Critics of the Albanese government’s gas strategy seem content for governments to prolong the lives of coal-fired power stations at taxpayers’ expense. Or they are more relaxed than most householders about nightly blackouts.
Australian governments, state and federal, are going flat out with the energy transition. During the day, solar and wind already generate most of the nation’s electricity needs. If Australia is to take advantage of the opportunity to export green iron and aluminium to Japan, China and Korea, it will need to generate much more renewable energy.
But at night, the demand for electricity will continue to far exceed supply from less-reliable wind generators. On top of household usage, factories on nightshift will continue to need reliable electricity.
And gas will be needed for producing chemicals and plastics for use in the production of everyday products including cheap clothing sold in large department stores.
Of course, we could let all those jobs and factories go overseas to east and south Asia where they are produced with fossil fuels but that would be hypocritical.
In time, big batteries will play an important role in replacing coal-fired generators for electricity supply at nights, as will pumped hydro. But commercially available big batteries can currently discharge for only four hours and it’s taking a long time for large-scale pumped hydro to come on stream.
Construction of Snowy Hydro is many years behind it original, overly optimistic schedule and its costs are blowing out by many orders of magnitude.
All the while, the existing fleet of coal-fired power stations is getting older and less reliable.
Ten coal-fired power stations have closed since 2012 and retirements have been announced for almost all the remaining fleet. Owners have announced that half will be gone by 2035, but the Australian Energy Market Operator (AEMO) forecasts that the remaining fleet will be retired 2-3 times faster than those announced closure dates.
As these ageing coal-fired plants become more unreliable, their owners won’t have any incentive to refurbish them.
Those arguing against new gas-fired power generation are condoning taxpayer subsidies for ageing coal-fired power stations.
It’s already happening. The Victorian government is underwriting the continued operation of the Loy Yang A brown-coal power station.
Meanwhile, Origin Energy and the NSW government are in talks to extend the life of the Eraring coal-fired power station in response to fears of potential blackouts between 2025 and 2027 – a move opposed by former state treasurer, Matt Kean.
As the transition to renewables continues, the climate movement should ask itself: is it better to replace highly emitting and increasingly unreliable coal plants with a mix of lower emissions from cheaper gas, renewables and batteries, or is it better to lock in higher electricity prices and carbon emissions by keeping coal plants operating longer?
Given the urgency of emission reductions, it seems an indulgence to wait until hydrogen power generation or some other not-yet-commercial, low-emissions technology is ready for deployment at scale.
That’s the choice we face – expensive delay or pragmatic transition that includes a crucial role for gas.
The gas strategy has been heavily criticised for allowing the opening of new gas fields, but its analysis makes clear new gas will be needed to support more renewables at home, as well as supporting our trading partners in their energy transitions.
Japan and Korea lack the solar and wind resources to switch quickly to renewables. In addition to keeping the lights on and their factories operating, they need gas for heating.
Yet as signatories to the Paris Agreement they have made commitment to achieve zero net emissions. They can’t make that transition without gas.
Australia can and should help Japan, Korea and China make the transition to net zero through the supply of gas.
Eventually, Australia could use its abundance of solar resources to add green value to iron and bauxite and to export hydrogen as ammonia for energy usage. This would enable those countries to export zero-carbon products to the European Union and Britain without being penalised by their Carbon Border Adjust Mechanisms (CBAMs).
The only option worse than prolonged taxpayer funding to keep coal-fired power stations running is indefinite funding to do so. That’s the Coalition’s plan – keep coal plants emitting until the 2040s and build new ones as old ones die, waiting for nuclear power generators to be installed and generating power at treble the cost of renewables.
The gas strategy announced last week by the Albanese government is properly seen as a means of accelerating the energy transition in Australia and abroad. It sure beats obligatory candlelit evenings and paying coal-fired power stations to stay open for extended periods of time.
Craig Emerson is managing director of Emerson Economics. He is director of the APEC Study Centre at RMIT University, visiting fellow at the ANU and adjunct professor at Victoria University’s Centre of Policy Studies. Emerson Economics has no gas industry clients.