Monday , May 17 2021

Gas is new coal with risk of $100b in stranded assets

Bloomberg

Natural gas is falling out of favour with emissions-wary investors and utilities at a quicker pace than coal did, catching some power generators unaware and potentially leaving them stuck with billions of dollars of assets they can’t sell.
Citigroup Inc and JPMorgan Chase & Co are among the banks that strengthened their financing restrictions on thermal coal under pressure from shareholders wanting to avoid the fuel, and the expectation is that gas is next.
Executives at some western European companies say they’re already struggling to sell gas-fired facilities.
“If you find out somebody who is ready to offer a good price for our gas plants in Spain, then we are ready to sell,” said Jose Ignacio Sanchez Galan, chief executive officer at Iberdrola SA in Spain. “We are not finding people.”
The cost of renewables has dropped dramatically during the past decade, making gas-fired stations less competitive.
Phasing out gas in power generation is just a first step. Cutting back use of the fuel in heating, transport and industry would wreak more potential damage. Europe wants to reach net-zero emissions by 2050, which is at odds with plans to build numerous infrastructure projects, like pipelines and
terminals.
If these are built but no longer needed, there’s a potential 87 billion-euro ($104 billion) stranded-asset risk, according to calculations by Global Energy Monitor.
In Italy there are plans to build 14 gigawatts of new gas capacity mostly to replace coal, according to Carbon Tracker Initiative Ltd.

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