Australia champions gas [NGW Magazine]
Australia’s natural gas sector has somehow managed to steal the show during recent government announcements relating to the renewable energy sector and carbon abatement strategies.
Between Canberra’s publication May 28 of updated Australian Energy Statistics, showing the continued expansion of renewable energy within the power sector, and the release of a report into low-cost carbon abatement solutions should have been a moment of triumph for renewables.
However, the government’s narrative has continued to stress the importance of gas in a low-carbon economy, while pushing for greater consumption of the fuel in the process. The government argues that gas is essential to flexible power generation, which will plug the supply gaps that emerge as renewable energy solutions proliferate.
The argument has merit, though clumsy timing has opened the government up to criticism from environmental campaigners, who argue that Canberra favours the fossil fuel sector over greener alternatives.
Statement of intent
Australia’s energy minister Angus Taylor declared on May 28 that the government envisioned a “gas-fired [economic] recovery” following the coronavirus (Covid-19) pandemic.
Australia has seen its GDP enter freefall in recent months after implementing a nationwide lockdown to slow the spread of the virus. Discussing the state of the economy in front of a Senate Select Committee on May 28, Reserve Bank of Australia (RBA) governor Philip Lowe said: “It’s actually still a pretty depressing scenario.”
As the government looks to kick-start economic activity it has placed its hopes of greater production and consumption of Australian gas.
Despite the most recent update to the Australian Energy Statistics, showing that mainstream renewable energy generation levels have increased by 54% since 2015, Taylor shifted the spotlight to gas production and consumption.
Taylor dubbed Australia a “world leader in renewable energy”, before arguing that it was essential for more gas-fired power capacity to be brought on line. Renewables accounted for 21% of Australian power generation last year, while gas accounted for 20.5%.
The minister said gas could provide dispatchable capacity needed to balance intermittent renewable energy supplies, thereby delivering a “secure, reliable and affordable electricity system”.
He added: “This has never been more important – particularly as we begin our recovery from the impact of the Covid-19 pandemic. This is why the Australian government believes a gas-fired recovery will drive jobs and economic growth.”
He then enjoined the country’s local governments to do more to encourage local gas production for the domestic market, while encouraging investment in “reliable generation”.
The minister’s comments further cement Canberra’s position on gas as a key transition fuel, highlighted in the recently released national Technology Investment Roadmap (TIR) discussion paper as well as the King Review of carbon abatement technologies.
Investment guide
The government said TIR, which was published on May 21, would serve as a roadmap to low-emissions technology investment through to 2050.
The paper has been billed as a “technology not taxes” approach to reducing emissions, shortlisting gas-fired power generation to strengthen variable renewables as a priority technology.
It said that gas generation using combined-cycle or aeroderivative turbines, or reciprocating generators could be used to fill the gaps in intermittent but low-emissions and zero fuel-cost generation from solar and wind.
The report added: “Flexible gas capacity will continue to play a crucial role in supporting variable renewable energy, alongside continuing growth in energy storage, demand management and innovative grid technologies as alternatives.”
It also highlights the “enormous potential” of technologies such as carbon capture and storage (CCS) and energy exports to reduce emissions. The roadmap said the carbon dioxide (CO2) geosequestration offered a significant opportunity for abatement in gas export projects, noting that the CO2 injection system at the Gorgon natural gas facility is expected to inject and store 3.4-4mn metric tons/year of greenhouse gas (GHG) emissions once fully operational.
“As the world’s largest exporter of LNG, Australia will continue to capitalise on this important low emissions export opportunity. Some of our key trading partners, including Japan and South Korea, have indicated that LNG will play an important role in decarbonising their electricity systems. LNG represents a continuing export opportunity for Australia,” the TIR noted.
Australian Petroleum Production & Exploration Association (Appea) head Andrew McConville said: “[Australia’s] LNG exports can substitute gas for more emissions-intensive fuels and have the potential to reduce greenhouse gas emissions by 163mn tonnes in our trading partners.”
The roadmap builds upon the recommendations an expert panel submitted in February and which were published on May 19.
King’s counsel
The King Review, named after panel chair Grant King, made 26 detailed and technical recommendations, including ways to encourage greater participation in the Emissions Reduction Fund (ERF), provide new incentives for voluntary emissions reduction on a broader scale and enable low-emission technologies.
While natural gas was only directly discussed by the review once, when it explained that biomethane could serve as a zero-carbon alternative to the fossil fuel, it did recommend that the government adopt technology neutrality in its co-investment strategy. This, it claims, will allow government funding and support to flow to emissions reduction projects in any sector.
The report warned that Australia would not be able to rely exclusively on the technologies currently competitive under the ERF to meet its longer-term emissions reduction goals. As such, the panel recommended introducing a programme that would incentivise the integration of transformative low-emission technology into existing facilities as well as investment in new low-emission technology facilities.
The programme, which would run alongside the ERF, would be available to large and small-scale projects and would cover both Scope 1 and 2 emissions. Scope 1 relates to a project’s facility level emissions, while Scope 2 covers emissions released from an energy commodity’s indirect consumption.
If such a programme were introduced it could make it easier for enhanced gas recovery (EGR) projects to receive funding. EGR projects pump CO2 into mature fields to increase gas extraction rates. The review also recommends developing a method to allow CCS and carbon capture, utilisation and storage (CCUS) to access the ERF.
Appea hailed the recommendations, with McConville saying the report underlined “the key role the oil and gas industry can play in cutting emissions”. He added that there were several CCS, CCUS and EGR projects under consideration in Australia that could provide opportunities to reduce emissions.
Way forward
Critics, unsurprisingly, have decried Taylor’s support for the gas industry. The Sydney Morning Herald’s Clyde Russell said: “[T]he debate in Australia over energy policy and emissions shows that in the absence of supportive, or even neutral, government policies, achieving the goal [of expanded renewables] may be difficult.”
RenewEconomy’s Giles Parkinson described the minister’s plans as “a desperate attempt to try and jam new gas infrastructure, [CCS] and even new coal investments into Australia’s energy future”.
While the timing of Taylor’s comments surround gas’ role in the economy could certainly have been more judicious, it is hard not to argue that greater production and consumption of the fuel makes sense.
Not only is domestic gas demand growing, with shortages projected to emerge as soon as 2023, but the energy industry continues to expand its value add to the Australian economy. ABS figures from last year show that the oil and gas industry’s added value expanded 19% year on year on financial year 2018-19 to A$34.5bn ($23.47bn) in 2018-19, a jump of 19% compared with 2017-18.
Moreover, gas represents a greener solution to coal, with the former emitting half as much carbon in power generation. Australia’s fossil fuel exports have long made the country one of the world’s leading polluters per capita. By encouraging a switch from coal to gas, not just at home but abroad, the government could score some “easier” wins in its journey to carbon neutrality.
The Australian government does not seem inclined to show much more support for the mainstream renewables sector, apparently content with the current rate of expansion. The question then becomes whether campaigning for greater gas use in place of coal offers greater returns and a more realistic prospect of victory than the reductive renewables versus all fossil fuel argument.