Scott Morrison is stuck in a time warp – more gas is not the answer | Simon Holmes à Court | Opinion
The prime minister, Scott Morrison, surrounded by advisors out of the fossil fuel industry, is stuck in a time warp.
His claim that “there is no credible energy transition plan, for an economy like Australia in particular, that does not involve the greater use of gas as an important transition fuel” is demonstrably wrong. There are many.
A decade ago solar and wind were expensive, gas was cheap, batteries had no conceivable role in a power grid and pumped hydro storage was a forgotten technology. Conventional wisdom held that gas was a “transition fuel” – that since gas generation has half the emissions of coal power (if we foolishly turn a blind eye to emissions caused when extracting gas), we could reduce emissions by switching out coal power stations for gas turbines.
Helped strongly by wind and solar, that’s exactly what has happened in the UK and US, where gas is cheap, thanks to favourable gas-field geology. Different geology and an unfortunate decision to deeply link our domestic gas market to Asia have condemned Australia – or at least the east coast, which doesn’t reserve gas for local use – to high gas prices.
The energy transition story is playing out quite differently in Australia. Over the last decade renewables tripled from 8% to 23% in the National Electricity Market and 11 coal power stations shut down. We didn’t burn more gas, we just burnt it more strategically.
There’s no doubt that gas has played a very important role in keeping the lights on. Morrison claims we need a lot more of it to continue the energy transition already in play. The experts disagree.
A clutch of deep decarbonisation studies going back a decade – from Beyond Zero Emissions, the Australian Energy Market Operator, ClimateWorks, ANU, UNSW, Institute for Sustainable Futures, CSIRO and the Energy Networks Association among others – have shown a future where Australia burns far less fossil gas (and coal), the lights stay on and electricity is affordable. Trilemma solved!
Granted, the further you go back through the literature, the more the assumptions diverge from current thinking, but it’d be fair to say that the future has become less favourable for the “gas is a transition fuel” narrative. Four recent reports are worth considering.
Just two-and-a-half years ago, Prof Alan Finkel handed his eponymous review to Coag. Under his two decarbonisation scenarios (a Clean Energy Target and an Emissions Intensity Scheme) gas powered generation steadily declines from present levels.
In 2018 the Energy Security Board developed the National Energy Guarantee, later abandoned. In the Neg modelling, first by Frontier Economics and later by Acil Allen Consulting, the ESB laid out a transition plan for the NEM that burns one-quarter of the gas we use today.
A 2019 study by the Energy Transition Hub demonstrated a pathway to deep decarbonisation and the birth of a significant clean energy export industry – a 500% increase in energy by 2050, with a reduction in power prices. Again, the study showed a declining role for gas, petering out to zero by 2030. (Disclosure: I am an advisor to the ETH, but was not involved in the study.)
Bloomberg New Energy Finance’s modelling notes that “gas generators have a very important (and valuable) role to play as a balancing technology and for system adequacy, but will simply be too expensive to transition the bulk of Australia’s electricity away from coal.” BNEF sees gas generation falling from 11% to just 4% of all generation by the end of the decade. Gas may recover next decade, but not if other flexible technologies become more competitive.
Saving the best to last, Aemo has recently published its draft 2020 Integrated System Plan, which charts a number of “least cost” scenarios for the development of the NEM that keeps the lights on. Aemo takes this work very seriously – there are reportedly more than 60 people in the forecasting section of the grid operator, and many more throughout the organisation have had a hand in this monumental study.
Under the Central scenario, which assumes no new policy, Australia ends up at 76% renewable energy in 2042. Under the Step-change scenario, which assumes Australia will do its fair share under the Paris agreement, we hit 92% renewable energy in 2042, having slashed emissions in the electricity sector by 85%.
By now it shouldn’t be a surprise to learn that this modelling also shows the grid using less gas – much less – than the present.
Prime minister, it’s actually quite difficult to find an energy transition plan that calls for more gas!
If so much coal and gas are leaving the electricity sector, and massive quantities of wind and solar energy are rushing in, how do we keep the lights on?
Variable wind and solar power need to be accompanied by flexible, or “on-demand” generation – power from gas, hydro and storage. Aemo’s study ensures that there’s sufficient flexible power in the system. The vast majority of the additional flexible energy is expected to be provided by storage – mostly pumped hydro, and a bit from batteries.
It turns out that when the wind don’t blow and the sun don’t shine, we’re going to be fine. (At the time of writing, a number of large “reliable” fossil fuel generators have failed in the extreme heat and there’s a very real possibility of blackouts late Friday afternoon.)
It’s clear we don’t need more gas to transition the electricity sector, but how about the other uses? The latest gas forecasts – not yet updated for the ISP – show no increase in industrial, commercial and residential demand. Further, many energy experts are banking on reduced gas demand as users switch from gas heating to heat pumps and induction cooking. Increasingly Australians are building houses without gas connections.
A quick look at the data shows that if we need to get the gas out from under our feet, it’s not for us, but for the export market.
So, Scott Morrison, let’s come clean and let the public know that there’s no domestic case for increasing gas extraction. Given that gas itself has a major problem with emissions, it’s better we leave it in the ground.