The European energy lesson – get gas
The gas supply imperative for Australia is greater than ever. Just ask those in Europe right now what it means. By Tim James.
The energy challenge and recent European experience was well summed up in this extraordinary Economist headline recently:
“Natural-gas shortages threaten governments’ green goals. The energy transition must be better managed or environmentalism will become unpopular.”
The article outlines how gas has been “plugging gaps” in energy supply brought about by a combination of the wind not blowing much, droughts interfering with hydropower output and coal being expensive due to the rising price of permits. Europe now needs to burn gas for electricity and to heat homes.
Gas prices are soaring leaving consumers in the cold, industry closing, economies threatened and governments scrambling. For instance, benchmark UK gas prices have increased six-fold in the last year.
While global gas demand has lifted, as Watercooler noted recently, the European energy crisis is very much one of supply too. Europe’s gas production has halved in the last decade and it relies on imports, about half of which come from Russia. This in turn creates major concerns around Europe’s energy security.
It’s a sobering and expensive reality check for Europe where climate action is at the heart of the “European Green Deal” and where, we’re told, the third industrial revolution will be led from.
Some of this is incredibly ironic. Six energy suppliers have closed down in the UK and government has had to step in to ensure an adequate supply of carbon dioxide for industry to use before food and drink shortages should start. Carbon dioxide for industry relies on gas for production and the irony of a shortage of carbon dioxide (albeit in the form for industrial use) is not lost in today’s carbon obsessed world.
Given current circumstances, perhaps the essential notions of availability, reliability and affordability in energy supply can come more into focus for our friends in Europe.
It’s a timely reminder in the Australian context too and confirms what the MRC has been researching and advocating for a long time now – growing gas supply matters a great deal and is vital for our future. Gas is an essential partner as economies transition to increased renewables uptake. One of the issues driving the European crisis is that Governments have not made enough allowance for the intermittency of renewable energy.
Our 2020 report “Powering out of pandemic: Unleashing the potential of gas” made the compelling case for more gas in Australia, particularly for the domestic market. As stated in our media release at the time: “The quickest and most cost-effective way to reduce carbon dioxide emissions from energy production is to open up the supply of gas as the natural partner of renewable energy.” We noted that the longer-term challenge is to smooth out volatility as the renewables uptake continues to rise. Battery storage is part of the solution, but right now more gas is key.
So Europe could do with a gas-fired recovery as is rightly spoken of here in Australia. Gas, as we found and continue to assert, is imperative in Australia (and Europe) in order to raise employment, sustain manufacturing and meet environmental goals.
There was good news for gas development in Australia a fortnight ago with a four-year research study handed down on the environmental and water-related impacts from gas resource development in three onshore gas provinces in Queensland, South Australia and the Northern Territory. As Environment Minister Sussan Ley confirmed, the program provided reassurance that effective environmental safeguards are in place. The decades-long campaign by those opposed to gas development in Australia continues to suffer as the safe and sustainable extraction of gas is further tested, demonstrated and resoundingly supported.
Even Anthony Albanese, according to Joel Fitzgibbon in recent weeks, is talking up support for the gas sector. Dan Andrews has taken a different position and is pressing ahead to seek to ban natural gas from two million households in Victoria. Once again, it was Joel Fitzgibbon in the same interview, who spoke sense in declaring he completely disagreed with Andrews’ policy, saying “it’s ill-informed and will have some very bad outcomes”. Getting rid of gas, Fitzgibbon explained, would hurt consumers and businesses, lift energy prices and lose jobs. Dan Andrews should probably read some European energy news right now.
The lesson from Europe looms large in Australia and across the world – don’t be caught short on gas. The case for growing gas in Australia is clear and compelling and, thank goodness, being made out by the Morrison Government in this important moment for energy, environment and economy alike.
