Amid Renewable Energy’s Expansion, Gas is Losing Traction: IISD Report

The Step Off the Gas report, published earlier this month by the International Institute for Sustainable Development (IISD),  examines international public finance for natural gas expansion in the Global South and the choices countries face in how to develop their energy systems while meeting socio-economic needs.

The report assesses economic and environmental risks from gas development, the status of alternatives to gas, and how to overcome challenges for the South in developing clean energy. It has detailed case studies of gas in three emerging economies: Argentina, Egypt, and India.

The International Institute for Sustainable Development (IISD) is an award-winning independent think tank working to accelerate solutions for a stable climate, sustainable resource management, and fair economies.

The study highlights that the greatest impacts of climate change will be felt in the Global South, especially by the poorest people. Southern countries differ widely in their circumstances and needs. What they have in common is that they have done less to date to cause climate change and have access to fewer resources to mitigate it compared to the wealthier countries of the Global North. Often, significant portions of their populations are energy-poor, while energy demand is growing fast.

The gas industry increasingly sees its future growth potential in the Global South. Gas advocates are calling on governments to pave the way for gas expansion, especially in Asia and Africa. New liquefied natural gas (LNG) exporters, such as the United States and Australia, are seeking new markets while gas companies look for new resources to extract and export.

The report finds that gas projects in low and middle-income countries are receiving more international public finance than any other energy source: four times as much as wind or solar. This investment risks driving a new dash for gas that locks countries into a high- carbon pathway, imperilling their economic future and the global climate.

Although gas advocates have long argued that gas can serve as a “bridge fuel” until renewable energy can be developed at a larger scale. Today, this idea is obsolete for three reasons: First, the climate crisis is now urgent: remaining atmospheric space is so limited that there is no room for any additional fossil fuels; second, since wind, solar, and energy storage and other supporting technologies have fallen rapidly in cost and are deployable at a large scale, there is no longer a need for a bridge; third, recent findings on the extent of methane leakage from gas infrastructure undermine claims of environmental benefits over other fossil fuels.

Gas is not needed, as renewable-based alternatives for most of its uses are either already cheaper or are expected to be within a few years. The Global South has the world’s largest wind and solar resources, and harnessing them creates opportunities to develop without depending on volatile international markets. For the majority of present uses of gas, alternative technologies are either already cheaper than gas or are expected to become cheaper within a few years

Renewable electricity is an increasingly cost-competitive and effective means of providing clean cooking, helped by improvements in the efficiency of electric stoves and devices. Countries in the Global South need greater international support to finance clean energy projects, including to help integrate renewables into often weak or unstable electricity grids. The COVID-19 pandemic has exposed how rapid global change can affect countries in deeply inequitable ways and re-emphasizes the importance of building resilient and socially just economies. As economic resources remain constrained in the coming years, it will be vital that scarce public funds are devoted to building back better.

This report recommends that international public finance should no longer support fossil fuels, focusing instead on creating the enabling conditions for countries to build energy systems based on renewable energy.