Four seismic climate wins show Big Oil, Gas and Coal are running out of places to hide

Jacqueline Peel, The University of Melbourne; Ben Neville, The University of Melbourne, and Rebekkah Markey-Towler, The University of MelbourneThree global fossil fuel giants have just suffered embarrassing rebukes over their inadequate action on climate change. Collectively, the developments show how courts, and frustrated investors, are increasingly willing to force companies to reduce their carbon dioxide pollution quickly.

A Dutch court ordered Royal Dutch Shell to slash its greenhouse emissions, and 61% of Chevron shareholders backed a resolution to force that company to do the same. And in an upset at Exxon Mobil, an activist hedge fund won two seats on the company’s board.

The string of wins was followed in Australia on Thursday by a court ruling that the federal environment minister, when deciding whether or not to approve a new coal mine, owes a duty of care to young people to avoid causing them personal injury from climate change.

The court rulings are particularly significant. Courts have often been reluctant to interfere in what is viewed as an issue best left to policymakers. These recent judgements, and others, suggest courts are more prepared to scrutinise emissions reduction by businesses and – in the case of the Dutch court – order them to do more.

Shell, Chevron and Exxon logos — The wins for climate action put big polluters on notice.
AP

Court warns of ‘irreversible consequences’

In a world-first ruling, a Hague court ordered oil and gas giant Shell to reduce CO₂ emissions by 45% by 2030, relative to 2019 levels. The court noted Shell had no emissions-reduction targets to 2030, and its policies to 2050 were “rather intangible, undefined and non-binding”.

The case was brought by climate activist and human rights groups. The court found climate change due to CO₂ emissions “has serious and irreversible consequences” and threatened the human “right to life”. It also found Shell was responsible for so-called “Scope 3” emissions generated by its customers and suppliers.

The Chevron upset involved an investor revolt. Some 61% of shareholders supported a resolution calling for Chevron to substantially reduce Scope 3 emissions generated by the use of its oil and gas.

And last week, shareholders of ExxonMobil, one of the world’s biggest corporate greenhouse gas emitters, forced a dramatic management shakeup. An activist hedge fund, Engine No. 1, won two, and potentially three, places on the company’s 12-person board.

Engine No. 1 explicitly links Exxon’s patchy economic performance to a failure to invest in low-carbon technologies.

oil rig — The court said Shell’s emissions reduction efforts were ‘rather intangible’.
Shutterstock

Climate-savvy shareholders unite

As human activity causes Earth’s atmosphere to warm, large fossil fuel companies are under increasing pressure to act.

A mere 20 companies have contributed 493 billion tonnes of CO₂ and methane to the atmosphere, primarily from the burning of their oil, coal and gas. This equates to 35% of all global greenhouse gas emissions since 1965.

Shareholders – many concerned by the financial risks of climate change – are leading the corporate accountability push. The Climate Action 100+ initiative is a leading example.

It involves more than 400 investors with more than A$35 trillion in assets under management, who work with companies to reduce emissions, and improve governance and climate-related financial disclosures. Similar movements are emerging worldwide.

Shareholders in Australia are also stepping up engagement with companies over climate change.

Last year, shareholder resolutions on climate change were put to Santos and Woodside. While neither resolution achieved the 75% support needed to pass, both received unprecedented levels of support – 43.39% and 50.16% of the vote, respectively.

And in May 2021, Rio Tinto became the first Australian board to publicly back shareholder resolutions on climate change, which subsequently passed with 99% support.

Rio Tinto executives — The Rio Tinto board backed a shareholder resolution on climate change.
Brendan Esposito/AAP

The litigation trend

To date, the question of whether corporate polluters can be legally forced to reduce greenhouse emissions has remained unanswered. While fossil fuel companies have faced a string of climate lawsuits in the United States and Europe, courts have often dismissed the claims on procedural grounds.

Cases brought against governments have been more successful. In 2019, for example, the Dutch Supreme Court affirmed the government has a legal duty to prevent dangerous climate change.

The decision against Shell is significant, and sends a clear signal that corporations can be held legally responsible for greenhouse pollution.

Shell has previously argued it can only reduce its absolute emissions by shrinking its business. The recent case highlights how such companies may have to quickly find new forms of revenue, or face legal liability.

It’s unlikely we’ll see identical litigation in Australia, because our laws are different to those in the Netherlands. But the Shell case is emblematic of a broader trend of climate litigation being brought to challenge corporate polluters.

This includes the case decided on Thursday involving young people opposed to a company’s coal mine expansion, and Australian cases arguing for greater disclosure of climate risk by corporations, banks and super funds.

teenagers involved in case — The case brought against the Australian government by a group of teenagers is part of a growing trend towards climate litigation.
Supplied

Change is nigh

Oil and gas companies often argue Scope 3 emissions are not their responsibility, because they don’t control how customers use their products. The Shell finding and shareholder action against Chevron suggest this claim may hold little sway with courts or shareholders in future.

The Shell case may also set off a global avalanche of copycat litigation. In Australia, legal experts have noted the turning tide, and warned is it’s only a matter of time before directors who fail to act on climate change face litigation.

Clearly, a seismic shift is looming, in which corporations will be forced to take greater responsibility for climate harms. These recent developments should act as a wake-up call for oil, gas and coal companies, in Australia and around the world.

Jacqueline Peel, Professor of Environmental and Climate Law, The University of Melbourne; Ben Neville, Senior Lecturer and Program Director of the Master of Commerce, The University of Melbourne, and Rebekkah Markey-Towler, Research fellow, Melbourne Climate Futures, The University of Melbourne

This article is republished from The Conversation under a Creative Commons license. Read the original article.

Government-owned firms like Snowy Hydro can do better than building $600 million gas plants

Arjuna Dibley, The University of MelbourneThe Morrison government today announced it’s building a new gas power plant in the Hunter Valley, committing up to A$600 million for the government-owned corporation Snowy Hydro to construct the project.

Critics argue the plant is inconsistent with the latest climate science. And a new report by the International Energy Agency has warned no new fossil fuel projects should be funded if we’re to avoid catastrophic climate change.

The move is also inconsistent with research showing government-owned companies can help drive clean energy innovation. Such companies are often branded as uncompetitive, stuck in the past and unable to innovate. But in fact, they’re sometimes better suited than private firms to take investment risks and test speculative technologies.

And if the investments are successful, taxpayers, the private sector and consumers share the benefits.

Wind farm — If government-owned firms led the way in clean energy technologies, society would benefit.
Shutterstock

Lead, not limit

Federal energy minister Angus Taylor announced the funding on Wednesday. He said the 660-megawatt open-cycle gas turbine at Kurri Kurri will “create jobs, keep energy prices low, keep the lights on and help reduce emissions”.

