Climate Change/Mass Extinction Megathread

[Sheilbh]

Also significant effects on energy transition from Iran and Hormuz.

The traditional markets for LNG are Asia - Japan, South-East Asia, Pakistan and Bangladesh especially. They already suffered a huge demand shock in 2022 when the European whale entered that market in its need to get away from Russian gas. With this new supply shock basically poor countries are totally priced out by Japan and Europe.

And as with so much else on energy transition, it's Janus faced. On the one hand countries accelerating the push to renewables (for example a Vietnamese LNG power plant project asking government permission to switch to renewables and batteries given costs). On the other, gas is a cleaner base power (this is how the UK has cut its emissions more sharply than any other G7 country) but is now less reliable and very expensive, so running in parallel with the accelerating adoption of renewables is a turn back to coal (a bit like Germany after Fukushima). Thailand is pivoting from building new gas plants to new renewables and coal (the China model). Italy has pushed back its phase out of coal and I wouldn't be surprised if other European countries followed (relatedly Denmark has announced they will continue allowing new oil and gas exploration - I can't help but wonder if there's some push in Europe at some point to re-evaluate the fracking bans).

As an aside I'd add that expensive gas is also very important industrially. So tis shock is massively accelerating the collapse of the UK - and other European countries' - chemicals industry, our last CO2 and salt manufacturers are shutting down which are key inputs into lots of things. Energy and resource intensive - sure there'll be no possible negative consequences from losing our domestic manufacturing capacity (I'd add particular insanity around the UK policy which is to not allow any new exploration etc which has been pointed out recently by Martin Wolf and he FT leader page - where we're importing gas from the exact same wells we are not exploring or from less green sources.) Less parochially, more importantly (via Adam Tooze), probably the most important map in the world right now on the impact the gas shock is having on fertiliser production: