Step On The Gas
Australia took a small step towards extracting more gas this week, but we are still using only a tiny fraction of this cheap, clean and accessible resource. By Tim James.
For a long-time now the MRC has advocated for greater gas supply in Australia. Our ongoing energy research program repeatedly confirms gas is an essential part of Australia’s energy future. It was therefore pleasing, while well overdue, to see Victoria this week finally announce a lift to its moratorium on onshore gas exploration and production. We’re proud to have been, and will continue to be, a strong voice for bringing new gas supply to Victoria and Australia.
Nonetheless, after considerable time and despite an abundance of scientific support, the Andrews Government still couldn’t get the policy right. Victorian Premier Daniel Andrews said “We’re backing the science to create jobs, boost energy supply and support regional communities across the state.”
At the same time, and in stark contradiction of his own words, the Premier announced that Victoria will move to enshrine its ban on fracking and coal seam gas exploration in the Victorian Constitution. The state’s constitution, no less!
This is a flagrant attempt to bind the hands of future governments – and one that will likely fail in a legal constitutional sense. The Andrews Government also pushed the timing one year down the road. The ban will not be lifted until 1 July 2021. It should be lifted this year, which is the Victorian Opposition ’s policy.
The Victorian Government’s new policy is a step in the right direction but does not go far enough. Fracking has transformed the American energy market and enabled it to reduce its emissions. As the MRC’s Nick Cater wrote recently in The Australian: “The switch from coal to gas around the world, principally in the US and China, has been a game changer. It has saved about 500 million tonnes of CO2 over the past 10 years, according to the International Energy Authority . . . Emissions from the US energy sector are 27 per cent lower than they were in 2005, despite the robust growth in the economy.” Fracking in the US is safe.
It seems Dan Andrew’s missed this memo. It’s a pity Victoria will miss out on vital additional supply.
On a positive note, Premier Andrews declared the (allowable) production of Victoria’s estimated resources could generate more than $310 million annually and create 6,400 jobs in a much-needed boost to regional economies.
The Victorian Opposition deserves credit for proposing that landholders will share the royalties of any gas produced and have additional rights in the process. This is where past policy positions, including in many other jurisdictions, have failed.
The MRC’s 2017 report Power Off Power On: Rebooting the National Energy market described the problem that is now being addressed: “Bans and restrictions on onshore gas exploration and production in Victoria, New South Wales and the Northern Territory have materially constrained the supply of gas. This has tightened the gas market and exacerbated problems in the electricity market.”
The report also called for the removal of policies or laws with “blanket bans on the development of natural gas resources,” noting the “chronic shortage of supply in the East Coast market demands the fast-tracking of gas supply projects both on and offshore”.
More recently, as the MRC wrote here, it was timely to see NSW commit to additional gas supply. It’s encouraging to see growing engagement and coordination between the Commonwealth and states with the NSW deal done and clearly now a greater prospect of a deal with Victoria. The NT removed its moratorium in 2018 and exploration resumed last year with considerable promise for the future.
“Activists don’t understand that in Australia we have a unique opportunity to leverage the benefits of gas by partnering it with renewable energy”
Predictably, the Victorian announcement was opposed by protesters claiming gas is a fossil fuel that permanently destroys the environment. The Climate Council, Friends of the Earth and various other activist types slammed the Andrews Government using the hashtag #nothappydan, which trended briefly on Twitter. Some even accused him of sneaking this in amidst COVID-19.
These activists don’t understand that in Australia we have a unique opportunity to leverage the benefits of gas by partnering it with renewable energy. In fact many of the activists opposing gas are undermining their own renewables dreams by their opposition to gas. Quick-fire gas generation is the best proven technological solution to overcoming the challenge of intermittency and grid stability with renewables.
Gas is currently a central policy focus for the MRC. We will make the case for a competitive market for gas, unburdened by unnecessary restrictions, that encourages investment in exploration and development of gas. After years of reports, engagement and advocacy we’re delighted to be part of real progress now being made in this policy area.