Experts insist the plan doesn’t stack up economically and may operate at less than 2% capacity.

But missing from the public debate is the question of how government-owned companies such as Snowy Hydro might be used to accelerate the clean energy transition.

Australian governments (of all persuasions) have not often used the companies they own to lead in clean energy innovation. Many, such as Hydro Tasmania, still rely on decades-old hydroelectric technologies. And others, such as Queensland’s Stanwell Corporation and Western Australia’s Synergy, rely heavily on older coal and gas assets.

Asking Snowy Hydro to build a gas-fired power plant is yet another example – but it needn’t be this way.

Snowy Hydro has been funded to build a $600 million gas plant, but it could do better.
Shutterstock

The burning question

Globally, more than 60% of electricity comes from wholly or partially state-owned companies. In Australia, despite the 20-year trend towards electricity privatisation, government-owned companies remain important power generators.

At the Commonwealth level, Snowy Hydro provides around 20% of capacity to New South Wales and Victoria. And most electricity in Queensland, Tasmania and Western Australia is generated by state government-owned businesses.

But political considerations mean government-owned electricity companies can struggle to navigate the clean energy path.

For example in April this year, the chief executive of Stanwell Corporation, Richard Van Breda, suggested the firm would mothball its coal-powered generators before the end of their technical life, because cheap renewables were driving down power prices.

Queensland’s Labor government was reportedly unhappy with the announcement, fearing voter backlash in coal regions. Breda has since stepped down and Stanwell is reportedly backtracking on its transition plans.

Such examples beg the question: can government-owned companies ever innovate on clean energy? A growing literature in economics, as well as several real-world examples, suggest that under the right conditions, the answer is yes.

State-owned Stanwell Corporation is reportedly back-tracking on plans to mothball its coal plants early.
Stanwell Corporation

Privatised is not always best

Economists have traditionally argued state-owned companies are not good innovators. As the argument goes, the absence of competitive market forces makes them less efficient than their private sector peers.

But recent research by academics and international policy institutions such as the OECD has shown government ownership in the electricity sector can be an asset, not a curse, for achieving technological change.

The reason runs contrary to orthodox economic thinking. While competition can lead to firm efficiency, some economists argue government-owned firms can take greater risks. Without the pressure for market-rate returns to shareholders, government enterprises may be freer to invest in more speculative technologies.

My ongoing research has shown the reality is even more complex. Whether state-owned electric companies can drive clean energy innovation depends a great deal on government interests and corporate governance rules.

For example, consider the New York Power Authority (NYPA) which, like Snowy Hydro, is wholly government owned.

New York Governor Andrew Cuomo has deliberately sought to use NYPA to decarbonise the state’s electricity grid. The government has managed the company in a way that enables it to take risks on new transmission and generation technologies that investor-owned peers cannot.

For instance, NYPA is investing in advanced sensors and computing systems so it can better manage distributed energy sources such as solar and wind. The technology will also simulate major catastrophic events, including those likely to ensue from climate change.

These investments are likely to contribute to greater grid stability and greater renewables use, benefiting not just NYPA but other electricity generators and ultimately, consumers.

Such innovation is nothing new. Also in the US, the state-owned Sacramento Municipal Utility District built one of the first utility-scale solar projects in the world in 1984.

Andrew Cuomo in front of flag — NY Governor Andrew Cuomo is using a state-owned company to aid the clean energy transition.
Mary Altaffer/AP

The way forward

More could be done to ensure Australian government-owned corporations are clean energy catalysts.

Clean energy technologies can struggle to bridge the gap from invention to widespread adoption. Public investment can bring down the price of such technologies or demonstrate their efficacy.

In this regard, government-owned companies could work with private technology firms to invest in technologies in the early stages of development, and which could have significant public benefits. For instance, in 2020, the Western Australian government-owned company Synergy sought to build a 100 megawatt battery with private sector partners.

But many problems facing state-owned companies are the result of ever-changing government policy priorities. The firms should be reformed so they are owned by government, but operated at arm’s length and with other partners. This might better enable clean energy investment without the politics.

Arjuna Dibley, Visiting Researcher, Climate and Energy College, The University of Melbourne

This article is republished from The Conversation under a Creative Commons license. Read the original article.

Climate explained: is natural gas really cheaper than renewable electricity?

Ralph Sims, Massey University

Climate Explained is a collaboration between The Conversation, Stuff and the New Zealand Science Media Centre to answer your questions about climate change.

If you have a question you’d like an expert to answer, please send it to climate.change@stuff.co.nz

The government wants us to phase out fossil fuels. Yet natural gas is much cheaper for households to buy per kWh than electricity. Why?

Natural gas is often touted as a transition fuel to use while we move away from coal and oil and as renewable energies continue to mature technologically and economically.

But the key point to note is that we simply cannot continue to produce greenhouse gases and the demand for natural gas, as for coal and oil, will soon have to decline rapidly.

In its draft package of recommendations to the government, New Zealand’s Climate Change Commission has called for a stop to new connections to the natural gas grid for commercial and residential buildings after 2025.

In that context, comparing the retail price of gas with electricity is not useful unless all other costs and likely future trends are considered.

The natural gas grid

Natural gas is extracted from gas fields and processed to “scrub” out other gases and condensates. The resulting gas, mainly methane, is then distributed through pipelines.

In New Zealand, natural gas is reticulated around much of the North Island, but it is not available in the South Island, where bottled liquid petroleum gas (LPG) is the alternative.

LPG is pressurised butane and propane that come from the scrubbed natural gas condensates as well as from oil refineries. A few cars such as taxis still use LPG, as do gas barbecues.

Natural gas is also combusted in gas-fired power stations to generate electricity. In New Zealand, this accounts for around 15% of total generation. Large volumes of gas are purchased relatively cheaply by power-generating companies and the electricity is then distributed through the grid to homes and businesses.

Cost comparison

The retail cost of electricity varies but is typically around 25 cents per kWh (also known as “c/unit”) for domestic users. Some retailers offer cheaper rates during “off-peak” times (to heat water for example).

The retail price for natural gas also varies and can be around 8c/kWh in Auckland or 5c/kWh in Wellington. If used for cooking, it can be cheaper than electricity. But to heat a building, an electric heat pump can be a cheaper option than a gas heater.

A heat pump concentrates the heat taken from the outside air and “pumps” it into the house very efficiently. One kWh of electricity consumed to run a heat pump can produce 3-4kWh of heat energy inside the house. It can also run the process in reverse and cool the air inside during hot summer days.

When comparing the cost of gas with electricity, two other cost factors must be considered. Under New Zealand’s Emissions Trading Scheme, there is a cost on the carbon dioxide produced when the gas is combusted because, like LPG, it is a fossil fuel and produces greenhouse gases.

