Woodside’s claim that gas displaces coal not borne out by evidence – instead it displaces renewables

Woodside CEO Meg O’Neill has used a speech at the Melbourne Mining Club on Thursday to repeat claims that Australia’s gas exports are helping to displace coal in Asia, despite evidence showing it actually helps displace renewables.

O’Neill used her speech, delivered at the Melbourne Town Hall, to call for an energy policy debate “based on science and facts, not wishful thinking” before claiming gas would be “critical” to help decarbonise Asia by displacing coal.

“The reality is we get far more impact from replacing coal in Asia with Australian (liquefied natural gas), than we do from asking Australian consumers to switch their household appliances from gas to electric,” O’Neill said.

O’Neill, who also serves as chair of Australian Energy Producers, the country’s oldest and longest-running oil and gas industry association, said the Australian government should approve Woodside’s massive gas developments, such as extending the life of infrastructure associated with the North West Shelf Project that began in 1984.

She also said embracing gas would help Australia compete with the US at a time where President Donald Trump is imposing retaliatory tariffs, crushing renewable energy investment and approvals, and telling the country’s oil and gas industry to let rip.

Claims that more gas production and exports will help to displace coal use in other parts of the world, particularly Asia, are common talking points shared among senior executives at fossil fuel producing countries in countries such as Australia, Canada and the US that are all planning on selling their gas in the Asia market at the same time.

Beyond the economics of the situation – if producers in Australia, Canada and the US all over-produce gas for sale to Asia a gas glut will be exacerbated and prices will fall – the available evidence suggests gas is more likely to displace renewables than coal, while increasing emissions.

A 2024 LNG Export Study published by the US Department of Energy – that remains on the departmental website at the time of writing despite a purge of government systems for information related to climate change by the new administration – examined claims by the oil and gas industry there that increasing gas production would displace coal in regions such as Asia.

It found that for any reduction in coal use, the corresponding fall in renewable energy would be nearly double. Modelling work found that in scenarios where the US increased its gas production, coal consumption decreased by 13%, renewable energy production decreased by 25%.

A separate 2024 study from Cornell University found that the effect on emissions from overbuilding gas would be profound. Because it takes gas to make gas, factoring in the emissions created during processing and transport, the study found the greenhouse gas footprint of LNG exports is 33% worse than coal.

There is also no good evidence that existing supplies of gas are helping to displace coal in Asia.

When the Institute of Energy Economics and Financial Analysis (IEEFA) investigated how things were developing in China, it found that gas only made up about 3% of the country’s power grid even as renewables surged to 16%, bringing down the share of coal from 70% to 61% since 2015.

Senior gas analyst with IEEFA Kevin Morrison said that despite 60 per cent of Australian gas exported through Queensland going to China, “it hasn’t helped with reducing emissions”.

“Despite claims from the gas industry that it’s a transition fuel and it helps lower emissions, there’s been no sign that the gas exports have replaced coal,” Morrison said.

“There is no evidence this gas is replacing coal, so it’s not reducing emissions. It’s adding to emissions.”