Focus on Climate Mitigation rather than Climate Adaptation The total burden of climate change consists of three elements: the costs of mitigation (reducing the extent of climate change), the costs of adaptation (reducing the impact of change) and the residual impacts that can be neither mitigated nor adapted to (Fankhauser, 2009).
Climate Mitigation involves making the impacts of climate change less severe by preventing or reducing the emission of greenhouse gases (GHG) into the atmosphere. This is either by reducing the sources of these gases such as replacing fossil fuel combustion with renewable energy production or by enhancing the storage of these gases such as increasing the size of forests (European Environment Agency, n.d.). Climate Adaptation is the process of adjusting to the current and future effects of climate change such as anticipating the adverse effects of climate change and taking appropriate action to prevent or minimise the damage they can cause (European Environment Agency, n.d.). For the purposes of the argument and clarity, responses such as migration, relocation and resettlement are included with climate adaptation and behavioural changes such as decreasing food waste are included with climate mitigation (IPCC, 2023). The Intergovernmental Panel on Climate Change (IPCC) stated in its 2023 report (IPCC, 2023) that Global GHG emissions have continued to increase that will lead to increased global warming, reaching a 1.5C increase before 2040. Furthermore, they noted that every increment of global warming will escalate the risks, projected adverse impacts and related losses and damages from climate change, and will intensify both multiple and concurrent hazards (IPCC, 2023). The effects of climate change are already here, as noted by the panel “human-caused climate change is already affecting many weather and climate extremes in every region across the globe” which has led to “widespread adverse impacts on food and water security, human health and on economics and society and related losses and damages to nature and people”. They also noted that “Vulnerable communities who have historically contributed the least to current climate change are disproportionately affected” (IPCC, 2023). The IPCC notes that some future changes are unavoidable and/or irreversible but “can be limited by deep, rapid and sustained global GHG reduction”, with the likelihood of abrupt / irreversible changes increasing with higher global warming levels as well as increased probability of low-likelihood high impact changes/events. The impacts of climate change are with us now. The acceleration of adaptation efforts together with deep, rapid, and sustained mitigation will decrease losses and damages related to climate change for both humans and nature. However, adaptation options often have long implementation times, therefore acceleration of adaptation within this decade is essential to close the “adaptation gap” (IPCC, 2023). Adaptation can also bring additional benefits such as improving agricultural productivity, innovation, health and wellbeing, food security, livelihood, and biodiversity conservation (IPCC, 2023). However, it should be noted that cost-effective adaptation is unlikely to reduce impacts to zero, as there will be substantial residual damages that adaptation cannot avoid (Fankhauser, 2009). Furthermore, the longer emission reductions are delayed, the fewer effective adaptation options will be available. There are limits to adaptation and adaptive capacity for human and natural systems at global warming even at 1.5°C. Losses and damages and limits to adaptation are also strongly concentrated among vulnerable populations and will be increasingly difficult to avoid with increased global warming (IPCC, 2023). Adaptation can be seen as a “local, private good with often clear and immediate benefits”, whereas mitigation can be seen as global, public good with future benefits leaving policymakers to choose adaptation (Rojas, 2019). Adaptation that focuses on areas and risks in isolation (e.g. seawalls) often lead to maladaptation over the longer term. These can “worsen existing inequities especially for Indigenous Peoples and marginalised groups and decrease ecosystem and biodiversity resilience” (IPCC, 2023). Effective adaptation involves the long-term planning and implementation of actions across sectors. These adaptive actions also need to be both inclusive and flexible in approach (IPCC, 2023). However, without addressing the cause of climate change through mitigation, adaptation alone will result in future generations bearing the brunt of climate change, with a lack of addressing GHG emissions compromising future generations rights to “life, liberty and security” (Gordign, cited by Rojas, 2019). Furthermore, over time, without effective mitigation efforts, the costs of adaptation are expected to increase rapidly and the ability to adapt diminish, leaving significant