The current cost per tonne of carbon dioxide emitted is around NZ$35 (or around 1c per kWh of gas), but it is likely to increase significantly over the next few years. This will be added to domestic gas bills. Electricity bills are less affected by carbon price rises because (more than 80% of electricity) in New Zealand is generated from low-carbon renewable resources.

The other cost to consider is the fixed connection charge for having a gas pipeline coming into the house. This cost also varies, but in Auckland some customers pay $1.15 per day. In Wellington, some pay $1.60 per day.

A house running fully on electricity will avoid this fixed cost. There will be a fixed daily supply charge for the electricity connection but most homes have to pay this anyway in order to have lighting and electrical appliances.

Additional risks

When gas is combusted inside a building to provide heat, the process consumes oxygen and produces water vapour. If ventilation is poor, oxygen levels drop and carbon monoxide is also produced, which can lead to poisonous air.

The water vapour results in condensation, obvious on windows at certain times of the day. That, too, can lead to unhealthy mould in poorly ventilated homes.

And there are further risks with gas. As exemplified by an explosion last year in a Christchurch home, natural gas (methane) is volatile as well as toxic.
Of course there are also risks with using electricity, though fairly rare, such as getting an electric shock or vermin eating through plastic cable coverings and shorting the wires, which can start fires.

While gas may appear cheaper, this applies only to certain energy uses (such as cooking). Overall, the cost of gas is likely to rise significantly in the near future.

The Climate Change Commission’s final advice to government is due at the end of May and will provide a time frame for the end of new gas connections — but there is no intention to disconnect existing gas supplies to buildings at this stage.

Ralph Sims, Professor, School of Engineering and Advanced Technology, Massey University

This article is republished from The Conversation under a Creative Commons license. Read the original article.

‘Unjustifiable’: new report shows how the nation’s gas expansion puts Australians in harm’s way

Tim Baxter, University of Melbourne

Australia’s latest emissions data, released this week, contained one particularly startling, and unjustifiable, fact. Against all odds, in a year when emissions fell in almost every sector, Australia’s export gas industry still managed to do more climate damage.

A new Climate Council report released today, to which I contributed, sheds more light on the problem of Australia’s expanding gas industry.

It reveals in alarming detail how gas emissions are cancelling out the gains won by Australia’s renewables boom. It also shows how gas emissions are almost certainly under-reported, and uncovers the misleading claims underpinning the Morrison government’s gas-led economic recovery.

This is clearly an unsustainable state of affairs. Australia has this year been in the grip of a climate crisis: unprecedented drought, the Black Summer bushfires and another mass bleaching of the Great Barrier Reef. The gas industry escalates this risk and puts more Australians in harm’s way.

The Jeeralang gas power station in Victoria. The gas industry is cancelling out gains won by renewables.
Climate Council

Gas: bucking the trend

As is now well known, COVID-19 restrictions helped trigger a fall in carbon dioxide emissions globally.

In Australia, emissions from transport dropped by 24% compared with April–June last year, as people stayed out of cars and planes.

Emissions from electricity dropped by around 5% in the quarter, compared with the corresponding quarter last year. This was mostly due to continued wind and solar expansion; demand for electricity dropped only marginally.

Overall, industrial demand for electricity was roughly the same as last year. Meanwhile, although office blocks and shopping centres were shuttered, power was needed in the domestic sector to heat homes and charge iPads for homeschooling.

Overall, almost every sector, including gas, also produced fewer emissions in the June quarter than in the same period the year before. Across the economy, emissions for the quarter were 7% lower than the same period last year. This result is represented in the graph below.

While emissions from the gas sector declined in the lockdown months, the sector’s poor emissions performance over the full 12 months to June meant it managed to increase its emissions over the year – one of the few sectors to do so.

Bar chart showing Australia's quarterly emissions since mid-2013. — Australia’s quarterly emissions since the 2013 election, highlighting the most recent quarter in orange.
Author supplied. Data source: Department of Industry, Science, Energy and Resources

How did gas get this bad?

Australia became the world’s largest exporter of liquefied gas in 2019. Our report shows almost three-quarters of gas extracted in Australia in 2019 was compressed and processed to send overseas, as shown below.

Remarkably, on top of this, in 2019 the Australian gas export industry was itself the second-largest user of gas in Australia for the first time. More than a quarter of gas consumed in Australia was used to liquefy and chill gas for export overseas.

So the Australian gas export industry uses or exports nearly 80% of the gas it extracts each year – four times the amount needed to service the country’s own needs. Clearly claims of a shortfall in domestic gas supplies, such as those used to justify the recent Narrabri Gas Project approval, are bogus.

Proportional representation of Australian gas use — Chart showing 72% of Australia’s gas is exported and 7.5% is used by the gas export industry to process exports.
Climate Council

A worse problem than we thought

The reports shows rising gas emissions are cancelling out gains made by Australia’s record build of solar and wind generation capacity. Between 2005 and 2018, emissions from the electricity sector fell by 15 million tonnes per year. Emissions from the gas sector increased by 25 million tonnes per year in the same period.

Our report also highlights serious problems with official estimates of gas emissions along the supply chain. These estimates are based on decades-old research designed for the US gas industry.

Australia is also underestimating the harm caused by gas emissions. Methods used by the federal government to quantify the relative impact of methane are incomplete and ignore recent scientific advances. If methane’s effect was considered completely, this would further increase the assessed impact of the gas industry on Australia’s emissions.

Underpinning all this, the international gas market is in crisis as a result of a global oversupply. The drastic increase in Australia’s gas exports in recent years has left us dangerously exposed to international boom-and-bust market cycles, and subsequent job losses and power price volatility.

Most of Australia’s gas is expensive to produce compared to international competitors. The centrepiece of the federal government’s gas-led recovery, a stretch goal of A$4 per gigajoule for gas, has been described by the extraction industry’s own lobbyists as a “myth”. And several Australian export plants were recently declared by banking giant HSBC as “at risk”.

Cost curve highlighting the breakeven points for Queensland's APLNG, GLNG and QCLNG gas export facilities above projected gas market futures prices on the Japanese and European markets — Australia’s three east coast gas export facilities were recently declared ‘at risk’ by HSBC.
Climate Council

Seizing the opportunity

Fossil fuel extraction and consumption in Australia makes up 80% of our annual emissions. But as the Climate Council report shows, this figure is likely a gross underestimate. And of course, it does not account for the additional emissions produced when Australia’s gas exports are burned overseas.

COVID created a temporary blip in global emissions. If we don’t use it as an opportunity to consider a planet without coal, oil and gas consumption, the climate gains will amount to nothing.

