Group lobbies against LNG investments | Inquirer Business

Group lobbies against LNG investments

/ 08:10 AM November 02, 2023

MANILA  -Southeast Asian countries — most especially the Philippines and Vietnam — that are dependent on liquefied natural gas (LNG) as a transition fuel need to revisit their energy policies and consider the drastic environmental impacts of the fossil fuel to meet global climate targets, according to a study.

Singapore-based research and investor relations firm Asia Research and Engagement (ARE) found that LNG, which accounted for 17 percent of the Philippines’ fuel for power in 2022, had “higher than expected” carbon dioxide emissions.

According to ARE, LNG emissions are expected to breach that of coal in the long-term, especially when accounting for upstream emissions, or those released during shipment and production.


“LNG’s carbon intensity rivals coal’s once upstream emissions are included in calculating its environmental footprint. When fugitive methane emissions during shipment and transport are added, LNG’s emissions may even surpass those of coal,” ARE pointed out.


Methane is the largest component of natural gas and is leaked throughout LNG’s life cycle. With coal still accounting for nearly 60 percent of the Philippines’ power requirements despite high renewable energy development targets, the national government has been strongly advocating for the use of LNG as a transition fuel, citing less emissions than that of coal.

In August, the Department of Energy (DOE) released a draft circular outlining the policy framework on LNG development, going as far as proposing to require distribution utilities to source a percentage of their electricity requirements from gas-fired power plants.


Various organizations including the Institute for Energy Economics and Financial Analysis (Ieefa) had clamored against the proposed policy, saying that LNG was “significantly more expensive than other energy sources.”

The Philippines currently has only one indigenous gas field — the depleting Malampaya in offshore northwest Palawan province — which means that it has to import LNG to support the needs of gas-fired power plants. ARE noted that despite the International Energy Agency’s projection that global LNG use must peak by 2025, its popularity continued to grow.

Transition fuel

In the Philippines, ARE said, there are plans to build seven LNG terminals, representing $13.6 billion in combined investments.

“Ieefa warned that building so many new LNG projects raised the risk that some would fail to secure reliable long-term buyers and thus end up underutilized or unfinished,” it said.

Ieefa also argued that retail power customers were allowed to choose which utility to buy power from under the Electric Power Industry Reform Act of 2001, making them “reluctant to commit to long-term fuel purchase agreements.”

Citing a 2021 Ieefa study, ARE added that this created “a more challenging environment for LNG projects that rely on long-term supply contracts to justify their large upfront investments.” Instead of prioritizing investments in LNG, Southeast Asian countries should revisit their energy policies and give “greater priority” to developing renewable energy, ARE said.

“The Philippines and Vietnam should halt plans to build new LNG terminals and gas-fired power plants. They also need to revise their long-term energy plans to reflect LNG’s life cycle emissions, not just those created burning it,” it said.

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Financial institutions are likewise encouraged to reassess their lending policies and consider banning new LNG financing and phased divestment from existing LNG projects.

TAGS: carbon emissions, LNG, Philippines, Vietnam

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