residual costs and damages (Fankhauser, 2009). As climate change is now a clear and present danger to our society and the natural world, both mitigation and adaptation are now necessary. However, the less we choose to mitigate today, the more adaptation we’ll need later and the less effective adaptation will become and the greater the divide will be between those that can afford adaptation and those that cannot (Rojas, 2019). The focus of the Newcastle Emission Reduction Plan is working to address the root cause of the problem of climate change through Climate Mitigation rather than dealing with its effects. It is suggested that a separate parallel process be initiated to plan cross-sectoral climate adaptation actions with a focus on inclusivity and flexible approach within Newcastle. References European Environment Agency. (n.d.). What is the difference between adaptation and mitigation?. Retrieved 24 May 2023, from https://www.eea.europa.eu/help/faq/what-is-the-difference-between Fankhauser, S. (2009). The costs of adaptation. Centre for Climate Change Economics and Policy Working Paper No. 8 Grantham Research Institute on Climate Change and the Environment Working Paper No. 7. Retrieved from https://www.lse.ac.uk/granthaminstitute/wp-content/uploads/2014/02/WorkingPaper7.pdf Intergovernmental Panel on Climate Change (IPCC). (2023). Climate Change 2023: Synthesis Report. Contribution of Working Groups I, II and III to the Sixth Assessment Report of the Intergovernmental Panel on Climate Change. Retrieved from https://www.ipcc.ch/report/ar6/syr/ Rojas, D. (2019). Climate Adaptation vs. Mitigation: what’s the difference, and why does it matter? The Climate Reality Project. Retrieved from https://www.climaterealityproject.org/blog/climate-adaptation-vs-mitigation-why-does-it-matter
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Offshore renewable energy infrastructure area proposal: Pacific Ocean off Hunter Submission from Newcastle Climate Change ResponseOffshore Renewable Energy Section
Department of Climate Change, Energy, the Environment and Water offshorerenewables@dcceew.gov.au 27 April 2023 To whom it may concern Offshore renewable energy infrastructure area proposal: Pacific Ocean off Hunter Submission from Newcastle Climate Change Response Thank you for the opportunity to provide a submission into the Offshore renewable energy infrastructure area proposal: Pacific Ocean off Hunter and taking the time to consider our submission. Newcastle Climate Change Response (NCCR) strongly supports offshore renewable energy development in Australia, and the designation of the Offshore Renewable Energy Area in the Pacific Ocean off the Hunter. NCCR is a group of friendly, passionate locals from all walks of life committed to the declaration Climate Change: Not on Our Watch. Through connecting with and growing diverse communities and providing a first place for concerned individuals to come, bound by principles of nonviolence, inclusion and relationality its purpose is to bring together anyone who wants to co-create the powerful and effective nationwide response necessary to keep the world within safe levels of warming for generations to come. NCCR is a ground-breaking interdisciplinary phenomenon that arose from Newcastle Law School’s Narratives of Climate Change Conference in 2018. NCCR is possibly different from what you might expect in a "local action group" - We are all about organic collective action as chosen by each of us, and empowering ourselves and everyone we know who is determined to stop climate change to do just that! Second, while we know that local and personal action is essential so that we can know we are doing our own individual part, our focus and context is intentionally and firmly global: Australia needs to be part of global action on this issue. NCCR is currently involved in the development of an ambitious emission reduction plan for the City of Newcastle Local Government Area through a participatory process that engages the community, industry and government. This project will create a detailed plan and city-wide commitment to rapidly reduce carbon emissions. NCCR recognises that the area proposed for this Offshore Renewable Energy Area is the Land and Sea Country of the Awabakal, Bahtabah, Biraban, Darkinjung, Karuah, Mindaribba, and Worimi peoples. First Nations must be thoroughly consulted in the development of projects in this area and included in the benefits from these projects. The Declaration of this offshore electricity area is a fantastic opportunity for Newcastle, Hunter and Central Coast regions to build the renewable energy infrastructure essential in tackling the climate crisis. The impacts of climate change on the environment are significant and severe. The present scientific consensus is that the earth's climate is warming due to human activity (https://climate.nasa.gov/scientific-consensus/ ), and the negative impacts of increased greenhouse gas emissions are measurable globally and nationally.