Tim Baxter, Fellow – Melbourne Law School; Senior Researcher – Climate Council; Associate – Australian-German Climate and Energy College, University of Melbourne

This article is republished from The Conversation under a Creative Commons license. Read the original article.

San Francisco just banned gas in all new buildings. Could it ever happen in Australia?

Madeline Taylor, University of Sydney and Susan M Park, University of Sydney

Last week San Francisco became the latest city to ban natural gas in new buildings. The legislation will see all new construction, other than restaurants, use electric power only from June 2021, to cut greenhouse gas emissions.

San Francisco has now joined other US cities in banning natural gas in new homes. The move is in stark contrast to the direction of energy policy in Australia, where the Morrison government seems stuck in reverse: spruiking a gas-led economic recovery from the COVID-19 pandemic.

Natural gas provides about 26% of energy consumed in Australia — but it’s clearly on the way out. It’s time for a serious rethink on the way many of us cook and heat our homes.

Cutting out gas

San Francisco is rapidly increasing renewable-powered electricity to meet its target of 100% clean energy by 2030. Currently, renewables power 70% of the city’s electricity.

The ban on gas came shortly after San Francisco’s mayor London Breed announced all commercial buildings over 50,000 square feet must run on 100% renewable electricity by 2022.

Buildings are particularly in focus because 44% of San Franciscos’ citywide emissions come from the building sector alone.

Following this, the San Francisco Board of Supervisors unanimously passed the ban on gas in buildings. They cited the potency of methane as a greenhouse gas, and recognised that natural gas is a major source of indoor air pollution, leading to improved public health outcomes.

From January 1, 2021, no new building permits will be issued unless constructing an “All-Electric Building”. This means installation of natural gas piping systems, fixtures and/or infrastructure will be banned, unless it is a commercial food service establishment.

Switching to all-electric homes

In the shift to zero-emissions economies, transitioning our power grids to renewable energy has been the subject of much focus. But buildings produce 25% of Australia’s emissions, and the sector must also do some heavy lifting.

A report by the Grattan Institute this week recommended a moratorium on new household gas connections, similar to what’s been imposed in San Francisco.

The report said natural gas will inevitably decline as an energy source for industry and homes in Australia. This is partly due to economics — as most low-cost gas on Australia’s east coast has been burnt.

There’s also an environmental imperative, because Australia must slash its fossil fuel emissions to address climate change.

While acknowledging natural gas is widely used in Australian homes, the report said “this must change in coming years”. It went on:

This will be confronting for many people, because changing the cooktops on which many of us make dinner is more personal than switching from fossil fuel to renewable electricity.

The report said space heating is by far the largest use of gas by Australian households, at about 60%. In the cold climates of Victoria and the ACT, many homes have central gas heaters. Homes in these jurisdictions use much more gas than other states.

By contrast, all-electric homes with efficient appliances produce fewer emissions than homes with gas, the report said.

A yellow triangle sign that says 'no coal or coal seam gas' on a wooden fence. — Natural gas produces methane, a greenhouse gas that’s far more potent than carbon dioxide.
Shutterstock

Zero-carbon buildings

Australia’s states and territories have much work to do if they hope to decarbonise our building sector, including reducing the use of gas in homes.

In 2019, Australia’s federal and state energy ministers committed to a national plan towards zero-carbon buildings for Australia. The measures included “energy smart” buildings with on-site renewable energy generation and storage and, eventually, green hydrogen to replace gas.

The plan also involved better disclosure of a building’s energy performance. To date, Australia’s states and territories have largely focused on voluntary green energy rating tools, such as the National Australian Built Environment Rating System. This measures factors such as energy efficiency, water usage and waste management in existing buildings.

But in 2020, just 2% of buildings in Australia achieved the highest six-star rating. Clearly, the voluntary system has done little to encourage the switch to clean energy.

The National Construction Code requires mandatory compliance with energy efficiency standards for new buildings. However, the code takes a technology neutral approach and does not require buildings to install zero-carbon energy “in the absence of an explicit energy policy commitment by governments regarding the future use of gas”.

An economically sensible move

An estimated 200,000 new homes are built in Australia each year. This represents an opportunity for states and territories to create mandatory clean energy requirements while reaching their respective net-zero emissions climate targets.

Under a gas ban, the use of zero-carbon energy sources in buildings would increase, similar to San Francisco. This has been recognised by Environment Victoria, which notes

A simple first step […] to start reducing Victoria’s dependence on gas is banning gas connections for new homes.

Creating incentives for alternatives to gas may be another approach, such as offering rebates for homes that switch to electrical appliances. The ACT is actively encouraging consumers to transition from gas.

Banning gas in buildings could be an economically sensible move. As the Grattan Report found, “households that move into a new all-electric house with efficient appliances will save money compared to an equivalent dual-fuel house”.

Meanwhile, ARENA confirmed electricity from solar and wind provide the lowest levelised cost of electricity, due to the increasing cost of east coast gas in Australia.

Future-proofing new buildings will require extensive work, let alone replacing exiting gas inputs and fixtures in existing buildings. Yet efficient electric appliances can save the average NSW homeowner around A$400 a year.

Learning to live sustainability, and becoming resilient in the face of climate change, is well worth the cost and effort.

Should we be cooking with gas?

Recently, a suite of our major gas importers — China, South Korea and Japan — all pledged to reach net-zero emissions by either 2050 or 2060. This will leave our export-focused gas industry possibly turning to the domestic market for new gas hookups.

But continuing Australia’s gas production will increase greenhouse gas emissions, and few Australians support an economic recovery pinned on gas.

The window to address dangerous climate change is fast closing. We must urgently seek alternatives to burning fossil fuels, and there’s no better place to start that change than in our own homes.

Madeline Taylor, Lecturer, University of Sydney and Susan M Park, Professor of Global Governance, University of Sydney

This article is republished from The Conversation under a Creative Commons license. Read the original article.

Malcolm Turnbull condemns Scott Morrison’s ‘gas, gas, gas’ song as ‘a fantasy’

Michelle Grattan, University of Canberra

Malcolm Turnbull has launched a swingeing attack on Scott Morrison’s gas-led recovery, labelling his threat to build a gas-fired power station “crazy stuff”, and his idea of gas producing a cheap energy boom “a fantasy”.

The former prime minister also claimed Morrison’s refusal to embrace a 2050 net zero emissions target was “absolutely” at odds with the Paris climate agreement. “That was part of the deal,” Turnbull said.

Morrison at the weekend would not commit to a 2050 target – endorsed by business, farming and other groups in Australia and very many countries – although he said it was achievable.

