Fossil fuel executives gathered in Adelaide last week for a conference of the Australian Petroleum Production and Exploration Association. They spent much of it making what might seem an audacious claim: that the gas industry is a solution to the climate crisis.
Senior Labor and Coalition MPs turned up to lend their support, and offer to do the industry’s bidding. The head of Santos, Kevin Gallagher, argued it showed gas developers would “ultimately find ourselves on the right side of history”.
What does the evidence say? Let’s look at some of the key claims made.
Is gas ‘part of the solution’ and vital to reaching net zero?
The federal opposition leader, Peter Dutton, summed up the mood at the Appea conference: “The road to net zero emissions – for Australia, the region and the world – is one we can only travel with gas.”
At one level, this is just a statement of the obvious. Gas is currently relied on as an energy source. So is coal. Neither can be turned off immediately.
But, just as obviously, burning these fossil fuels is the main cause of the climate crisis. Logic says we need to use as little of them as possible as soon as we can.
The argument at the conference was the opposite – that the path to net zero was to open up new gas fields. Under this logic, adding vast new sources of greenhouse gas emissions is good for the climate.
It’s a remarkable claim. The International Energy Agency is among those to have warned no new gas fields should be opened if the world is to meet internationally agreed climate goals.
Gas proponents argue using more gas will allow a quicker move away from coal, which emits more. This is the “gas is a transition fuel” argument. They say there are cases where it has happened – in the UK, for example, where the coal industry crashed decades ago for reasons unrelated to the climate crisis and gas helped fill that breach.
But these are historic arguments from a time when there were no clean alternatives. Now there are. Renewable energy – solar and wind – can be substituted for gas in many cases.
Experts say the question we should be asking is: how quickly can we move away from gas? And how much gas do we need while that happens, and to meet demand for the few cases in which there is not yet a realistic alternative?
The energy and climate change director at the Grattan Institute, Tony Wood, says the role of gas becomes “progressively smaller and smaller” as net zero goals get closer for a simple reason: “It’s a fossil fuel and it’s increasingly expensive.”
“The role of government is to manage the transition away from gas,” he says. “It won’t be a gas-led recovery and it won’t be an easy walk in the park. Part of the solution is [for gas] to not be there anyway. The politicians have not got that narrative nailed yet.”
Is gas essential to decarbonise the electricity grid?
The Australian Energy Market Operator says it is likely some gas-fired power will be needed well into the future. Aemo’s integrated system plan – a blueprint for the optimal future grid – suggests “peaking” gas plants, that can be turned on and off quickly, will be needed as backup when there is less sun and wind and batteries and other forms of storage, such as pumped hydro, are stretched beyond capacity.
But its forecasts suggest less gas will be burned than today. And gas power is already a bit player in the national market.
What about in other industries – manufacturing, for example?
Gas is an important fuel source for some manufacturing industries such as plastics, alumina and chemicals, which use it for processes that require extreme heat and as a feedstock.
Solar and wind can not replace gas in these processes. The expectation is green hydrogen, made with renewable energy, may be able to. It isn’t affordable or available at scale yet. The Albanese government announced $2bn in this month’s budget to try to kickstart a renewable hydrogen industry.
In the meantime, manufacturing uses a relatively small proportion of the gas extracted in Australia: about 400 petajoules a year, or 7% of the total. Electricity generation uses a similar amount.
So is there a gas shortage in Australia?
No. Enough gas is collected to meet demand within the country several times over. Three-quarters of it is compressed into liquefied natural gas (LNG) and sold in Asia. Another 7.5% is used by the gas export industry (turning gas into LNG is an energy hungry business).
But southern states do face a potential gas shortfall. This is the result of political and business decisions.
Western Australia is the exception: it has a reservation policy, requiring 15% of all gas be kept for local use. The result has been no shortage and much cheaper gas than on the east coast.
Will demand for gas remain as high as it is today?
Forecasts suggest it won’t. In Victoria, the state most reliant on gas for household cooking and heating, and where the potential for a shortfall in coming years appears greatest, a government-appointed expert panel has recommended the fuel be “largely phased out” by 2035 as part of a plan to cut emissions by 75%. The Australian Energy Market Operator also projects a drop in use in other states.
Globally, the IEA has forecast that the recent “golden age” of gas development will end by 2030 and that Australian exports will decline sharply after 2040. A three-year-long Australian study backed by industry reached a similar conclusion. The future is unwritten, but the evidence suggests companies backing new gas fields expected to run for decades shouldn’t be confident about their investment.
Is gas cleaner than coal – and how does it compare to renewables?
Gas advocates argue it emits about half as much CO2 as coal to create the same amount of electricity. But those numbers can be misleading as they do not count things that can make the climate impact significantly greater.
They don’t include fugitive leaks of methane, a particularly potent greenhouse gas, or CO2 released creating the energy that is used during the extraction, compression and transportation of gas. And they don’t factor in the efficiency of the power station in which the gas is ultimately burned. An inefficient gas plant can be nearly as dirty as an efficient coal plant.
There is little detailed information on the genuine footprint of gas, but a decade ago one study found when LNG was exported for electricity generation it was at least 22 times dirtier than wind energy and 13 times dirtier than nuclear power.
Would having more gas keep energy prices lower?
Since exports opened up about a decade ago, the gas price on the Australian east coast has been pegged to the price in Asia. It made it more expensive than the alternatives: solar, wind or coal. Gas prices have jumped even higher since Russia further invaded Ukraine and European countries sought to replace Russian gas with other sources.
While there is a general principle that more supply lowers prices, Tony Wood says the reverse actually applies for gas in Australia. Why? The gas that is relatively cheap to extract and sell has mostly already been accessed and most remaining fields will be more expensive to mine.
Can carbon capture and storage give the industry a future?
Not on current evidence.
CCS was a major focus at the Appea conference. The federal resources minister, Madeleine King, described CCS – capturing emissions before they go into the atmosphere and pumping them back underground – as the “single biggest opportunity for emissions reduction in the energy resources sector” and said the technology could currently capture up to 44m tonnes of CO2 a year.
This claim needs some context. The 44m tonne capacity is just 0.12% of global emissions released by burning fossil fuels in 2021.
CCS has had billions of dollars of government grants and subsidies committed to it, including an estimated $4bn in Australia, but the technology has not meaningfully provided emission cuts.
A flagship project at Chevron’s giant Gorgon LNG development in WA, backed by $60m in government funding, has been beset with problems and missed operational targets since starting in 2016. It is still running at only one-third of its capacity, storing 1.6m tonnes last financial year while emitting 8.3m tonnes.
To date, the few CCS developments in operation are mostly trying to capture CO2 that leaks as gas is extracted, and not addressing the emissions released when gas is compressed into LNG or the fuel is burned – which is where most of the pollution comes from.
There is also the issue of cost. Even if gas-fired power stations fitted with CCS became the norm, it would significantly push up the price. The IEA has estimated each tonne of CO2 captured would add about US$90 to the cost of an electricity source that’s already more expensive than renewable energy.