The energy crisis in Texas has become world news. During last month’s extreme winter weather, surging electricity demand collided with falling generation, forcing the state’s grid operator to implement rolling blackouts. In many cases, blackouts lasted for over 24 hours, causing fuel and electricity supply shortages and disruptions throughout the natural gas supply chain. At least 4.5 million Texans were at one point without electricity and more than 30 deaths have been attributed to power losses, though the final toll could be much larger.
News of the Texas power crisis spread throughout Asia, where energy growth markets such as Vietnam, the Philippines, and Bangladesh are considering US liquified natural gas (LNG) imports as an alternative to coal-fired electricity generation. But the events in Texas have highlighted the risks inherent in LNG imports for both the energy transition and climate change adaptation. Below are five lessons from the crisis for emerging markets in Asia.
Volatile LNG prices create an increasingly challenging environment for price-sensitive emerging markets. High prices and difficulties sourcing gas can cause gas-fired power plants in importing countries to go underutilized. In turn, all the associated infrastructure — ports, regasification facilities, pipelines — are also at risk of being stranded. Institute for Energy Economics and Financial Analysis (IEEFA) recently estimated that volatile LNG prices put over $50 billion of natural gas projects at risk of cancellation in Vietnam, Bangladesh, and Pakistan.