Gas For The Win
Australia’s energy race is heating up. Gas is now the horse to watch coming down the straight. By Tim James.
There’s an abundance of accessible and affordable gas reserves across Australia. Yet from 2022 onwards in many parts of Australia, including NSW and Victoria, gas supply adequacy is highly uncertain and supply shortfalls will take effect around 2023.
It’s an alarming and absurd situation in which both statements are true. Ordinary Australians, on confronting the reality here, must scratch their heads and think this cannot continue. So many simple signs point in one direction: we need to grow gas supply.
Impending shortfalls have been known for some time and were recently further reported by the Australian Energy Market Operator (AEMO) Report in March 2020 Gas Statement of Opportunities.
The only current gas generation facility in NSW in Camden will cease in 2023. During the same period, demand for gas will rise on the back of reductions in coal-fired generation, including the Liddell power station in NSW which will close in April 2023.
As Australia looks to and needs to invest in manufacturing post COVID-19, the importance of accessible and affordable gas to manufacturers is widely understood and was being advocated by manufacturers and major trade unions as recently as last week.
While COVID-19 has seen a dip in demand for gas across Asia, demand for gas in the Asia Pacific will grow through to 2040 as the International Energy Agency reports.
Looking ahead locally, recent modelling by the CSIRO has Australia’s domestic gas growing by 20 per cent or more by 2060, while gas production is predicted to rise by at least 90 per cent.
Australia has invested heavily in renewables. Our per-capita investment in renewables is the highest in the world. The firming capability of gas generation, namely its ability to immediately despatch power when needed, makes gas an essential partner to intermittent renewables.
The many pieces of the puzzle outlined above come together to form one clear picture – we must get gas going!
Encouragingly, there are many reasons to think the tide is turning towards ambition and long overdue action to get gas growing in Australia.
Since the MRC last wrote about gas supply, Energy Minister Angus Taylor has released Australia’s Technology Investment Roadmap. It’s a timely and significant discussion paper that points to growing demand for gas and makes clear that gas will play an important role in “balancing renewable energy, ramping up and down to match supply and demand”. It also notes that some of Australia’s key trading partners, including Japan and South Korea, have indicated that LNG will play an important role in decarbonising their electricity systems, hence LNG represents a continuing export opportunity for Australia.
The Minister consistently speaks of the energy road ahead being driven by technology not taxes, and has emphasised that Australia should have many horses in the energy race.
Here’s a red-hot tip from the Menzies Research Centre if you’re into the (energy) horse race: gas is coming home hard down the straight. It’s had a mixed race, with many hurdles and hiccups, and more than a few difficult obstacles along the track, but it’s now hitting its stride.
To use the Minister’s words, gas should be given its best chance but hasn’t to date. Common sense says that if you’re on the road to the future and following an “energy roadmap” then to do so in a known and proven vehicle that performs well, can be readily supplied, is affordable, demonstrates reliability and produces low emissions then gas is going to come home strong.
The usual critics, ideologues and activists are getting all wound up at the thought of gas supply and demand growing. GetUp says the notion of a “gas-recovery is a myth” and accuses the government of “looking after its fossil fuel mates”. Zali Steggall says Australia “cannot rely on gas”. The Guardian reports on the “trouble with gas” claiming the “sums don’t add up”.
Those renewables advocates who say gas is a “stranded asset” should think twice. Incidentally, it’s interesting that the climate change lobby claims to have invented the term to focus on emissions. Those advocates would be better off training and improving their horses in the energy race to compete on merit more effectively with gas if they so detest it.
The momentum for gas supply in Australia is growing for good, and for many good reasons. It’s for more affordable, reliable and cleaner energy and, importantly it’s for jobs, households and manufacturers. There cannot be and will not be just one winner in the energy race. There will be many, and gas has earned the right to be among them. Its time has come and Australia will be the stronger for it.