The Morrison government says it will spend up to $600m on a new gas-fired power plant in New South Wales – the latest in a series of announcements dedicating taxpayers funds to greater fossil fuel use.
Meanwhile, the International Energy Agency has released a landmark report saying there should be no new investments in coal, oil or gas if the world is to keep open a narrow possibility of meeting the goals of the Paris climate agreement and reaching net zero global greenhouse gas emissions by 2050. It has laid out a pathway that could get the world there.
What gives? Here’s what you need to know.
So what is the latest gas announcement?
The energy and emissions reduction minister, Angus Taylor, says unallocated funding in last week’s budget will be committed to the public-owned Snowy Hydro Ltd to build a 660MW gas plant at Kurri Kurri in the Hunter Valley.
An environmental impact statement (EIS) lodged with the NSW government shows the Kurri Kurri plant would be rarely used – which in itself is not necessarily a big deal.
It would be a “peaking” gas plant, designed just to be turned on to fill gaps when needed. Snowy Hydro says it expects the plant will be just 2% of its full capacity across the year. It would be expected to be powered initially by diesel – an even more expensive and polluting fuel – before receiving its gas supply.
Taylor suggested on Wednesday that it could also use some hydrogen blended in with the gas to lower its emissions. The Snowy Hydro EIS said there was potential for this in the future should hydrogen became economically viable but it would require the plant to be modified.
The Kurri Kurri announcement followed EnergyAustralia saying it would build a 316MW gas plant, Tallawarra B, with $83m in NSW and federal government support. That plant has been described as a gas-hydrogen hybrid – it has committed to blending in 5% of hydrogen into the gas fuel from 2025.
Why is the government investing in gas power?
Taylor and Scott Morrison say another 1,000 of new “dispatchable” electricity – that, unlike solar and wind, can be called on when needed – is needed when the Liddell coal-fired plant shuts in 2023.
It says this must be from burning gas, which it says is essential to the future grid. Morrison warned nine months ago that the government would build this amount of gas capacity if the private sector didn’t.
The government has wavered on the actual figure a bit – Morrison told the ABC last year the gap was about 250MW – but has returned to the 1,000MW goal set in September last year.
Taylor says the two plants announced this month are part of the government’s much-vaunted “gas-fired recovery” from recession.
Does this stand up to scrutiny?
Not according to many energy analysts, the climate science community, or the head of the government’s Energy Security Board, Kerry Schott.
There are a long list of arguments against the government investing in new gas, from a variety of angles. They include:
Schott telling Guardian Australia, and the government, that the case for a gas plant in the Hunter Valley “doesn’t stack up” commercially given there is an abundance of cheaper and cleaner alternatives flooding the market.
The Australian Energy Market Operator (Aemo) finding there is no need to replace the exiting Liddell coal plant in 2023 because the gap to ensure grid reliability was only 154MW, and that has already been covered by other commitments.
A taskforce advising governments about the impact of the Liddell closure backing this up by finding NSW did not find an additional 1,000MW to keep the lights on, and listing a range of committed and probable projects that it found would be “more than sufficient”.
Aemo finding that while between 6 and 19GW of new dispatchable power would be needed over the next 20 years under an optimal future grid – ie, a grid that runs nearly entirely on solar and wind as coal is pushed off the field. It could come from a range of sources including batteries, pumped hydro and demand management. It said new gas was an option but – in apparent contradiction of Morrison’s claims that gas generation would bring prices down – that it was likely to be more expensive than other options.
That by directly interfering in the electricity market the federal government is likely to further discourage the private investment needed to deliver the huge amount of dispatchable generation needed over the years ahead. This argument suggests an overarching policy that sets an emissions trajectory – such as a carbon price – would be a cheaper and more effective approach that could guide private investment.
Last, but by no means least, gas is a fossil fuel that releases about half the emissions of coal when burned, and contributes even more to global heating once methane that leaks during extraction and piping is counted. The argument is backing the option to support the electricity grid that adds greenhouse gas emissions when there are cleaner and cheaper alternatives.
Sounds comprehensive. How does the government respond?
It says the new capacity is needed to keep prices down, and quotes the former chief scientist Alan Finkel as saying gas is the perfect complement to solar and wind.
