Development Finance Institutions must align their financing with the Paris Agreement. To do this then they must recognise that fossil gas cannot be considered a ‘transition’ fuel to cleaner energy systems. Rather it is another carbon intensive high emitting fossil fuel that is potentially diverting funds from sustainable renewable alternatives.
The recent Step Off The Gas report highlighted 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 risks locking countries into a fossil fuel dependent future, further increasing devastating climate impacts and inequality and delaying the transition to renewables.
Financing new gas projects is not the solution, investment in sustainable renewable energy is. renewable-based alternatives for most of its uses are either already cheaper or are expected to be within a few years. We urgently need to shift to a fair and clean energy system.
Fossil gas is harmful because:
· There is significant leakage of methane from the processing, transport, regasification and consumption of gas. Methane is 83 to 86 times stronger over 20 years than CO2 as a greenhouse gas.
· Fossil gas affects air quality and hazardous air pollutants have harmful effects on health and the environment.
· Fossil gas infrastructure, including pipelines, leak harmful chemicals into the environment and water supplies.
· Increasing reliance on imported LNG leaves countries open to unreliable and unaffordable energy sources
Public finance deliberately inspires confidence in fossil gas project viability and encourages private sector investment in this harmful energy source. Development Finance Institutions should therefore:
· Urgently redirect finance away from fossil gas to align both private investment and public policy with the Paris Agreement goal of keeping global warming below 1.5C
· Divert public finance to deliver a rapid, inclusive transition away from coal and to sustainable, renewable energy sources.
· Invest in the expansion of energy storage infrastructure and grid modernisation to accelerate the renewable energy transition
· Exclude support for unproven expensive technologies and false solutions like coal gasification and Carbon Capture, Utilisation and Storage (CCUS) that continues to justify fossil fuel exploitation and new fossil fuel power generation.
International public finance for fossil fuels must end and must be shifted to ensuring countries can build reliable, safe, clean accessible energy systems based on renewable energy.