‘$104bn in stranded asset risk for oil, gas pipelines in India’
New Delhi, Feb 2 (IANS) With the Union Budget for 2021-22 laying a major focus on the launch of a National Hydrogen Mission for generating hydrogen from green power sources, a survey by international researchers on Tuesday said there is $104 billion in stranded asset risk for oil and gas pipelines in India.
While the Indian government has not announced any net zero targets, continued deflation in renewable energy price is making its economics of continued dependency on fossils untenable. India’s energy sector has the highest exposure to nonperforming assets (NPAs), said the survey by Global Energy Monitor.
Globally, continuing a decade-long slowdown and year-on-year oil and gas pipeline additions fell by 13 per cent in 2020. Nevertheless, over $1 trillion in pipeline expansion projects are in development, drastically undermining pledges by the world’s major economies to achieve carbon neutrality by mid-century.
The report cites seven major policy options available to the Biden Administration for reining in pipeline overbuilding.
The report findings include stranded asset risk of $1 trillion. A planned 2,12,000-km expansion in the global system of oil and gas transmission pipelines, amounting to $1 trillion in capital expenditures, is on a collision course with commitments by most large economies to transition to carbon neutrality by mid-century, setting the stage for large amounts of stranded assets.
It says there is lock-in of future emissions. Pipeline projects under construction and in pre-construction will support a lifetime increase in oil and gas CO2 emissions of 170 gigatonnes, only 15 per cent less than the projected lifetime CO2 emissions of the currently operating global coal plant fleet.
The gas dominates the mix. Eighteen of the 20 longest pipelines in development and 82.7 per cent of all pipelines in development will carry gas, reflecting the fossil fuel industry’s success in perpetuating the myth that gas can be a “bridge fuel” to a clean energy future.
The findings say the US is the leading developer of pipelines as measured by capacity, with 19.6 million barrels of oil equivalent per day in development. This expansion presents a major climate risk since US exports of liquified natural gas have the highest greenhouse gas intensity of any major exporter, according to Boston Consulting Group.
China continues a massive 32,800-km expansion of the country’s oil and gas pipeline network. That network is being consolidated under a new company, PipeChina, which will soon be the largest builder of gas pipelines in the world, says the report.
The global pipeline expansion has slowed in the past decade and some projects were delayed in 2020 by the Covid-19 pandemic. Overall, however, the expansion curve has been bent rather than broken, with pipelines continuing to enjoy both policy support and financial support by governments and major financial institutions.
The findings are based on the Global Fossil Infrastructure Tracker, a project-by-project survey of oil and gas pipelines and terminals.
“The policy landscape facing the new administration in 2021 is radically different from the one that Biden left in 2017,” said James Browning, lead author of the report.
“Fossil gas is now recognised as a climate buster, not a climate solution. That means Biden faces the tough decision to rein in gas infrastructure, which is the most effective way to limit emissions.”
“Last month the head of the European Investment Bank, the world’s biggest publicly owned financial institution, remarked that ‘Gas is over’,” said Greig Aitken, GEM’s finance researcher.
“It’s high time for other significant financial institutions, both public and private, to step up and follow the EIB’s lead in ending their support for oil and gas infrastructure projects and companies.”