COP28’s impact on LNG spree: Will decarbonization moves throw oil & gas players off their game?

There is a vast divide between some forces at play during COP28, which are trying to shape the future of the energy landscape in their image. While many are sparing no expense in the fossil fuel crackdown quest to bring about a net zero world, others are doing their utmost to ensure a more balanced approach that will not interfere with planned oil and natural gas projects, as they are convinced that fossil fuels cannot be thrown out of the energy mix as quickly as some would like unless many countries around the globe wish to forsake their energy security to chase the green shift.

This shows the dichotomy between the players at the UN climate talks but it is still not easy to predict which side will win despite being only days away from the final text. Once negotiations come to an end, how will the oil and gas industry fare? Will the anticipated global build-out of liquefied natural gas (LNG) projects continue or will many of these projects come to an abrupt end?

While the negotiations concerning the fossil fuel language to be included in the COP28’s final text agreement are still ongoing, parties advocating a phase-out of coal, oil, and gas have hit a wall and reached an impasse with those who believe that the world needs to continue burning fossil fuels longer. As the conference wheels keep turning, some sort of common ground is expected to be reached on coal, oil, and gas along with an accelerated deployment of renewable energy and other low-emission technologies, including carbon capture, utilization, and storage (CCUS).

However, the inroads green agenda has made so far have raised fears that the expected boom in LNG projects, along with other oil and gas ones in the pipeline, will be at risk regardless of the final stand the parties take at COP28. These concerns were fueled by a notice that a new license to drill for oil and gas off Nova Scotia, Canada, was rejected. While the fossil fuel industry took a hit with this decision, the environmentalists celebrated the news as a climate victory, enabling them to stop climate damage before it can get a toehold in light of the accelerating threat of global warming.

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According to Sierra Club Canada’s National Programs Director, the lobbying of Big Oil at COP28 makes it “clear that this industry will even use the climate emergency itself as an opportunity to leverage power and profit.” While pointing out that it fought off oil drilling in the Gulf of St. Lawrence, which took decades of work, Sierra Club Canada underlines that it is now in court to overturn the approval of Bay du Nord and more exploratory drilling off Newfoundand. 

Commenting on the decision to reject drilling plans off Nova Scotia, Gretchen Fitzgerald, National Programs Director at Sierra Club Canada, outlined: “This time round, a license to drill for oil and gas the world cannot afford to burn has been vetoed at the get-go. Meaning no more public resources spent fostering development that cannot occur if we are to keep our communities safe from more climate pollution. No more years spent trying to convince elected leaders that seismic blasting to look for more oil really does harm ocean life and engendered whales like the northern bottlenose whale found near this license. 

“No panic that a spill out there could damage the fragile sand spit that is Sable Island National Park. No need for legal challenges to try and get our laws to be put to work as they were designed to do, to protect the environment. No need to wonder if our elected leaders can put aside party politics and have a mature conversation about climate solutions. No late nights thinking: if we fail, I have failed to protect my daughter and others like her who just want the adults in her life to create a safe place for her to grow into.”

By rejecting this offshore oil and gas exploration license, the governments of Nova Scotia and Canada vetoed the move made by the Canada-Nova Scotia Offshore Petroleum Board (CNSOPB) to award rights for a parcel of seabed in shallow water near Sable Island to Inceptio. In response, the Council of Canadians, as part of the Nova Scotia Offshore Alliance, called on both levels of government to put in place a total moratorium on offshore drilling and exploration.

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Robin Tress, Council of Canadians’ Co-executive Director, stated: “This is a testament to the collective efforts of thousands of people across Canada who have been working to stop fossil fuel expansion and get meaningful climate action. We are heartened to see our governments making decisions based on climate science and acting in the public good, despite the intense pressure from fossil fuel corporations.

“There is no future in Nova Scotia’s offshore, and we have spent enough time and effort on supporting this sunsetting industry. We urge both ministers and the CNSOPB to redirect all attention and resources towards decarbonization and responsible renewable energy development instead.”

