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Energy transition

# Natural Gas in Question as Bridging Fuel for Energy Transition

## The EU sees the tightening requirements for gas investments, along with the cancellation of planned gas projects, as being in favor of renewables.

Natural gas may be facing an uphill battle in proving itself as a suitable bridging fuel between conventional hydrocarbons and renewable energy sources, especially in Europe where urgency over climate change has ramped up and the call for a quicker path to decarbonization grows louder. As a result, natural gas plant projects across the region are having a harder time finding financing as lenders are pressured to ratchet up the emissions criteria required for funding.

Utility providers across Europe have already predicted the potential of supply issues as they work to phase out aging infrastructure, including coal-powered and nuclear plants. Producers have felt for years that gas would be the natural feedstock for new power generation as scientists played catchup in the world of green energy.

However, with the cost of renewable energy falling and the promise of new breakthroughs in hydrogen technologies coupled with the drive for a zero-emission future, the natural gas “bridge” may be bypassed altogether.

Developer Drax revealed in February it had shelved plans for a new 3.6-GW natural gas power plant in the UK and took a £13-million (18.4-million) impairment associated with it. According to GreenTechMedia, a Drax spokesperson said the decision aligns with a strategic shift to renewables, a shift that has also seen the firm acquire a portfolio of hydro and pumped-hydro plants in 2019. The European Commission’s Executive Vice President Frans Timmermans told an industry event in March that there will only be a “marginal role for fossil gas” on the path to net-zero emissions by 2050. According to Reuters, a report by US-based think tank Global Energy Monitor in April said that building all the gas infrastructure planned or under way in the European Union would create €87 billion (105 billion) of stranded asset risk. Gas projects worth around €30 billion were cancelled, delayed, or indefinitely postponed last year as they struggled to find funding.

That proposition does not appear to get any better soon. European Investment Bank, Europe's largest public lender, has revamped its lending policy to largely exclude new natural gas infrastructure from the end of 2021.

While natural gas may be losing its footing as the fuel of choice going into the energy transition in some parts of the world, it remains in favor in other parts, specifically China.

The Oxford Institute for Energy Studies said in February that China could add 40–50 GW of new gas-fired power capacity by 2025 to 140–150 GW, up 50% from current levels, as the government tries to limit coal consumption.