, un experto del NewClimate Institute, una ONG con sede en Berlín que forma parte del consorcio que elabora el CAT, sobre los hallazgos de este estudio y cuáles son los retos que plantea para la combat el actual situación Climate change.

Climate Action Tracker conducted a study on the global response to the Ukraine war from the perspective of combating climate change. What did they find?

Right now there are governments trying to do things differently because of the energy crisis. They now have to deal with this situation as they will no longer import fossil fuels from Russia.

So they can do two things: try to get fossil resources from somewhere else; Or work in favor of more efficiency and renewable energies.

Unfortunately, we have found that most countries are experiencing some kind of “gold rush” towards new fossil fuel infrastructure, new LNG pipelines, new LNG ports and new oil and gas fields.

This is very counterproductive for climate policy because once this infrastructure is built, it will be used for several decades and traps us in a very high carbon future.

Why do you expect to use this new infrastructure for several decades?

The thing about the new infrastructure is that the pipeline is expensive to build, meaning that once it’s built, investors want to use it for decades.

The problem is that we want to reduce gas consumption to 0 globally by the middle of the century, and if we build new infrastructure, that reduction will be very difficult. So these investments will tie us up with high greenhouse gas emissions or end up as stranded assets.

He is concerned about building these new infrastructures. But what other ways are governments working against climate targets in the current crisis?

The main problem is infrastructure, but another problem is that all the governments we assess today have subsidized consumers with tax cuts on fossil fuels. This is not a good idea.

I can understand that governments want to help consumers and industries, but they should only support those who really need it.

On the poor population or the industry that is in real danger, but what they are doing instead is reducing taxes on fossil fuels and that means that they will reduce the pressure on all citizens and oil companies, even those who can afford it and that they can give up fossil fuels. This is not a good idea either.

But in the current context, when inflation and energy prices are so high, what are the alternatives for governments because many people find it difficult to fill the gas tank of their car to go to work. Is there any workable solution you’d recommend?

Yes, if that is compensation for higher energy prices, one should compensate the poorer households and not the richer ones.

Some people have suggested doing this on a per capita basis, so that everyone receives the same amount. Others say it is better to submit to the tax system so that the poor have an extra tax break or extra money in their pockets, which would certainly be possible and would be a better option.

But the real long-term solution is to save energy and get more renewable energy. Saving energy is always a profitable option.

For example, driving slower with speed limits, lowering heating slightly in winter, and restricting car access to cities so that people use public transportation. Support more public transportation so people don’t use cars, but mass transit, there are many options for governments to help their citizens and businesses in this crisis.

In the report, I noted that most Western countries have sought to reduce or stop buying Russian fossil fuels altogether, and many have announced ambitious goals for the transition to renewables such as wind and solar. Isn’t this useful for fighting climate change?

Yes, there are things that some countries do well. They have increased many of their renewable energy goals and some have also provided subsidies for public transportation.

That’s fine, but we’re far behind on climate policy and we have to cut emissions so drastically that we don’t have time to make mistakes.

The IEA says that from now on, we should not invest in any new fossil fuel infrastructure.

And if we now see a “gold rush” in investing in fossil fuel energy infrastructure, this will be a serious problem because we cannot afford to make that mistake.

For now, we must use the same money, effort and time to drive energy efficiency and renewable energy and not to expand our fossil fuel infrastructure.

But in the short term, is it really possible to take advantage of renewable sources to solve the current crisis?

Well, the expansion of renewable energy is not fast, but the construction of a new gas pipeline or the construction of a new LNG terminal is not. So they have the same problem.

The really fast thing is to reduce energy consumption by driving more slowly or lowering the heating. That would be very fast, but unfortunately not many governments use this option.

The CAT report did not mention China, the world’s largest energy consumer. What do you think of Beijing’s response to this crisis?

I think China is less affected by the crisis. They have some energy trade with Russia, but they are not dependent on Europe.

China is also considering increasing its renewable energy targets. That will be good. But at the same time, China is considering buying cheaper oil and gas now from Russia. It may be in market conditions, but for other reasons it wouldn’t be a good sign.

China is very important from a climatic point of view. It is responsible for 1/4 of global greenhouse gas emissions and what happens there is very important to global emissions and global climate. Moreover, one would expect the crisis to lead to a further push towards efficiency and renewable energy sources.

What about Latin America? There is no mention of Latin American countries in your report…

no. Currently, LNG and gas exports are more concentrated in North America, Africa and Asia.

Now there is another positive thing we have seen: some governments are now entering into agreements to supply or buy green hydrogen. I think this is a new opportunity. We thought this would happen in five years or so, but it’s already happening now. So there is good acceleration.

Latin America has a lot of potential for renewable energy. I can consider exporting green hydrogen made from renewable energy and selling it to Europe or other places, and I think that would be a good business opportunity.

Do you have any other recommendations or alternative solutions to this crisis?

There is one more element. Many fossil fuel companies are making record profits because energy prices are so high and their production prices are the same.

So they are now making much higher profits and some governments have started taxing that extra profit and reinvesting it in renewables, but only a few governments have done that and that would be another thing that governments could do now.

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