Finkel’s view on this is contentious, and was criticised by 25 scientists in a letter last year, but he maintains gas has played a role in other places where they have moved away from coal in past decades – England and California, for example – and could allow for a quicker transition to a mostly renewable grid. Opponents point out there were fewer cheap alternatives to gas when those other places made the shift.
The government’s use of Finkel’s advice is selective. He has also argued the country should be aiming to use as little gas as possible given it is a fossil fuel. By contrast, Morrison and Taylor say they want to significantly expand the amount of gas available for use in Australia, and say it is good for the climate.
On emissions, Taylor and Morrison argue Australia is doing much better than some other countries because its emissions are already 19% lower than they were in 2005.
The parts they leave out:
Most of the reduction is due to a substantial drop in land-clearing and native forestry in some states and has had little to do with restructuring a still mostly a fossil fuel-based economy.
About two-thirds of the 19% cut came when Labor was in power federally, not the Coalition.
A small chunk of the 19% is due to coronavirus-related shutdowns last year. Emissions from some sectors, such as transport, may increase this year.
Official government projections released in December forecast there would be only a 6.8% fall over the decade to 2030, with emissions from transport, mining and agriculture either flatlining or increasing under existing policies.
The Morrison government has taken steps to slow the shift to a clean energy grid by allowing federal support for large-scale renewable energy to lapse after the national renewable energy target was met two years ago.
Most comparable nations, including all members of the G7, have shifted gears in recent months and increased their commitments for the next decade to make much deeper cuts in emissions than Australia is planning.
Meeting some of the targets will be challenging, but they are increasingly introducing policies to meet them – see, for example, Joe Biden’s proposals in the US and what Boris Johnson is doing in the UK.
Is there any scenario under which Australia would build more gas plants while cutting emissions?
Perhaps.
Aemo found gas-fired power would decline under the cheapest approach to building a future grid. It already provides less than 7% of electricity and that is expected to shrink over the next few years.
But there is an argument that it would make sense to have more gas-fired capacity available if a number of coal plants shut earlier than scheduled due to the influx of solar making them unviable economically.
Under that scenario – which would be good for the climate, but could be problematic for a grid that is transforming in the absence of an overarching national policy – gas plants would be used less often than cheaper batteries and pumped hydro storage, but could fill some gaps in the system, particularly when backup was needed for longer stretches. It would effectively be taking an “all of the above” approach to ensuring the system worked.
The result may be that the number of gas plants connected to the grid increases, but less gas is burned overall.
But Aemo suggested this would not be the cheapest way to address the problem. If governments build stronger electricity connections between the states as planned, that could do the same job. It would significantly increase capacity to move supply across the eastern seaboard, and the need for gas backup would fall.
And it should be noted, of course, that this is not the government’s argument for building gas power. Morrison and Taylor say they want to extract and burn more gas to drive economic growth.
The budget included $59m in federal funding for gas expansion and $30m to support a company owned by the billionaire Andrew “Twiggy” Forrest on plans for another proposed new gas-hydrogen plant at Port Kembla.
The federal government has criticised and vetoed attempts by state governments and federal agencies to accelerate the spread of renewable energy, has appointed fossil fuel advocates to advise on energy policy and – as we said before – not acknowledged the role gas plays in the climate crisis.
OK, then. What did the International Energy Agency say?
The IEA is a traditionally pretty conservative organisation on the shift away from fossil fuels. The oil and gas industry, in particular, has cited its previous reports to defend its case that new gas projects can still be built as the world addresses climate change.
Its report on Tuesday changed all that. It found there was a “narrow and extremely challenging” pathway for the world to both meet the goals of the Paris agreement and get to net zero greenhouse gas emissions by 2050 – but it meant there should be no new investments in oil and gas fields and coal power plants, starting immediately.
It found wealthy developed countries such as Australia should be moving to net zero emissions first, before 2050. That means phasing out dirty coal plants by 2030, having zero emissions electricity grids and banning new petrol and diesel car sales by 2035.
Global investment needs to shift much more rapidly away from fossil fuels to clean and zero emissions solutions. Spending on clean energy should more than double to US$5tn (A$6.4tn) a year by 2030.
Crucially, the IEA chief Fatih Birol said the technology needed to reach net zero was largely already with us – but it needed support to be developed much more rapidly.
