From bridge fuel to background noise: Another blow for gas | RenewEconomy

From bridge fuel to background noise: Another blow for gas

It was meant to be the year of gas, but a drumbeat of news has made it the fuel to forget.

Credit: AAP Image/Lukas Coch

It was meant to be a good year for gas: a convenient global health crisis that smashed the global economy turned the attention of governments to economic recovery. After enjoying a full decade of unquestioned authority on what’s good for jobs and the economy, the fossil fuel industry expected and received primary attention when it came to recovering from the COVID19 pandemic, with the government establishing a clear narrative. Australia will be undergoing a “gas-fired recovery“, announced only a few months after climate change contributed to some of the worst bushfires in history.

It isn’t 2012 anymore. A strong government announcement and some extremely questionable appointments should have been enough for the whole process to bubble away quietly in the background, inflating the industry using government power and taxpayer’s money. In 2020, the incredible global drumbeat of economic, social and political climate action has completely changed the game. A collection of countries have announced net zero targets. Gas is rapidly losing support in Europe as strict funding rules cut off the fuel from large sums of cash. A slew of reports into climate pathways into the future all clearly or subtly get the same message across: the only way out of this mess is by ditching gas, along with oil and coal, as these three together are the primary causes of the climate curse. Investors have noticed the incredible direct environmental and climate impacts of America’s dirty gas industry, and plan to discard it accordingly.

Another beat on the drum: the Grattan Institute, an independent think tank financially supported by large mining and fossil industry players like Woodside and BHP, has published an extremely blunt report entitled “Flame out: the Future of Natural Gas”. The report highlights that “gas will only ever play a supporting role in Australia’s transitioning electricity system, and Scott Morrison’s threat to build a new gas generator in New South Wales is an unnecessary and ‘heavy-handed’ intervention”.

It is quite a wide-ranging document, and most importantly, strikes at the heart of every single line of argument deployed in defence of Australia’s ‘gas fired recovery’. Gas as a pathway to massively boosted employment, for example, has become a core theme in the Federal government’s messaging. But the Grattan report simply quantifies the actual jobs associated with gas-intensive industries, and finds that centralising the country’s COVID19 economic recovery on this sector will not have a significant impact on the country as a whole. Gas-intensive industries make up 1.3% of total manufacturing employment, and 2.4% of manufacturing activity, and comprises, in total, 0.1% of the national economy.

For power generation too, the report confirms what has been a constant refrain from energy market analysts for years now: gas is destined to decrease, not increase, as the share of renewables begins to spread outward over the next decade. Any effort to increase that gas role will only result in higher emissions, fewer renewable projects and higher electricity prices. The language in the report is unequivocal. “Today, the dream of gas as the critical transition fuel is dead, at least in eastern Australia. Gas is expensive, and will stay that way”, write Grattan.

This has been on this case for a decade now: “Falling demand, rising gas prices and a renewable energy target that largely supports new wind energy mean new gas-fired electricity generation is unlikely to be required for at least the next decade”, they wrote in 2014. In fact, gas used in power generation peaked in that very year, and Grattan is confident about a rapid decline. Morrison’s recent stunningly clumsy intervention into NSW’s energy market to replace Liddell with a 1,000 megawatt gas-fired power station is described in this report as ‘heavy-handed‘.

The final blow is to the use of gas in households. As I’ve recently explored elsewhere, Australia’s rapidly decarbonising grids mean household gas is a bad option that locks in expense, air pollution and high emissions. In fact, Grattan goes so far as to suggest a country-wide moratorium on the connections of new homes to fossil gas – something the gas industry must be truly incensed by, given their strong recent focus on locking new homes into gas heating and cooking. This is, essentially, targeted at Victoria, a state which has the lion’s share of household gas usage. But there’s little clarity on the state government’s appetite for this, and a new gas import terminal is currently under consideration, which may give some hints to the future direction.

The report itself also highlights a common theme in the energy transition: we are only just now coming to realise how deeply wasteful a fossil-fuelled lifestyle is, with a large proportion of the total emissions released historically attributable to energy that was never used. While finding that, of course, all-electric homes are far cheaper in the long run, it is also worth dwelling on exactly how significantly electrification reduces total energy demand due to the sheer efficiency of electric appliances:

And that is a major reason why converting from gas to electricity saves emissions in South Australia and New South Wales already, and very soon in remaining regions (a conservative estimate that excludes rooftop solar, ACT’s 100% zero carbon power purchases and assumes AEMO’s ISP central scenario):

The gas-fired recovery was a bad idea when it was announced, but it would have been tough to predict, back in April, just how significantly the dream would be shattered, and how quickly. Centralising an entire country’s recovery on this vanishingly minor fuel which is very badly exposed to climate risk is already proving to be pointedly embarrassing.

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