[1] The eight hottest years globally have occurred in the last eight years, with the last decade warmer than any previous decade.[2] The average global temperature now exceeds 1°C above pre-industrial (1850-1900) levels and is expected to exceed 1.5°C between 2030 and 2052.[3] Australia has warmed faster than the global average and is on average 1.44 ± 0.24°C warmer than when national records began in 1910 with most of the warming occurring since 1950 with every decade since being warmer than the one before.[4] If compared to a pre-industrial (1850-1900) baseline, then by 2019 Australia had warmed by greater than 1.5°C.[5] To address the issue of dangerous climate change, Australia, along 196 other parties, is a signatory to the Paris Agreement, which entered into force on 4 November 2016. The Paris Agreement aims to strengthen the global response to the threat of climate change, by: Holding the increase in the global average temperature to well below 2°C above pre-industrial levels and pursuing efforts to limit the temperature increase to 1.5°C above pre-industrial levels, recognizing that this would significantly reduce the risks and impacts of climate change.3 As we see the impact of increased carbon emissions, we also find evidence of the impact on Australian native wildlife, the Australian people and the wealth of the nation as noted by the catastrophic Black Summer bushfires, crippling drought and floods. The urgency of the Climate Crisis shows that we need to take advantage of renewable resources where available, and maximise the opportunity to build offshore renewable energy off the Hunter Coast to allow for the potential for multiple offshore wind projects, increasing the viability of the region for offshore wind. To enable this opportunity the construction of renewable energy within this region needs to be given priority over other uses in this area. We are not concerned about the visual impact of wind turbines, in fact, they are far more desirable in our eyes than the numerous coal ships currently dotting our local horizon, which are a constant reminder of the world’s current fossil fuel dependence. However, keeping turbines 15 km from elevated areas such as Norah Head, and Port Stephens Headland may help secure social licence and increase community confidence and support in the development of offshore renewable energy. Newcastle, the Hunter and Central Coast has a skilled workforce, existing high voltage electricity grid connections (e.g. Munmorah, Eraring, Kooragang Island) and substantial deep-water port infrastructure at Newcastle Port suitable for construction and maintenance of off-shore renewable energy such as wind farms. Offshore renewable projects in the Area need to use local manufacturing where possible and to ensure that local workers can be trained up for these renewable energy jobs both in construction and ongoing maintenance. There are very few places in Australia that offer the facilities needed to build renewable energy on the mass scale required to address the Climate Crisis. The AEMO estimates that the Hunter Coast offshore wind zone has the capacity to host 10 GW of offshore wind farms (think 2 Bayswater and Eraring Power stations).[6] We call for strong well supported government planning processes, for planning and coordinating the overall economic evolution we currently are in. Governments’ gravitas, size, authority, and resources make them well suited to be a significant part in the overall planning of the larger campaign to diversify the economy towards a prosperous zero emission community. Offshore wind is a project which is part of this campaign. There are other equally important and interconnected projects in the campaign. Each project in the larger campaign will need to develop in concert with each other, aware of their own relative interdependencies. Users will need confidence that electricity will arrive at their site on time. Grid developers will need confidence that supply, and demand, will be available on schedule. Energy generators need to be sure of their markets. And so on. Broadly each other sector needs confidence that the others sectors will develop at an understood pace. These include:
A similar piece of national employment, skills and supply chain research is required to guide government decision-making for offshore renewable energy to gain an understanding of renewable energy supply chains, employment and skills, identify opportunities and barriers to building local capacity and employment, and plan actions to realise the opportunities associated with offshore renewable energy. The development of offshore renewable energy must be used as an opportunity to deliver a just transition to the local workforce and community. Climate action must be joined to a just transition at every step of the way. This means ensuring that projects and policies delivering the energy transition maximise the number and quality of jobs and community and First Nations benefits that they provide, and that there is a clear path for the workforce and communities from old industries to new industries. A regional Energy Transition Authority should also be established to support workers, plan for diversification and ensure the right training is available. RecommendationsThe Declaration should require that all licences issued in the area maximise the contribution of the project to the Australian economy and local communities, including:
