Asia, April 6, 2022 — cybernewschronicle.com — Asia is currently investing more than US$350 billion (RM1.47 trillion) in new gas infrastructure projects, a figure that is triple the estimated investment for Europe, according to data from Global Energy Monitor. This massive financial commitment, spanning liquefied natural gas (LNG) terminals, gas-burning power plants, and pipelines, represents a significant market allocation that is reshaping the region’s energy economy.
The scale of this investment—more than US$350 billion—is being driven by governments in China, the Philippines, and Vietnam, among others, who are seeking to avoid burning more coal. The economic calculus behind this boom is straightforward: natural gas can heat homes, cook food, and power factories at all hours of the day, while also cleaning up urban smog.
The fuel produces half the carbon emissions of coal, making it a financially attractive alternative for rapidly industrializing economies. However, this spending spree also carries fiscal consequences. The expansion risks locking in the use of fossil fuels for decades and could slow some deployments of renewable energy.
Asian governments are pursuing the same benefits the United States and Europe have enjoyed from gas for decades, but the long-term financial implications remain a subject of debate among investors and policymakers.
Market Dynamics and Regional Consumption
Asia is the largest energy-consuming region and home to most of the world’s population. According to BP Plc data, the region’s gas market accounted for about the same amount of consumption as the United States. Despite this, the potential for massive further growth is why the expansion of gas infrastructure in Asia is concerning to some analysts.
Robert Rozansky, a researcher, noted that there are currently 30 import projects under construction, with tentative plans for another three dozen, according to data compiled by BloombergNEF. South Korean companies, including Posco Energy Co, SK E&S Co, and state-run Korea National Oil Corp, are adding LNG facilities.
These facilities could later be re-purposed for the transportation and storage of hydrogen, a developing source of low or zero-emissions energy. This dual-use approach may offer a hedge against future regulatory or market shifts, but the upfront costs are substantial.
The Debate Over Fossil Fuels’ Role
Some scientists argue that the world may be on track to warm by more than three degrees Celsius, twice the Paris Agreement target. The causation debate remains open, but the UN has added another measure of urgency to efforts to phase out fossil fuels. Mark Carney, the former Canadian and UK central bank governor who is now a special envoy on climate action for the United Nations, addressed the issue at the Asia Sustainable Finance Forum in Seoul last month.
“There definitely is a role for gas,” Carney said, “and particularly in displacing coal.” He added, “But we always need to keep in mind the ultimate horizon for any source of energy given its carbon footprint.” Carney’s remarks highlight the tension at the heart of Asia’s energy strategy: the need for reliable, affordable power versus the long-term environmental goals that some scientists and international bodies advocate. The US$350 billion investment represents a bet that gas can serve as a bridge fuel, but the duration of that bridge remains uncertain.
What to watch next: Investors and policymakers will be monitoring how Asian governments balance the immediate economic benefits of gas expansion against the potential for stranded assets if global energy policies shift. The re-purposing of LNG facilities for hydrogen storage by South Korean companies offers one possible pathway, but the commercial viability of such transitions will depend on technological breakthroughs and market demand for low-emissions energy.
Additionally, the pace of renewable energy deployment in Asia, particularly in China, the Philippines, and Vietnam, will be a key indicator of whether the US$350 billion in gas projects ultimately accelerates or delays the region’s energy transition.
