Global gas pipeline expansion creates $485.8 billion in stranded asset risk: survey
A massive expansion of the global pipeline network threatens climate goals and creates a $485.8 billion stranded asset risk, according to a new Global Energy Monitor (GEM) survey.
After a Covid-19 related drop in pipeline commissionings in 2021, the gas industry and positive gas countries led by China, India, Russia, Australia and the United States are pushing ahead with their plans commissioning of tens of thousands of kilometers of gas pipelines in 2022.
This expansion comes despite the warning from the International Energy Agency (IEA) that gas consumption is set to peak in the next few years and that the world must quickly switch from fossil fuels to renewables.
For 2021, the GEM survey found that cancellations and delays in some parts of the world were being offset by rapid expansions elsewhere, particularly in Asian countries, perpetuating a dangerous status quo inconsistent with the net zero scenario of 1, 5 degrees Celsius IEA.
Globally, there are 70,900 km of pipelines under construction, with an additional 122,500 km in pre-construction development.
Together, these would cost approximately $485.8 billion in capital expenditure.
In 2021, global pipeline commissionings fell to 6,500 km, their lowest level since 1996, but much of that drop was due to the economic and logistical chaos caused by the Covid-19 pandemic.
With 36,800 km under construction and scheduled for commissioning in 2022, and a further 59,500 km scheduled for commissioning between 2023 and 2030, the global gas network is poised for rapid and significant expansion.
China is the world leader in gas pipeline development, with 26,300 km of pipelines under construction and another 29,800 km in pre-construction development, representing a total stranded asset risk of $89.1 billion.
China’s pipeline boom is unfolding under the leadership of newly created conglomerate PipeChina, the world’s second-largest gas pipeline developer behind Russia’s Gazprom.
India ranks second among the world leaders in gas pipeline development, with 16,200 km under construction and another 2,200 km that have been proposed, representing a stranded asset risk of $14.7 billion.
True to its 2020 “gas recovery” plan after the Covid-19 pandemic, Australia is developing 12,200 km of gas pipelines, of which only 600 km are currently under construction. These pipelines represent an estimated stranded asset risk of $18.6 billion.
In the United States, growing opposition from NGOs and activists and a changing legal and regulatory landscape contributed to the defeat of several high-profile pipelines in 2020-21; However, pipelines estimated to cost $47.6 billion are still under development, and the United States is expected to become the world’s largest gas exporter in 2022.
“A slowdown in pipeline development in 2021 was unfortunately more of a Covid issue than an acknowledgment that gas contributes to the climate crisis,” said Baird Langenbrunner, research analyst at GEM.
“Looking forward, the fact that nearly half a trillion dollars worth of gas pipelines are in development makes no economic sense, as many of these projects will become stranded assets as the world transitions to renewable energy.”
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