First Nations must be able to provide free, prior and informed consent to both the Declaration and licensing process. At a minimum, existing rights must be fully respected. The Hunter Offshore Renewable Energy Area is a critical area for renewable energy development, because of the available grid and port infrastructure, the location close to large electricity loads, and the quality of the wind resource. Given the urgency of the climate crisis, development of renewable energy projects must be given precedence over other uses of the Hunter offshore area. The outer edge of the proposed Area is on the edge of the continental shelf with depths of between 200m and 1,000m deep. Installing infrastructure at such depths which will increase the technical challenge and cost of offshore wind projects, their viability and ultimately the cost of electricity. The Minister should look at all opportunities to expand the Area into waters that are less than 200m deep. The area south of Norah Head and more than 10 km offshore is 70m-200m deep and close to grid connection points, but has been excluded because Defence has said that they use it for military exercises. We note that this area is already covered by the PEP11 petroleum exploration permit. Defence should be encouraged to carry out exercises on other parts of the coast. The proposed Renewable Energy Area should be expanded approximately 30 km south towards the mouth of the Hawkesbury. The proposed 46km/25 nautical mile exclusion zone for the RAAF Williamtown base removes a significant portion of potential Area that is between 100-140m deep, that is close to grid connection points. Mitigation measures for radar and planes used in other countries should be implemented to expand the proposed Area for renewable energy development to the west, to a minimum of 15 km offshore. Petroleum Exploration Permit 11 (PEP11) covers a significant portion of the proposed Renewable Energy Area, and adjacent areas. PEP11 should be cancelled, and the existing gas exploration well securely and permanently capped so it does not interfere with renewable energy development. The Renewable Energy Area should be a minimum of 5 km from marine habitat protection zones: Great Lakes Marine Park and Hunter Marine Park. The Renewable Energy Area should be a minimum of 15 km from higher elevation lookout areas such as Tomaree Headland, and Norah Head. The Renewable Energy Area should be a minimum of 15 km from the nesting grounds of Australia’s rarest endemic seabird the Gould’s Petrel (Cabbage Tree Island, Boondelbah Island, and Broughton Island) which are approximately 5 km from Tomaree Headland.[8] Recreational fishers should be allowed to fish within the boundaries of offshore wind farms (as is the case in other countries such as the USA and UK). The Federal government should set a National Offshore Wind Target to provide certainty to the international community that Australia is serious about developing offshore wind and developing a strong local capability and industry. Offshore renewable energy implementation is part of a larger interconnected program including grid expansion, just transition, training and education, supply chain development, electrification of industry and development of new low emission industries. The Government needs to develop a well supported government planning process for the planning and coordinating this larger interconnected program. The Federal government needs to identify and assess employment and industry development opportunities associated with offshore renewable energy. In particular, detail our understanding of renewable energy supply chains, employment and skills, identify opportunities and barriers to building local capacity and employment, and plan actions to realise the opportunities. The Australian Federal Government should work with state and local governments to establish a streamlined and effective development and approval processes for offshore wind development. This should include undertaking strategic planning (continuing what this consultation has started) in advance of, and paving the way for efficient project development. The government must coordinate the development of transmission infrastructure from the grid to a shared connection point for wind farms at an offshore substation to increase the viability and facilitate increased development of offshore wind. Projects