Fitzgerald claims that there is “huge” support across Canada to call the fossil fuel industry to account for climate pollution. After the release of a framework for an emissions cap, Sierra Club Canada is convinced that the country needs to implement a cap before 2026, which should be stronger to align with climate targets, ensuring the loopholes for the oil and gas industry will be closed. While some see the emissions cap as a production cap, others perceive it as a means of controlling pollution.

“We know the oil and gas industry lobbied hard to weaken the proposed regulations, but even in their weakened form they are still really significant. Importantly, given efforts to start up liquified natural gas (LNG) projects on both coasts, the framework indicates that the regulations will apply to LNG and pipelines that feed them,” added Fitzgerald.

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Sierra Club Canada’s National Programs Director points out the areas where the regulations should be strengthened such as upping the planned timeline for the regulations being ratified (mid-2024) and coming into force (2026 – after the next federal election, and four years from the 2030 target for reducing Canada’s emissions by 40-45%); stepping up the ambition of the rules so the oil and gas industry reduces its emissions at the level which the rest of the country is trying to achieve – at least 40-45% reduction; and closing regulatory loopholes that made similar schemes in the EU and elsewhere ineffective at curbing emissions.

This is in line with the requests for drastic, bold action to tackle the climate crisis, which are being advocated to back the global exit plan from fossil fuels. The campaign for a treaty is rapidly gaining momentum, as Colombia, the European Parliament, the oil-producing state of California, 11 nation-states, 90 cities, the World Heath Organization (WHO), multiple faith leaders, and thousands of NGOs have already endorsed it. At COP28, the European Parliament is also asking nations around the world to develop the treaty, according to Izzie McIntosh, Climate campaigner at Global Justice Now.

Andrew Forrest, Former CEO, now non-executive Chair, Fortescue Metals, remarked: “We need just a simple understanding that there’s only one question we should ask, which is: when are you going to stop burning fossil fuel? Any industrialist, any politician should receive that simple question. Not ‘what’s your net [zero] 2050 plan’ or ‘what is your going greener plan’, or any of that whitewash. Over 3 billion people are exposed now … the time for excuses and prevarication is over. We have the solutions to phase out fossil fuel, and this is where we must go.

“If you say you can’t, then maybe you’re right – you can’t. But now’s the time for you to leave the stage and bring on someone who will. If you’re looking to put a head on a spike when lethal humidity really hits, well, start with mine. But don’t let off the other 999 who may not have acted as quickly as we have. I include myself in that because I’m not pointing the finger at everyone else, I’m saying I’m part of the problem too. But at least I’m changing.”

With this and other recent developments in mind, 350.org is convinced that the world is closer than ever to agreeing to phase out fossil fuels for good, as states on the frontlines of the climate crisis lead the way, building allies and momentum for a phase-out of coal, oil, and gas. As a result, climate campaigners are leaving no stone unturned in ensuring the negotiations reach the crucial tipping point by pushing to get the European Union (EU) on board, after the EU outlined time and again its desire to be seen as a climate champion, leading the call for a renewable energy target.

On December 7, more than 300 organizations from over 40 countries around the world released a letter that not only calls on the Biden administration to abandon its support for LNG at COP28 but also demands a stop to the permitting of new facilities in the United States and an end to financial and diplomatic support for LNG globally.

“Any push for a phase-out of all fossil fuels at COP28 risks falling flat if the world’s leading LNG exporter shows no signs of changing course. We urge the Biden administration to publicly commit during the COP to no further regulatory, financial, or diplomatic support for LNG in the United States or anywhere in the world,” outlined the letter.

The U.S. is forecasted to see exports double by 2027. Recently, the U.S. Export-Import Bank (EXIM) approved support for commodity trader Trafigura to insure speculative bets in the global LNG market. While President Joe Biden’s administration has given regulatory approval to terminals like Alaska LNG, it has yet to approve major projects pending in or near the Gulf of Mexico, such as Venture Global’s Calcasieu Pass 2 (CP2), which is said to be the largest export application ever considered by the Department of Energy.