Turnbull also declared that Energy Minister Angus Taylor – who on Tuesday delivered his technology investment roadmap for low emissions – didn’t believe most of what he was saying on energy.

“Angus has got quite a sophisticated understanding of the energy market, and he is speaking through the political side of his brain rather than the economic side,” Turnbull told the ABC.

The energy/climate war was pivotal in Turnbull’s fall from the prime ministership in 2018, and from the opposition leadership in 2009. While Morrison is totally safe in his job, the battle over energy policy on the conservative side of politics has not been put to rest, although the prime minister is banking on his elevation of gas satisfying his Liberal parliamentarians.

Morrison’s gas policy, which the government spruiks as underpinning a manufacturing revival, is being seen as a walk away from coal.

It includes a threat to build a gas-fired power station in the Hunter region if private enterprise does not fill the gap left by the coming closure of the Liddell coal-fired station.

The debate about gas has produced an unexpected unity ticket between Turnbull and former resources minister, the Nationals Matt Canavan, on one key point – both insist gas prices won’t be as low as the policy assumes.

But Turnbull and Canavan go in opposite directions in their energy prescriptions – Turnbull strongly backs renewables and Canavan is a voice for coal.

While acknowledging gas had a role “as a peaking fuel”, Turnbull dismissed any prospect of a “gas nirvana”.

“There is no cheap gas on the east coast of Australia. It is cheap at the moment because there’s a global recession and pandemic and oil prices are down, but the equilibrium price of gas is too high to make it a cheap form of generating electricity.”

“The cheap electricity opportunities come from wind and solar, backed by storage, batteries and pumped hydro, and then with gas playing a role but it’s essentially a peaking role,” Turnbull said.

Writing in the Australian, Canavan said the Morrison gas plan would “keep the lights on but it is unlikely to lower energy prices to the levels needed to bring manufacturing back to Australia.

“If we were serious about getting [energy] prices down as low as possible, we would focus on the energy sources in which we have a natural advantage, and that is not gas. We face gas shortages in the years ahead.”

Former Nationals leader Barnaby Joyce said about the government’s power station threat, that it would be “peculiar” to build a gas-fired plant “in the middle of a coal field”.

Turnbull said of last week’s announcement, “I’m not going to sing the song but it’s a gas, gas, gas”.

The roadmap was “gas one minute, carbon capture and storage the next”.

“What you need is to set out some basic parameters, which deal with reliability, affordability and emissions reduction, and then let the market get to work. That’s what Liberal governments should do. Unfortunately, it’s just one random intervention after another,” Turnbull said.

He lamented that, for whatever reasons, there was a “body of opinion on the right of Australian politics in the Liberal party and the National party, the Murdoch press, which still clings to this fantasy that coal is best and if we can’t have coal we’ll burn gas – I mean, it’s bonkers. The way to cheaper electricity is renewables plus storage, which is why the big storage plan that we got started, Snowy 2, is so important.”

Turnbull said that unlike his own situation when PM, Morrison was “in a position with no internal opposition”. “Now is the time to deliver an integrated, coherent energy and climate policy which is what the whole energy sector has been crying out for.”

Taylor told the National Press Club the government’s determination to get the gap filled, whether by private investment or a government power station, when the Liddell coal fired station closes in 2023 “is partly about reliability, but it’s primarily about affordability.

“If you take that much capacity out of the market, it’s a huge amount in a short period of time. We saw what happened with Hazelwood. We saw very, very sharp increases in prices. We’re not prepared to accept that.”

Asked whether the government’s resistance to committing to the 2050 target was more about appeasing the right wing of the coalition rather than about the target itself, Taylor said: “Our focus is on our 2030 target in the Paris agreement…and in a few years time we will have to extend that out to 2035 …

“What we’re not going to do is impose a target that’s going to impose costs on the economy, destroy jobs, and stop investment. The Paris commitment, globally, is to net zero in the second half of the century and we would like that to happen as soon as possible.”

Michelle Grattan, Professorial Fellow, University of Canberra

This article is republished from The Conversation under a Creative Commons license. Read the original article.

No, Prime Minister, gas doesn’t ‘work for all Australians’ and your scare tactics ignore modern energy problems

Samantha Hepburn, Deakin University

The federal government today announced it will build a new gas power plant in the Hunter Valley, NSW, if electricity generators don’t fill the energy gap left by the Liddell coal-fired station when it retires in 2023.

The government says it’s concerned that when the coal plant closes, there’ll be insufficient dispatchable power (that can be used on demand) because the energy sector is focused on accelerating renewable energy at the expense of reliability. So electricity generators are required to come up with a plan to inject 1,000 megawatts of new dispatchable energy into the national grid.

This is tantamount to an ultimatum: if we must have renewables, then prove they generate the same amount of electricity as fossil fuel or we will go back to fossil fuel.

The government’s joint media release has this to say:

This is about making Australia’s gas work for all Australians. Gas is a critical enabler of Australia’s economy.

But under a rapidly changing climate, the issue is not just about keeping the lights on. We not only want energy, we also want to breathe clean air, have enough food, have clean and available water supplies, preserve our habitat and live in a sustainable community. So no, gas doesn’t “work for all Australians”.

Adapting to a new energy future is a complex process our national government must not only support, but progress. It should not be hijacked by fossil fuel politics.

Scare-tactics won’t resolve the climate emergency

The government’s scare tactic completely ignores the two fundamental imperatives of modern energy.

The first is the critical importance of decarbonisation. Energy production from fossil fuels is the most carbon intensive activity on the planet. If we are to reach net zero emissions by 2050 and stay within 2℃ of global warming, we cannot burn fossil fuels to produce energy.

The government shouldn’t revert to outdated fossil fuel rhetoric about “reliable, dispatchable power” during an accelerating climate emergency.

The second is it’s in the public interest to support and invest in energy that’s not only environmentally sustainable for the future, but also economically sustainable. Demand for fossil fuels is in terminal decline across the world and investing in new fossil fuel infrastructure may lead to stranded assets.

We need to address the ‘energy trilemma’

The question the government should instead focus on is this: how can the government continue to supply its citizens with affordable, reliable electricity but also maintain a reduction in greenhouse gas emissions and high air quality standards?

Answering this question involves addressing a three-part set of tensions, known as the “energy trilemma”:

sustainable generation that is not emission intensive
infrastructure reliability and
affordability.

The energy trilemma is a well-known tool in the sector that powerfully communicates the relative positioning of each tension. No single axis is necessarily more important than the other two. The aim is to try to balance all three.

Constructing a new gas plant seeks to address the second pillar at the expense of the first. This isn’t good enough in the face of the climate emergency.

Gas fired electricity can emit methane. Over a 20-year period, methane is 84 times more effective than carbon dioxide in trapping heat, and 28 times more effective over 100 years.

