COP28 Deal Signals Role For Gas In Clean Energy Transition

(Bloomberg) -- COP28 climate talks in Dubai ended with a nod that lower-carbon fuels like natural gas will play a role in the shift to cleaner energy sources.

The summit’s final text recognized that such fuels “can play a role in facilitating the energy transition while ensuring energy security.” Producers have long argued that gas should complement the roll-out of intermittent renewables, replacing dirtier fossil fuels like coal and oil.

The proposal adds to an intense debate about the role of gas in the shift to clean energy. Major suppliers including Shell Plc and Woodside Energy Group Ltd. insist the fuel has a secure long-term role, and are pushing for more investments in new projects, while the International Energy Agency forecasts demand will peak this decade. Environmentalists argue that expanding gas production threatens 2050 net zero targets.

“We are not going to win the fight against the climate change if we continue to rely structurally on fossil fuels,” said Tinne Van Der Straeten, the energy minister for Belgium which still relies on gas for almost a quarter of its electricity production. “Gas as a transition fuel means that you use it as short as possible and how you make sure that you use it as short as possible - is by ramping up renewables as fast as possible.”

Gas has been heralded by the industry as the cleanest fossil fuel since it releases less carbon dioxide than coal when combusted. However, it’s responsible for rampant methane emissions, a byproduct of production that’s 80 times more dangerous than CO2. The COP28 text included a pledge to reduce methane pollution to near zero by the end of decade, and has been widely endorsed by the fossil fuel industry.

Some governments, like Japan’s, are saying additional investment in gas is necessary to boost energy security, especially after Russia’s invasion of Ukraine last year upended the market and sent prices of the fuel to a record high. Firms in Europe and Asia signed 27-year liquefied natural gas purchase agreements with Qatar over the last year, raising questions over their climate commitments. 

The president of this year’s UN-sponsored summit, the United Arab Emirates’ Sultan Al Jaber, brokered an agreement that committed to shifting away from all fossil fuels for the first time, while keeping Saudi Arabia and other oil producers on board. The oil industry was in full force at COP28, with major heads, including Darren Woods, chief executive officer of Exxon Mobil Corp., and Toby Rice, CEO of EQT Corp., also attending the summit.

--With assistance from Lyubov Pronina.

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