Some basic facts about the role of existing and new gas in Australia
15 July 2020
Written by Martijn Wilder AM, former Head of Baker & McKenzie’s Global Climate Change and Emissions Trading Practice and now at Pollination.
This briefing note is an excellent background to the gas discussion in Australia.
Thank you to our member Kirsty Gold who supplied us with this excellent outline of some of the basic facts about the role of existing and new gas in Australia in an attempt to clarify many of the claims being raised by the media, commentators and the COVID Commission.
You can contact Martijn at martijn.wilder@pollinationgroup.com
In the context of the COVID-19 recovery, Pollination was requested to provide an outline of some of the basic facts about the role of existing and new gas in Australia in an attempt to clarify many of the claims being raised by the media, commentators and the COVID Commission. This note attempts to do so, and has been widely reference checked and peer reviewed. It is not a political statement and may not be relied upon for investment purposes or taken as advice.
Executive summary
As Australia looks to rebuild its economy post COVID-19, there has been significant debate about the role that gas can and should play. Much of the information in the public domain is misleading or false and as result we have set out some basic facts about the role of gas and the importance of separating the role of existing gas from new gas. This discussion focuses on the role of new gas, not existing gas, although the climate change impacts of gas are applicable across the board.
- Australia is not a globally competitive producer of gas
- Australia has already exploited all of our cheaper gas and the remaining options for new unconventional gas cost twice as much to produce
- According to former CEO of the Australian Energy Council Mathew Warren, gas at $4/GJ, as suggested in the leaked Taskforce report, would be below the cost of production and would require over $1 billion in public subsidies every year
- Likewise, a comprehensive Acil Allen feasibility study found that the proposed $6 billion West-East gas pipeline would not be viable without billions in direct public subsidies
- A better way to cut gas prices for manufacturers would be to free up supply by helping households and businesses save energy and switch from gas to electricity
- Increased gas is not required for the transition to a net-zero power system — the job of supplying on-demand electricity can be done by other technologies such as batteries, pumped hydro, and demand-response
- In addition, or national energy market operator, in consultation with industry has found that by 2040 gas generation will be just one per cent of the National Electricity Market total and instead energy will largely come through wind, solar, pumped hydro and batteries
- Gas is primarily made of methane which is a more potent greenhouse gas than CO2 — depending on how much methane leaks during production it can be as damaging to the climate as coal.
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