The Morrison government has been promising a “gas-fired recovery” from the pandemic since not long after lockdowns began in early 2020. Over the past 18 months it has announced nearly $1bn in funding for gas projects.
But this has done almost nothing to aid the country’s recovery from the Covid recession for an obvious reason – gas power plants, pipelines and basins take years to develop and build. Further, as Greg Jericho has pointed out, the gas industry employs very few people.
The Coalition is laying the foundation for a long-term expansion of a fossil fuel industry – in some cases with Labor’s support. The government is betting this decades-long, big-emitting infrastructure will remain viable while Australia, and much of the world, is promising to reach net zero emissions by 2050.
Angus Taylor, the energy and emissions reduction minister, this week announced another $50.3m to support companies developing seven gas and carbon capture and storage projects.
He said they were priorities under the government’s gas-fired recovery and the country had to make sure it had “adequate supply and storage to avoid expected shortfalls in production in southern Australia that could emerge by 2024”.
In a speech to gas industry representatives, the minister said the “energy crisis in Europe” – exacerbated by Russia’s attack on Ukraine – “should act as a warning of what could happen in Australia if there is not enough investment in the gas sector here”. He made a similar point on social media.
Aus will face an energy crisis like the one in Europe unless more gas supply is unlocked. The Morrison Govt has committed $50.3m to 11 priority gas & carbon capture & storage projects—keeping power prices down & backing up renewables in the grid. https://t.co/WE6NtArkir pic.twitter.com/IIB2ajIQ4a
— Angus Taylor MP (@AngusTaylorMP) March 22, 2022
Is this a fair comparison?
No. Putting aside whether it is in good taste to compare Australia’s situation with what’s facing countries currently affected by Russia’s invasion of Ukraine, let’s briefly consider what has happened in Europe.
Russia is a major fossil fuel exporter and has been providing the continent with up to 40% of its gas. For Germany, it’s 60%. European powers have been understandably criticised for allowing themselves to become increasingly reliant on Russia for energy while Vladimir Putin’s authoritarian regime has been taking documented steps to undermine global security and stability – and threatening to invade its neighbour.
Energy prices in Europe spiked after the invasion but were already high due in significant part to gas shortages linked to Russia not increasing supply. Figures vary across the continent, but according to some estimates, gas prices are up about 65% and electricity 30% on average over the past year. As Taylor said, bills have skyrocketed, hurting households and shuttering businesses. National governments have been scrambling for alternative supplies. In some countries, but not all, the supply crisis has renewed talk about the need to accelerate the shift to renewable energy. Energy security and independence are live issues.
The situation in Australia is markedly different. It already has energy independence thanks to its access to vast supplies of sun, wind, coal and gas. It just has to make decisions about how to use them.
Australia does not have a gas shortage. It extracts more gas than it needs to meet domestic demand – many times over – but sells three-quarters overseas as LNG (liquefied natural gas).
This has made sense for fossil fuel producers, which reaped the financial benefits, but led to a sharp spike in the cost of gas for Australian consumers as the international market set, and inflated, the domestic price.
Successive governments have allowed this to happen, and some LNG is tied up in long-term contracts – but there is no shortfall in what Australia produces.
Is southern Australia at risk of running out of gas as Taylor says?
This is disputed. The amount of gas available from existing reservoirs in Victoria, in particular, is declining, and the state is more reliant on gas than other jurisdictions due to it being piped into homes for heating and cooking. Even with a concerted effort, it would take time to shut down that network and convert to clean electricity.
But experts say the crunch may not hit as soon as 2024, and there are better ways to ensure people get what they need than by spending hundreds of millions of dollars locking in more of an expensive fuel that contributes to global heating.
Tony Wood, from the Grattan Institute, believes the most sensible approach would be to set up a short-term gas import terminal in Victoria to supply it from existing fields in Western Australia, rather than the Coalition’s approach of investing in infrastructure that could take a decade to build and would soon be a “white elephant” as the push for cleaner solutions accelerates.
There is an economic argument for a swift transition away from domestic gas use. Saul Griffith, an Australian who advised the US government on energy policy, last year estimated converting all home appliances and cars to run on clean electricity could eliminate a third of Australia’s emissions while saving households $40bn a year by 2028.
This sort of plan to “electrify everything” would allow existing gas supplies to be used to meet demand in the few manufacturing industries in which there are currently no affordable alternatives. The Grattan Institute has estimated that fewer than 1% of Australian manufacturing jobs are in gas-intensive industries that would materially benefit from an industry expansion.
Where is the climate crisis in all this?
Climate change was not mentioned in Taylor’s speech on Tuesday to the Australian domestic gas outlook conference in Sydney where he announced the new funding.
The government’s position over time has been that gas is part of the solution to reduce emissions, both here and overseas, because it displaces coal and can back up renewable energy.
But the head of the International Energy Agency, Fatih Birol, last year warned countries could not open new oil and gas fields if they were to keep alive a chance of limiting global heating to 1.5C above pre-industrial levels – a goal that was acknowledged and strengthened in last year’s Glasgow climate pact.
Gas is often said to have about half the emissions of coal when burned, but several studies have suggested its actual impact is higher than that, due to leakage of methane – a particularly potent greenhouse gas – during extraction and transport. Scientists have warned cutting methane emissions will be vital if 1.5C is to stay within reach.
The US and EU last year led a group of countries that signed up to cut methane emissions by 30% by 2030. Australia declined to join them.
The Morrison government’s stance has been regularly noticed and noted by global leaders – most recently by the UN secretary general, António Guterres, who this week singled out Australia as a “hold out” for refusing to commit to meaningful emissions reduction targets by 2030, as scientists say is necessary.