The affordability pillar is also important. Morrison says constructing the plant will prevent energy price spikes. But research clearly confirms renewable energy generation is cheapest.

What is it with the federal government and gas?

After first informing us gas will help bolster the economy after the COVID-19 pandemic, this new announcement makes it clear the federal government is firmly wedded to gas.

This may be because the federal government regards adherence to gas as a compromise between the renewable sector and the demands of the fossil fuel industry.

In any case, we cannot and must not revert to fossil fuel energy generation. We must abandon past behaviours if we’re to adapt to a changing climate, which is set to hit the economy much harder than this pandemic.

Most Australians have derived their assumptions about energy security from fossil fuel dependency, because this is what they have known. The good news is this is changing.

Increasingly, the global community understands it’s not sustainable to burn coal or gas to generate energy just because we want to be “sure” we can turn the lights on. Consumer preference is shifting.

This is something BP recognises in its 2020 Energy Outlook report, which outlines three scenarios for the global energy system in next 30 years.

Each scenario shows a shift in social preferences and a decline in the share of hydrocarbons (coal, oil and natural gas) in the global energy system. This decline is matched by an increase in the role of renewable energy.

I’ll say it again: renewable energy is the future

The technology underpinning renewable energy production from clean, low-cost generation such as wind, solar, hydro-electricity, hydrogen and bio-mass is advancing.

Renewable energy generation is sustainable, better for the environment, low in emissions, and affordable. Reliability is improving at a rapid rate. A recent report indicates electricity generated by solar photovoltaic (PV) and onshore wind farms from 2026 will overtake the combined power production from coal and gas.

The combined solar and wind capacity will grow to an estimated 41.4 gigawatts in 2023 from 26.4 gigawatts this year. By contrast, coal and gas capacity will shrink to 35.3 gigawatts in 2023 from 39.1 gigawatts this year.

The report is based on the Australian Energy Market Operator (AEMO) Step Change Scenario, which models a shift to renewables. It includes rapid adjustments in technology costs and a “well below 2℃” scenario as part of its 20-year planning blueprint.

Yes, there are challenges in shifting from a centralised grid and developing new transmission capacity.

But these are the challenges we need to be investing in. Not a new gas plant that’s likely to be a stranded asset in the not-too-distant future.

Samantha Hepburn, Director of the Centre for Energy and Natural Resources Law, Deakin Law School, Deakin University

This article is republished from The Conversation under a Creative Commons license. Read the original article.

Grattan on Friday: Morrison signs up to the gas gospel, but the choir is not in tune

Michelle Grattan, University of Canberra

If Labor were threatening to build a power station, the Liberals would likely be screaming “socialists”.

As for a Coalition government contemplating such a thing — well, to say the obvious, it hardly fits with the Liberals’ stated free market, private enterprise philosophy. But hey, neither does the hyper-Keynesian support package to cushion the economy through the pandemic.

Only a few within its own ranks would dispute the government’s COVID mega spending, whatever the ideological contradiction. And they’re keeping their voices to private whispers.

The gas power plant is another matter, and it will be fascinating to see how the debate plays out if the threat turns into reality.

The threat is part of the go-with-gas policy unveiled by Scott Morrison this week, spruiked as driving a “gas-fired” recovery, especially for manufacturing. This sounds suspiciously like a three word slogan that promises more than it is likely to deliver.

But Morrison has signed up to the church of gas, whose pastors include Nev Power, chairman of the prime minister’s COVID-19 commission and Andrew Liveris, the head of its (now defunct) manufacturing taskforce, which delivered a pro-gas report. Morrison this week referenced his discussions with Liveris at Kirribilli House.

Much of the gas plan is broad and aspirational at this stage. But the threat is specific enough, and Morrison adopted a grim, school teacher tone when he delivered it in his speech at Newcastle unveiling the policy.

He said the electricity sector must lock in by April investments to deliver 1,000 megawatts of new dispatchable energy to replace the Liddell coal-fired power station before it closes in 2023. Or else. The government-owned Snowy Hydro was working on options, Morrison said.

Going back to Malcolm Turnbull’s time, the government conducted — and lost — a bitter battle with AGL over the planned Liddell closure. It exerted maximum pressure on the company to extend the life of the station, or alternatively, sell it, but to no avail.

The gas policy, especially the threat, hasn’t gone down well — with the energy sector or environmentalists. And it’s come under criticism from experts and even within Coalition ranks.

The Australian Energy Council, representing investors and generators, warned the spectre of a government gas generator could put off private investors.

Environmentalists are against gas anyway, whoever produces it, because it is a fossil fuel and therefore has emissions, albeit not as bad as coal.

The Nationals Matt Canavan, who not so long ago was resources minister, says if a new power station is to be built in the Hunter region it should be coal-fired.

And the director of the Grattan Institute’s energy program, Tony Wood, says the government’s claim that 1000 megawatts of new dispatchable capacity is needed isn’t supported by the advice from its own Liddell taskforce.

More generally, Wood argues the idea of a gas–led recovery “is a mirage”.

He says east coast gas prices are unlikely to fall to very low levels and anyway, even very low prices would not stimulate major economic activity. “Investing in more gas infrastructure in the face of climate change looks more like a herd of stampeding white elephants,” is Wood’s blunt assessment.

“Gas is very likely to have a role for some time to balance solar and wind. This role will be important but diminishing in volume and the pace of change will be determined by the relative economics of gas versus storage technologies and hydrogen.”

Some see the government’s big takeup of gas as a way of walking away from coal, without fanfare. The government denies this, but it would fit with Morrison’s middle-course pragmatism.

That pragmatism is reflected in the week’s other major energy announcement, for $1.9 billion investment in new and emerging technologies to lower emissions.

Morrison explicitly spelled out the government’s view that renewables, notably solar and wind, have boomed commercially and can take care of themselves.

The policy looks both backwards and forwards.

Backwards, with its support for carbon capture and storage (CCS) which — leaving aside its problems as a technology — is an encouragement to fossil fuels.

Forwards, by extending support to a wide range of technologies of the future.

Critics don’t like the proposed expansion of the remit of the Australian Renewable Energy Agency (ARENA) and the Clean Energy Finance Corporation (CEFC) beyond supporting renewables.

If the government can get the legislation through the Senate, these bodies would be able to back a wide range of projects, including CCS.

The government is also clinging to its Emissions Reduction Fund, which has had trouble attracting proposals. It plans to reform the fund’s processes.

Taken as a whole and leaving aside the arguments about their efficacy, this week’s decisions have a clear political element. They are relatively risk averse within the Coalition, the threatened power plant notwithstanding.

