You don’t see many government ministers turning up at coal conferences these days. The industry will continue for a while – thermal coal power still provides about 60% of electricity on the east coast, and exports this year top $60bn – but it is broadly agreed it’s on the way out.
The same cannot be said for gas, the other fossil fuel that Australia excels at digging up and selling overseas.
This week the annual conference of the Australian Petroleum Production and Exploration Association – the gas and oil industry lobby group – is being held in Adelaide. Speakers include the federal resources minister, Madeleine King, the opposition leader, Peter Dutton, and state and territory government representatives.
The main sponsor is Woodside Energy, which last year vaulted into the world’s top 10 producers after taking over BHP’s petroleum assets. It has big expansion plans, including opening controversial gas fields off Western Australia that are sometimes described as “carbon bombs” due to the potentially billions of tonnes of heat-trapping CO2 that would be released if they are developed.
Not surprisingly, the marketing slogan at the Appea conference – “Lead, shape, innovate – accelerate to net zero” – tells a different story. It suggests that, rather than a major contributor to the climate crisis, gas industry expansion is a part of the solution.
There is plenty of independent evidence to say this is nonsense, but the claim that gas is good persists. It is buttressed by some media and the politicians that turn up to assure the industry of its importance.
An example came in a conference speech – more a pep talk, really – by South Australia’s energy minister, Tom Koutsantonis. He told gas executives he understood they must feel “under siege” after months of criticism (not to mention battles over price caps and tax increases) and promised that the Labor state government would remain a “resolute partner”, prepared to “speak truth to power and truth to people who want to argue for your demise”.
He went further: “This industry … is a key pillar in our path of decarbonisation … We cannot have net zero without you. I cannot decarbonise our steel industry without this industry. We can’t decarbonise our electricity industry without this industry.”
Koutsantonis later told Guardian Australia he wanted to get to 90% renewable energy generation as fast as possible, and that meant backing gas expansion so it could fill gaps that other technologies couldn’t.
The minister’s speech was followed by a preview of an upcoming Appea “public awareness campaign” – an ad – about the “important role of gas in our lives”. It claimed gas was a main source of electricity generation, 50% cleaner than coal and already picking up the load left behind as coal plants close.
In his speech on Thursday, Dutton is going harder, telling gas executives to “fight for yourselves” against Labor’s “renewable zealotry” in the name of “the country’s future prosperity”.
What to make of these statements? Perhaps that Appea would benefit from a bit more honesty about its future from the conference main stage.
The gas industry is a major source of greenhouse gas emissions, and probably a significantly bigger source than is widely appreciated. Billions of dollars promised for carbon capture storage (CCS) programs have done little to nothing to change that.
The main component of gas is methane. Yes, it is less polluting than coal when burned. But methane is much more powerful at trapping heat than CO2, and global studies have found far more methane in the atmosphere from fossil fuel operations than companies say they have released. Any discussion of gas expansion should acknowledge its full potential impact on the climate, and people’s lives.
As Koutsantonis points out, the Australian Energy Market Operator says gas has an ongoing role to play in helping back up solar and wind power. It is expected “peaking” gas plants will be called on if wind and solar capacity is reduced for longer periods (known in Germany as a “dunkelflaute”) than batteries and other storage can cover. But this isn’t expected to happen much. The amount of gas burned for electricity is forecast to fall.
The reality is that gas power is already in decline in the national grid. Like coal, it has been squeezed by surging solar and wind. It provided just 6% of generation last year.
Aemo forecasts suggest gas use in South Australia could fall about 35% over five years as it relies more on interstate transmission lines for power. In Victoria, an expert panel has recommended gas be “largely phased out” by 2035 as part of a state government plan to embrace electrification and cut emissions by 75%.
Nationally, the Grattan Institute has warned the industry it should abandon “wishful thinking or living in denial” and accept gas use will shrink for economic and environmental reasons, and suggested a path it says could lead to a green steel industry based on renewable energy.
The projected trajectory for gas is similar on the international stage. A report by the Australian Industry Energy Transitions Initiative, backed by industrial companies including Woodside, found gas exports were likely to slump after 2025 and fall nearly 80% by 2040. The International Energy Agency reached a similar conclusion: that the “golden age” of gas development will end by 2030 and Australian exports will decline sharply after 2040.
Some appear to be paying attention. Origin Energy sold its stake in the Northern Territory’s Beetaloo Basin and pledged to review other exploration permits. But clearly not everyone is convinced.
Instead, a major theme at the Appea conference, from Madeleine King down, is the need to develop CCS for gas to reach zero emissions. It remains the industry’s magic fairy dust that maybe, one day, could give it a future.
If that’s to ever prove true, it appears gas companies will mostly need to stump up for the funding themselves. Labor has redirected $250m in CCS funding promised under the Coalition to other climate programs, and the industry minister, Ed Husic, has made headlines for stating the obvious: the technology has been around a long time and still isn’t proven at scale.
The government has also pledged $2bn to kickstart green hydrogen, made with renewable energy and considered a potential substitute for fossil fuels should it prove competitive. Taken together, it gives a pretty clear picture about where hard heads actually believe the future lies.
