Natural gas is the fastest growing energy source in the U.S., and that’s a big problem. Last year, gas was the number one contributor to the growth in U.S. carbon emissions. When gas infrastructure leaks, it also emits methane, a gas that recent research shows is even worse for the climate than previous dire estimates showed. And according to a new report from shareholder advocacy group As You Sow and policy think-tank Energy Innovation, it’s not even a good investment.
The U.S. is on track to spend some $US1 ($2) trillion on new gas-fired power plants and fuel by 2030, according to the new analysis shows that the nation’s energy sector’s gas buildout is putting utility investors at risk of losing tens of billions of dollars.
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The climate crisis, which natural gas fuels, poses risks for investors. Extreme weather physically threatens energy infrastructure, as evidenced by the 1.1 million people in and around New York lost power during and after Hurricane Sandy or the damage the 2018 California fires caused to power lines.
Investing in clean energy is not only the better option for the climate, it’s also increasingly more affordable and, frankly, financially safer. As governments and companies make more commitments to kick fossil fuels, gas infrastructure assets are increasingly at risk of becoming stranded, and they could soon become worthless.
The report argues that investors should play their part to stop the buildout of natural gas. It suggests they directly ask companies to analyse emerging risks, join influential investor coalitions such as Climate Action 100+ and Climate Majority Project (major investment firms like BlackRock have done this), and push to shift the regulations to encourage the transition to clean energy. At least some firms have turned away from the most damaging types of extraction like Arctic oil, but there’s clearly a lot more work to do.
Shareholders can play an important role in pushing that transition, as they’re well positioned to encourage utilities to reduce the financial risks that natural gas poses. But to be clear, we shouldn’t phase out of fossil fuels like natural gas because they’re a bad investment. We should stop extracting and burning them because they’re ruining ecosystems, destroying people and the planet. Still, the new report is just more evidence that we need to stop building new natural gas infrastructure, fast.