Australian E&P Welcomes Govt Climate Review

The Australian Petroleum Production & Exploration Association (Appea) welcomed December 19 the government's 2017 review of climate change policies released that day, not least because of the review's support of natural gas.

Australia has already over-achieved against its previous emissions reduction targets for a mix of economic and technological reasons and the report says a raft of policies are in place to reduce Australia’s emissions in line with the Paris Agreement.

The government's report found that the country's energy market was changing like those elsewhere in the world, "driven by retirement of ageing thermal generation, flattening demand for electricity and rapid growth in renewable energy resources. The costs of intermittent generation from wind and solar, once prohibitively expensive, have plummeted in the past decade. At the same time, electricity prices for households, business and industry have increased, and investment has dried up for the kind of dispatchable generation needed to stabilise the grid, such as ready-to-use sources like coal, gas, pumped hydro and batteries. The government’s priority is to deliver a more affordable, more reliable and cleaner electricity supply for all Australians."

Among the review's plans is an energy guarantee. Its intention is to incentivise the right investment in the right place at the right time, lowering wholesale prices and reducing spot price volatility, while improving reliability and cutting emissions at lowest cost: "As retailers will need to contract with low-emissions and dispatchable generators, the guarantee will encourage more supply into the market, putting downward pressure on wholesale prices. It will also encourage existing generators to invest in their existing plants improving their efficiency." 

Upstream industry group Appea CEO Malcolm Roberts said that “achieving our 2030 emissions target at least cost to our economy is a significant challenge for Australia. The review confirms that natural gas has a major part to play in this transition. Gas-fired generation is essential to maintaining reliable energy supply while reducing emissions from the electricity sector. On-call gas-fired peaking plants are the ideal back-up for intermittent renewable energy." He also said that Australia’s LNG exports are a "clear, net positive for the global environment," as they emit less carbon dioxide in power generation.

“Natural gas is not only a low- emissions fuel; replacing biomass and coal with gas markedly improves air quality. Air pollution, from various sources, is a major, preventable cause of premature deaths in developing countries," he said.

Roberts said Appea would continue to advocate for realistic treatment of trade‑exposed industries to maintain their international competitiveness and ensure Australia continues to attract investment. “More gas development is a win for the environment and a win for Australian consumers. It should remain at the core of any climate change response,” he said.

Last week Australia’s competition watchdog reported that the tight supply situation on Australia’s east coast had become less tight after the region’s LNG producers had supplemented local supplies; the watchdog also cautioned that placing restrictions on upstream activities make future supply shortfalls worse than they need be.