Ben Goloff, Center for Biological Diversity, underlined: “With a fossil fuel phase-out the leading topic at COP28, now’s the time for the Biden administration to halt LNG exports once and for all. The United States is doling out permits for new gas export terminals like there’s no tomorrow. Our new analysis shows that the Inflation Reduction Act’s emissions benefits are more than canceled out by the Biden administration’s support for new fossil fuel projects, and new LNG export facilities are the engine of this disastrous machine.”

Kelsey Crane, Senior Policy Advocate for Earthworks, is also convinced that the build-out of LNG is a threat to global and domestic climate goals while Allie Rosenbluth, United States Program Manager at Oil Change International, urges Biden to end all support for LNG and support “a full, fair, fast, and funded phase-out of fossil fuels at the UN climate talks.”

Krishna Ariola of Youth for Climate Hope Philippines, said: “The mad dash for gas is nothing but a blockade to a renewable energy future in Southeast Asia. Lies peddled by countries like the United States paint gas as a transition fuel, but our people and environment have paid a steep price.

“In addition to LNG’s environmental and climate impact, new gas plants mean higher electricity bills and a slower transition to renewables. Why must we let LNG poison our waters, destroy biodiversity, and drive us further to climate chaos?” 

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A new report from the Philippines-based Center for Energy, Ecology and Development (CEED) – titled: LNG, Shipping, and the Amazon of the Oceans: Scoping Key Issues and Potential Impacts of the Massive Expansion of LNG in the Verde Island Passage – points out that the domestic shipping industry plays “a major role” in the Philippine economy, as the trade passing through the country’s ports generated total revenue of PHP 20.531 billion (over $369 million) in 2022.

With a total of 476,156 vessel calls recorded throughout the country’s ports in 2022, CEED claims that one of the major hotspots of trade and shipping activity is the Verde Island Passage (VIP), which is being touted as the ‘Amazon of the oceans,’ connecting the South China Sea with Tayabas Bay and Sibuyan Sea, which acts as the main shipping route between Manila, Visayas, and Mindanao and a popular shipping route to international ports in Batangas, Manila, and Subic Bay.

Center for Energy, Ecology and Development highlights within its report that the VIP is “confronted with the threat of massive development” from the natural gas and LNG industries while there are eight gas-fired power plants, one commissioned LNG terminal, and eight more LNG terminals being proposed in the Philippines. CEED claims that the VIP is “the epicenter of this mad dash for gas,” which will result in an expected growth of demand for LNG and an increase in LNG tankers and shipping traffic.

Gerry Arances, CEED’s Executive Director, underscored: “In the last decade, civil society fought tooth and nail to derail coal expansion. Unfortunately, there is a massive detour in South-East Asia with the LNG expansion.”

A recent Urgewald research shows that global oil and gas companies have set the stage for a huge expansion of LNG projects, with global LNG export capacity alone expected to grow by 162%. This environmental and human rights organization, together with the Port Arthur Community Action Network (USA) and the CEED (Philippines), have raised concerns about the LNG projects that are currently in the pipeline.

Moreover, Urgewald’s Global Oil & Gas Exit List (GOGEL), a comprehensive public database on the industry, shows that the oil and gas companies’ plan to increase global LNG export capacity equals 729 million tons of liquefaction capacity annually. Based on this research, the U.S. Gulf Coast is set to become the world’s largest LNG export hub, with 21 new facilities in the works, which account for 41% of the global LNG export expansion listed on GOGEL. The majority of natural gas exported from these terminals or 88% originates from the Permian Basin, which is at the heart of the U.S. fracking industry.

While describing the impacts of these projects, John Beard, founder and leader of the Port Arthur Community Action Network, said: “Our communities once thrived off the rich fisheries here. But the proliferation of LNG projects and petrochemical facilities have polluted our waterways, poisoned our air and destroyed our health. It’s impossible to escape the noxious fumes and as a result, we suffer from high rates of cancer, respiratory infections and constant migraines.