in the Area should be required to cooperate on the use of shared infrastructure with an appropriate mechanism to allocate costs, risks, ownership, and control. The federal government must work with the NSW state government to coordinate the development of common user port infrastructure for offshore renewable energy construction and maintenance to facilitate accelerated development of offshore wind. This could be modelled on the Port of Esbjerg, Denmark, which is currently the world’s largest renewable energy port. Thank you for taking the time to read our submission. Sincerely, Kath Teagle NCCR Secretary On behalf of NCCR [1] NASA (n.d.). Scientific Consensus: Earth's Climate is Warming. Retrieved from https://climate.nasa.gov/scientific-consensus/ [2] World Meteorological Organization (2023). Past eight years confirmed to be the eight warmest on record. Retrieved from https://public.wmo.int/en/media/press-release/past-eight-years-confirmed-be-eight-warmest-record [3] IPCC (2018). Global Warming of 1.5°C: An IPCC Special Report on the impacts of global warming of 1.5°C above pre-industrial levels and related global greenhouse gas emission pathways, in the context of strengthening the global response to the threat of climate change, sustainable development, and efforts to eradicate poverty, Intergovernmental Panel on Climate Change. Retrieved from https://www.ipcc.ch/sr15/ [4] BOM & CSIRO. (2020). State of the climate 2020. Retrieved from https://www.csiro.au/en/research/environmental-impacts/climate-change/State-of-the-Climate. [5] Steffen, W & Bradshaw, S (2021). Hitting Home: The Compounding Costs of Climate Inaction. Retrieved from https://www.climatecouncil.org.au/resources/hitting-home-compounding-costs-climate-inaction/. [6] AEMO (2022). 2022 Integrated System Plan - For the National Electricity Market. Retrieved from https://aemo.com.au/en/energy-systems/major-publications/integrated-system-plan-isp/2022-integrated-system-plan-isp [7] Briggs, C., Gill, J., Atherton,A., Langdon, R., Jazbec, M., Walker, T.,Youren, M., Tjondro, M., Rutovitz, J.,Cunningham, R., Wright, S. and Nagrath, K. (2022). Employment, Skills and Supply Chains: Renewable Energy in NSW – Final Report. Sydney: University of Technology Sydney and SGS Economics and Planning. Retrived from https://www.energy.nsw.gov.au/sites/default/files/2022-09/employment-skills-and-supply-chains-renewable-energy-in-nsw-final-report.pdf [8] NSW National Parks and Wildlife Service (n.d.). Gould's petrel conservation project. Retrieved from https://www.nationalparks.nsw.gov.au/conservation-programs/goulds-petrel-conservation-project Aim for Real Zero and Don’t Settle for Net Zero |
Without global vigilance around net-zero pledges and offsets, they are likely to be used as greenwashing and distraction by companies that aren’t prepared to lose profits to take the action necessary to help solve the climate crisis (Morgan, 2021). |
Carr (2022) noted that whereas carbon credits are a way to reduce carbon emissions and to quantify emissions and pollutants and therefore are a step in the right direction, just like most ideas, loopholes have turned carbon credits into a bookkeeping trick with credits used as a greenwashing tactic that allow companies to mislead customers without making any significant improvements to their business model. Armistead and Hemming (2023) noted that “buying carbon credits year after year means that a business is not making the changes they need to legitimately help decarbonise the economy”.
The Australia Institute (2023) poll found that around half of Australians surveyed (48%) agreed that carbon offsets are greenwash and about three in five Australians (62%) agreed that carbon offsets help polluters look like they are reducing emissions even when they aren’t.
Dyke, et al (2021) declared that the concept of net zero has given licence to a “burn now, pay later” approach which has seen emissions continue to soar. These market based approaches have been a windfall to the fossil fuel industry, emissions from which have only grown since offsetting approaches began (Kuch, 2022).
The Australia Institute (2023) poll found that around half of Australians surveyed (48%) agreed that carbon offsets are greenwash and about three in five Australians (62%) agreed that carbon offsets help polluters look like they are reducing emissions even when they aren’t.
Dyke, et al (2021) declared that the concept of net zero has given licence to a “burn now, pay later” approach which has seen emissions continue to soar. These market based approaches have been a windfall to the fossil fuel industry, emissions from which have only grown since offsetting approaches began (Kuch, 2022).
Offsets should be a last resort
Even according to the Australian government, the process of offsetting should be a last resort, with avoiding, reducing and substituting fossil fuels undertaken prior to considering offsetting (Feik, 2023).