Energy has been such a fraught area for the government that Morrison is very aware of juggling the conflicting forces within his ranks.

The internal coal lobby, spearheaded by Canavan but wider than him, will continue to mutter. The crunch will come when the government’s feasibility study for a Queensland coal-fired power station is finished. But putting gas at the centre of the picture will reassure some in the Coalition who remain deeply suspicious of renewables.

The Liberals in seats where climate change is a big preoccupation may or may not find enough to sell in this week’s packages. They can emphasise the “transition” nature of gas — Morrison described it as “a stable transition fuel” — and talk up the support for emerging technologies.

But they will confront the counter argument that the government is not doing enough or proceeding fast enough on climate change.

Meanwhile, Labor struggles with its own energy and climate policies, which caused it such problems last election, when it had dual or confusing messaging in the country’s south and north and lacked costings.

Post election, the spectrum of Labor thinking on these issues has been exposed, and resources spokesman Joel Fitzgibbon, who takes many of his cues from his NSW coal seat of Hunter, frequently speaks out.

Like Morrison, on energy and climate policy Anthony Albanese will be seeking to position himself somewhere in the middle ground for the election. He’ll look to being to the left of the PM — but not way out on a limb.

Michelle Grattan, Professorial Fellow, University of Canberra

This article is republished from The Conversation under a Creative Commons license. Read the original article.

Morrison government threatens to use Snowy Hydro to build gas generator, as it outlines ‘gas-fired recovery’ plan

Michelle Grattan, University of Canberra

The Morrison government has threatened to use Snowy Hydro to build a gas generator in the Hunter Valley if the electricity sector fails to fill the gap left by the scheduled closure of the Liddell power plant in 2023.

The threat comes as the government released its plan to place gas at the centre of Australia’s economic recovery, with a package of measures to “reset” the east coast market and “unlock” supply.

Scott Morrison and Energy Minister Angus Taylor said the electricity sector had to deliver 1,000 megawatts of new dispatchable energy to replace the Liddell power station before it closed.

“The Government will step up and back a new gas power plant in the Hunter Valley if the sector doesn’t replace Liddell’s capacity,” they said in an ultimatum to the sector.

“Snowy Hydro Limited is developing options to build a gas generator in the Hunter Valley at Kurri Kurri should the market not deliver what consumers need.”

The government had a long running battle with AGL over its determination to close the Liddell coal-fired power station, trying unsuccessfully to force it to abandon the decision.

Morrison and Taylor said the government’s Liddell taskforce had found closing the plant without adequate dispatchable replacement capacity could mean a 30% price rise over two years, or $20 per megawatt hour to $80 in 2024 and up to $105 per MWH by 2030.

Morrison said such rises were unacceptable – they would be a huge hit to families, businesses and job creating industries in NSW if the energy generated by Liddell wasn’t replaced.

“We won’t risk the affordability and reliability of the NSW energy system and will step in unless the industry steps up.

“To ensure we do not have a scenario without replacement, the government is giving the private sector until the end of April 2021 to reach final investment decisions on 1000 MW of dispatchable capacity, with a commitment for generation in time for summer 2023-24.”

In its announcement of its gas plan, the government says its proposed multiple initiatives will deliver affordable and reliable energy for households, business and industry, and shore up the energy grid’s reliability as renewables form an increasingly larger part of the energy market.

One part of the plan is the creation of an Australian Gas Hub at Wallumbilla in Queensland to bring users and suppliers closer together, delivering a transparent liquid gas trading system.

This is modelled on the Henry Hub located in Louisiana which is a distribution point on a natural gas pipeline system. It serves as the official delivery location for futures contracts.

The concept of a gas-led recovery is highly controversial. It has been strongly pushed by the chair of the government’s national COVID-19 commission Nev Power, and the government argues that gas is much lower in emissions than coal fired power.

But the promotion of gas is resisted by environmentalists, given it is a fossil fuel, and questioned by some in the investment community who doubt it will be possible to achieve gas prices low enough to make a major economic difference.

Outlining the “gas-fired recovery” plan Morrison, Taylor and Resources Minister Keith Pitt said: “The government wants the private sector to step-up and make timely investments in the gas market.”

But “if the private sector fails to act, the government will step in – as it has done for electricity transmission – to back these nation building projects. This may include through streamlining approvals, underwriting projects or the establishment of a special purpose vehicle with a capped government contribution”.

The government says the east coast market needs change because it is not delivering internationally competitive prices for Australian businesses and households.

International prices have fallen but this has not been reflected in lower long term contract offers for Australian customers.
There are also fears of a supply shortfall in the medium term.

Under the measures, new gas supply targets will be set with states and territories and a potential “use it or lose it” requirement will be enforced on gas licences.

The government aims to unlock five new gas basins beginning with the Beetaloo Basin in the Northern Territory and the North Bowen and Galilee Basis in Queensland. This will cost $28.3 million for the plans.

To avoid supply shortfalls, there will be new agreements with the three east coast LNG exporters with strengthened commitments on price.

The government will also “explore options” for a prospective gas reservation scheme “to ensure Australian gas users get the energy they need at a reasonable price”.

To improve the gas transport network the government will identify priority pipelines and critical infrastructure for a National Gas Infrastructure Plan (NGIP) worth $10.9 million . This will also highlight where the government will step in if private investors do not.

The regulations on pipeline infrastructure will be reformed to increase competition and transparency; competition will be further promoted by kick starting work on a secondary pipeline capacity market.

The government will work with the Australian Competition and Consumer Commission to review the calculation of the LNG netback price which provides a guide on the export parity prices.

It will also use the NGIP to develop customer hubs to boost competition and transparency for customers.

HERE ARE THE GOVERNMENT’S DETAILED MEASURES.

It will get more gas into the market by:

Setting new gas supply targets with states and territories and enforce potential “use-it or lose-it” requirements on gas licenses
Unlocking five key gas basins starting with the Beetaloo Basin in the NT and the North Bowen and Galilee Basin in Queensland, at a cost of $28.3 million for the plans
Avoiding any supply shortfall in the gas market with new agreements with the three east coast LNG exporters that will also strengthen price commitments
Supporting CSIRO’s Gas Industry Social and Environmental Research Alliance with $13.7 million
Exploring options for a prospective gas reservation scheme to ensure Australian gas users get the energy they need at a reasonable price.

It will boost the gas transport network by:

Identifying priority pipelines and critical infrastructure as part of an inaugural National Gas Infrastructure Plan (NGIP) worth $10.9 million that will also highlight where the government will step in if the private sector doesn’t invest
Reforming the regulations on pipeline infrastructure to promote competition and transparency
Improving pipeline access and competition by kick-starting work on a dynamic secondary pipeline capacity market.

