Oil and gas infrastructure investments could be a bubble in danger of bursting.
That’s according to a new report from Global Energy Monitor, a group that monitors fossil fuel infrastructure.
The report outlines an expected one trillion dollars of investment in oil and gas infrastructure and wonders, given increasing concerns about the need to transition from fossil fuels, whether that kind of investment makes sense.
In particular the report points to a seperate report from the Intergovernmental Panel on Climate Change (IPCC) which found global carbon emissions needed to hit net zero before the middle of the century to keep global temperatures from rising above 2C.
Ted Nace is the executive director of the Global Energy Monitor. He said now is the time for companies to use investment to transition away from fossil fuel - rather than putting the funds into infrastructure.
“It’s gotta be questioned because that much money put into continuing the same system and expanding it is money taken away from building the new system that everybody feels we need.”
Nace said the proposed Line 5 tunnel project is an example of the kind of infrastructure project that may not make long term sense.
“It looks like there’s the same thing happening now with oil and gas that happened with coal about ten years ago where investors were still buying into a very positive story and they overextended themselves financially.”
Nace said coal companies ultimately went bankrupt.
A spokesperson for Enbridge Energy which oversees the Line 5 pipeline, said the company has diversified its assets to have the best platform for growth.
You can read the full Enbridge statement below:
Enbridge has the scale, financial flexibility and market access to be an energy leader in the gathering, processing and transporting of crude oil, liquids and natural gas across North America. Our assets are now more diversified and balanced between natural gas and crude oil, complemented by our rapidly growing renewable power generation business. We move 28 percent of the crude oil produced in North America, and 20 percent of the natural gas consumed in the U.S. Our core values and our commitment to stewardship of the environment and community engagement will not change. Going forward, we have the best platform for growth, providing greater opportunities for communities, consumers, customers and investors.