“And those bearing the brunt of these impacts are often communities of color. We refuse to be sacrificed for the greed of companies like Sempra Infrastructure and Cheniere. It’s time to end the LNG and the petrochemical build-out and reinvest in clean, green, renewable energy. That is what saves people and saves the planet.”

Moreover, Southeast Asia is putting the wheels into motion to forge the world’s largest LNG import hub, with the Philippines at the forefront of this development. According to Urgewald, the plans envisioned in the Philippines include up to 12 LNG import facilities and 39 GW of gas-fired power with the Verde Island passage, a marine corridor, which is home to over 1,700 fish species and 300 coral reef species, being one of the main affected areas.

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“The Philippines is among the countries most vulnerable to climate change. In the last few years, we’ve experienced some of the worst typhoons in the world. If we don’t take drastic climate action now, it’s only going to get worse. Luckily, the Philippines is a paradise for renewables. According to our government, we have a potential of 807 GW for renewable energy. That’s a lot more than we actually need. We don’t want more fossil fuels. What we need is clean and affordable renewable energy,” outlined Arances.

While Urgewald believes that the outsized build-out of LNG infrastructure poses “a severe threat to the livelihoods of local fisherfolk, the nation’s energy security, and the chance for a sustainable future for all,” the American Petroleum Institute (API) highlights the critical role of American energy leadership in strengthening national security, supporting economic prosperity and advancing innovation to accelerate climate progress. 

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Amanda Eversole, API’s  Executive Vice President and Chief Advocacy Officer, emphasized: “The U.S. oil and natural gas industry knows how to solve big and complex problems, and that is exactly what we will continue to do, with innovation leading the way. Lessons from the past match lessons from the present. Russia’s war against Ukraine – on the heels of a brutal pandemic – created new, frequently uncomfortable norms for energy and foreign policy. America must, to the greatest extent possible, lead on energy.

“American energy is writing a remarkable, game-changing chapter in the story of our nation’s future. If our nation’s leadership is to grow, Washington must enact policies that support increased oil and natural gas investment, exploration, and production as part of a balanced and reliable energy mix.”

A lot of uncertainty surrounds the text of the COP28 final agreement, as many are pushing for a fossil fuel ‘phase-out’ rather than a ‘phase-down’ to keep within the 1.5C of global warming and prevent the worst effects of the climate crisis. However, the Kick Big Polluters Out coalition’s investigation into the number of fossil fuel lobbyists attending the UN climate talks this year shows that 2,456 were admitted to COP28, thus, both sides of the equation have enough manpower to continue to ensure the negotiation process will remain a tricky endeavor.

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With the fate of coal, oil, and gas still up in the air, Simon Stiell, UN climate chief, told the delegates at COP28 that the world needs “highest ambition, not point-scoring or lowest common denominator politics,” as “good intentions won’t halve emissions this decade or save lives right now,” thus, “enhanced transparency” is required to deliver on the promise to fund climate action across the globe.

The global oil and gas industry decarbonization charter, which 50 companies, including multiple National Oil Companies (NOCs), signed at COP28, sets out clear guidelines for the future, including investment in the energy system of the future, such as renewables, low-carbon fuels, and negative emissions technologies along with increasing transparency, covering enhancing measurement, monitoring, reporting, and independent verification of greenhouse gas emissions and their performance and progress in curbing these emissions.

As the signatories of the charter committed to net-zero operations by 2050 at the latest, ending routine flaring by 2030, and near-zero upstream methane emissions, this is expected to have knock-on effects on all the players in the oil and gas industry, potentially spurring more litigation from environmentalists and attempts to halt the development of further fossil fuel projects.

Regardless of the obstacles in its path and the outcome of ongoing negotiations on the final text, this year’s COP is still likely to spark stronger climate action, bringing additional efforts and initiatives into play to lower emissions while making things more complicated for the fossil fuel industry down the road.

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