To better empower gas consumers, it will:

Establish an Australian Gas Hub at our most strategically located and connected gas trading hub at Wallumbilla in Queensland to deliver an open, transparent and liquid gas trading system
Level the negotiating playing field for gas producers and consumers through a voluntary industry-led code of conduct, to be delivered by February 2021
Ensure Australians are paying the right price for their gas by working with the ACCC to review the calculation of the LNG netback price which provides a guide on the export parity prices
Use the NGIP to develop customer hubs or a book-build program that will give gas customers a more transparent and competitive process for meeting their needs.

Michelle Grattan, Professorial Fellow, University of Canberra

This article is republished from The Conversation under a Creative Commons license. Read the original article.

4 reasons why a gas-led economic recovery is a terrible, naïve idea

Samantha Hepburn, Deakin University

Australia’s leading scientists today sent an open letter to Chief Scientist Alan Finkel, speaking out against his support for natural gas.

Finkel has said natural gas plays a critical role in Australia’s transition to clean energy. But, as the scientists write:

that approach is not consistent with a safe climate nor, more specifically, with the Paris Agreement. There is no role for an expansion of the gas industry.

And yet, momentum in the support for gas investment is building. Leaked draft recommendations from the government’s top business advisers support a gas-led economic recovery from the COVID-19 pandemic. They call for a A$6 billion investment in gas development in Australia.

This is a terrible idea. Spending billions on gas infrastructure and development under the guise of a COVID-19 economic recovery strategy — with no attempt to address pricing or anti-competitive behaviour — is ill-considered and injudicious.

It will not herald Australia’s economic recovery. Rather, it’s likely to hinder it.

The proposals ignore obvious concerns

The draft recommendations — from the National COVID-19 Coordination Commission — include lifting the moratorium on fracking and coal seam gas in New South Wales and remaining restrictions in Victoria, and reducing red and “green tape”.

It also recommends providing low-cost capital to existing small and medium market participants, underwriting costs at priority supply hubs, and investing in strategic pipeline development.

But the proposals have failed to address a range of fundamental concerns.

gas is an emissions-intensive fuel
demand for fossil fuels are in terminal decline across the world and investing in new infrastructure today is likely to generate stranded assets in the not-too-distant future
renewable technology and storage capacity have rapidly accelerated, so gas is no longer a necessary transition resource, contrary to Finkel’s claims
domestic gas pricing in the east coast market is unregulated.

Let’s explore each point.

The effect on climate change

Accelerating gas production will increase greenhouse gas emissions. Approximately half of Australian gas reserves need to remain in the ground if global warming is to stay under 2℃ by 2030.

Natural gas primarily consists of methane, and the role of methane in global warming cannot be overstated. It’s estimated that over 20 years, methane traps 86 times as much heat in the atmosphere as carbon dioxide.

And fast-tracking controversial projects, such as the Narrabri Gas Project in northern NSW, will add an estimated 500 million tonnes of additional greenhouse gases into the atmosphere.

Accelerating such unconventional gas projects also threatens to exacerbate damage to forests, wildlife habitat, water quality and water levels because of land clearing, chemical contamination and fracking.

These potential threats are enormous concerns for our agricultural sector. Insurance Australia Group, one of the largest insurance companies in Australia, has indicated it will no longer provide public liability insurance for farmers if coal seam gas equipment is on their land.

Fossil fuels in decline

Investing in gas makes absolutely no sense when renewable energy and storage solutions are expanding at such a rapid pace.

It will only result in stranded assets. Stranded assets are investments that don’t generate a viable economic return. The financial risks associated with stranded fossil fuel assets are prompting many large institutions to join the growing divestment movement.

Solar, wind and hydropower are rolling out at unprecedented speed. Globally, renewable power capacity is set to expand by 50% between 2019 and 2024, led by solar PV.

Solar PV alone accounts for almost 60% of the expected growth, with onshore wind representing one-quarter. This is followed by offshore wind capacity, which is forecast to triple by 2024.

Domestic pricing is far too expensive

Domestic gas in Australia’s east coast market is ridiculously expensive. The east coast gas market in Australia is like a cartel, and consumers and industry have experienced enormous price hikes over the last decade. This means there is not even a cost incentive for investing in gas.

Indeed, the price shock from rising gas prices has forced major manufacturing and chemical plants to close.

The domestic price of gas has trebled over the last decade, even though the international price of gas has plummeted by up to 40% during the pandemic.

As Australian Competition and Consumer Commission chair Rod Simms declared in the interim gas report released last week, these price issues are “extremely concerning” and raise “serious questions about the level of competition among producers”.

To date, the federal government has done very little in response, despite the implementation of the Australian Domestic Gas Security Mechanism in 2017.

This mechanism gives the minister the power to restrict LNG exports when there’s insufficient domestic supply. The idea is that shoring up supply would stabilise domestic pricing.

But the minister has never exercised the power. The draft proposals put forward by the National COVID-19 Coordination Commission do not address these concerns.

A gas-led disaster

There is no doubt gas producers are suffering. COVID-19 has resulted in US$11 billion of Chevron gas and LNG assets being put up for sale.

And the reduction in energy demand caused by COVID-19 has produced record low oil prices. Low oil prices can stifle investment in new sources of supply, reducing the ability and incentive of producers to explore for and develop gas.

It’s clear the National COVID-19 Coordination Commission’s recommendations are oriented towards helping gas producers. But investing in gas production and development won’t help Australia as a whole recover from the pandemic.

The age of peak fossil fuel is over. Accelerating renewable energy production, which coheres with climate targets and a decarbonising global economy, is the only way forward.

A COVID-19 economic strategy that fails to appreciate this not only naïve, it’s contrary to the interests of broader Australia.

Samantha Hepburn, Director of the Centre for Energy and Natural Resources Law, Deakin Law School, Deakin University

This article is republished from The Conversation under a Creative Commons license. Read the original article.

Court warns of ‘irreversible consequences’

Climate-savvy shareholders unite

The litigation trend

Change is nigh

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Lead, not limit

The burning question

Privatised is not always best

The way forward

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The natural gas grid

Cost comparison

Additional risks

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Gas: bucking the trend

How did gas get this bad?

A worse problem than we thought

Seizing the opportunity

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Cutting out gas

Switching to all-electric homes

Zero-carbon buildings

An economically sensible move

Should we be cooking with gas?

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Scare-tactics won’t resolve the climate emergency

We need to address the ‘energy trilemma’

What is it with the federal government and gas?

I’ll say it again: renewable energy is the future

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The proposals ignore obvious concerns

The effect on climate change

Fossil fuels in decline

Domestic pricing is far too expensive

A gas-led disaster

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