The gas industry has been unleashing a firehose of rhetoric over concerns Australia could suffer a shortage of gas.
In a series of articles in the Australian newspaper under the banner “Gas Crisis”, industry figures and the Coalition’s energy spokesperson, Ted O’Brien, claim a shortage is going to “destroy” the economy, cause a “crippling energy crisis” and have Australians suffering the ignominy of “cold showers”.
O’Brien tells the newspaper the country’s energy market is “one unexpected event away from collapse” that can lead to “rolling blackouts” as the government “drives the economy towards an energy catastrophe”.
Samantha McCulloch, the chief executive of Australian Energy Producers that represents the oil and gas industry, says “without immediate action to bring on new gas supply, Australia faces economy-destroying gas shortages”.
Scary rhetoric but is it justified?
“No,” says Tony Wood, the director of the Grattan Institute’s energy program.
“We are not at a threat of people freezing in their homes or having cold showers. That sort of noise doesn’t help.
“There is a serious problem here but it’s been coming for more than 10 years. But if you catastrophise it then nobody will solve it.”
So what’s going on with Australia’s gas supply?
More than 80% of the gas produced in Australia is not used for the domestic economy but instead goes into the country’s LNG export industry, concentrated in north Queensland.
The problem arises when consumers and businesses need gas that is not already contracted in places well away from their sources.
Wood points out that Australia’s biggest gas consumer, Victoria, has relied on gas from the Bass Strait where production is slowing. The state government has said it does need new sources of gas.
According to the Australian Competition and Consumer Commission, southern states could have a shortfall of gas next winter, but this could be made up with available supplies from Queensland. Eastern states could see shortfalls as early as 2027 or 2028.
Wood says “we need to get off gas” because it is a fossil fuel driving climate change. But, he says, in the near term Australia isn’t moving to renewables fast enough and therefore needs more gas in the short term.
Solutions could be to “ration” supplies or build LNG import terminals in the south, he says, because it could get gas delivered closer to where it was needed.
“We’re not talking about no gas, but about some seasonal shortfalls. The worst risk is that you could end up having to ration supplies, and that could be the most economic thing to do.”
Renewables only?
In an editorial this week, the Australian said the government needed to “get back to basics” on energy policy. The basics meant lots more gas.
The paper claimed the government was pushing ahead with a “renewables-only approach” to energy that is “against all evidence from overseas that gas and possibly nuclear must be part of the mix”.
This is curious, because the government’s “Future Gas Strategy” says Australia will be using gas beyond 2050 and will need new supplies, even as the economy moves away from fossil fuels.
While many climate change campaigners and climate scientists would argue we should be doing everything we can to stop using fossil fuels altogether, the Labor government still sees a role for gas.
The Australian Energy Market Operator’s blueprint for developing the country’s electricity supply also says that gas-fired electricity generation will be needed mostly on standby for times when wind and solar are generating less power.
So the “renewables-only” talking point, pushed often by the Coalition, is a myth.
Did less wind cause a gas threat notice?
The Australian wrote in a news story on Monday that in June, Aemo had issued a “gas supply threat notice” caused by “wind and hydro performing well below expectations”, leading to an increased reliance on coal and gas.
But that’s not the full story.
The threat notice, revoked last week, did say higher than expected demand for gas-fired power was one cause for the notice. But the notice also said an “unplanned outage” at Victoria’s Longford gas plant, together with maintenance offshore that had slowed down production, were factors.
An Aemo spokesperson said when the threat notice was issued, “south-east Australia was experiencing lower temperatures and a series of persistent cold snaps which drove higher morning peak demands through the tail end of autumn and the first month of winter, leading to high gas generation demand”.
At the same time, wind generation dropped off by about 20%, prompting gas-fired generation to rise by about 17%, the spokesperson said.
The Longford gas plant was forecast to have production capacity of about 800 terajoules a day but a graph supplied by Aemo showed the unplanned maintenance meant actual capacity was below 600 TJ/d for most of June.
Chasing a target
The Australian wrote in its pro-gas editorial that the energy minister, Chris Bowen, was “chasing a climate target at a pace that cannot be met on a timetable that is destined to be missed”.
“Rather than pull back, the response of government is to lift the target,” it said.
The latest government projections of progress towards the target do show Australia will fall short – but not by much.
The 2030 climate target is to cut emissions by 42% below 2005 levels. The government projects that if it implements all of its policies (known as “additional measures” that include a safeguard mechanism for major polluters, an EV strategy and government-backed renewable investments), then Australia will hit 41%.
This could slip further because the “additional measures” include the expectation that Australia will get 82% of its electricity from renewables by 2030 and there are real concerns the government will miss that target.
Australia’s climate target is also calculated on a budget basis – that is, the total amount of CO2 that can be emitted between 2005 and 2030 (4,353m tonnes CO2-equivalent).
On that measure, according to the government’s latest projections, Australia will scrape in just under its target with those “additional measures”.
When the Australian suggests the minister should “pull back” on targets to avoid missing them, it is actually advocating for Australia to break the UN’s international climate agreement.
That agreement stipulates countries are not allowed to backslide on targets or submit plans less ambitious than previous ones.