Despite all these issues, offsetting can still have a small role, as some emissions cannot be avoided or reduced at present, given low-emissions technologies for industries like steelmaking and cement manufacturing are still scaling up (Morgan, 2023). However, these offsets must be strictly limited and set to progressively decline over time, as opportunities for genuine emissions reductions at the source are developed and implemented across industry (Morgan, 2023).
Morgan (2023) declared that offsets are not a solution and there is no substitute to actually ending the routine burning of fossil fuels. “The atmosphere doesn’t respond to good intentions or clever schemes. All it responds to is the volume of greenhouse gases which trap ever more heat” (Morgan, 2023).
Mowery (2022) sums it up, net zero is a first step for companies to become more environmentally friendly; however, it is not the optimal end result. “Organisations must strive to reach real or true zero emissions to be truly sustainable and do their best to keep the planet in conditions that will allow society and all life to thrive.”
Despite all these issues, offsetting can still have a small role, as some emissions cannot be avoided or reduced at present, given low-emissions technologies for industries like steelmaking and cement manufacturing are still scaling up (Morgan, 2023). However, these offsets must be strictly limited and set to progressively decline over time, as opportunities for genuine emissions reductions at the source are developed and implemented across industry (Morgan, 2023).
Morgan (2023) declared that offsets are not a solution and there is no substitute to actually ending the routine burning of fossil fuels. “The atmosphere doesn’t respond to good intentions or clever schemes. All it responds to is the volume of greenhouse gases which trap ever more heat” (Morgan, 2023).
Mowery (2022) sums it up, net zero is a first step for companies to become more environmentally friendly; however, it is not the optimal end result. “Organisations must strive to reach real or true zero emissions to be truly sustainable and do their best to keep the planet in conditions that will allow society and all life to thrive.”
References
Armistead, A., & Hemming, P. (2023). The Safeguard Mechanism and the junk carbon credits undermining emission reductions. The Australia Institute. Retrieved 11 March 2023, from https://Australiainstitute.org.au/post/the-safeguard-mechanism-explained/
Bernoville, T. (2022). What is the difference between carbon-neutral, net-zero and climate positive?. planA. Retrieved 14 March 2023, from https://plana.earth/academy/what-is-difference-between-carbon-neutral-net-zero-climate-positive
Carr, B. (2022, April 21). Exposing the Carbon Credit and Offset SCAM. [Video]. YouTube. https://www.YouTube.com/watch?v=A5GAaCTwc9s
Climate Active. (2019). Carbon offsets. Retrieved 14 March 2023, from https://www.climateactive.org.au/what-climate-active/carbon-offsets
Dyke, J., Watson, R., & Knorr, W. (2021). Climate scientists: concept of net zero is a dangerous trap. The Conversation. Retrieved 13 March 2023, from https://theconversation.com/climate-scientists-concept-of-net-zero-is-a-dangerous-trap-157368
Feik, N. (2023). The great stock ’n’ coal swindle. The Monthly. Retrieved 13 March 2023, from https://www.themonthly.com.au/issue/2023/march/nick-feik/great-stock-n-coal-swindle#mtr
Kuch, D. (2022). Now we know the flaws of carbon offsets, it’s time to get real about climate change, The Conversation. Retrieved 11 March 2023, from https://theconversation.com/now-we-know-the-flaws-of-carbon-offsets-its-time-to-get-real-about-climate-change-181071
Lyons, K., & Ssemwogerere, D. (2017). Carbon Colonialism: The Failure of Green Resources’ Carbon Offset Project in Uganda. The Oakland Institute. Retrieved 14 March 2023, from https://www.oaklandinstitute.org/sites/oaklandinstitute.org/files/uganda_carbon_colonialism.pdf
Morgan, J. (2021). Why carbon offsetting doesn't cut it. World Economic Forum. Retrieved 16 March 2023, from https://www.weforum.org/agenda/2021/09/greenpeace-international-carbon-offsetting-net-zero-pledges-climate-change-action/
Morgan, W. (2023). A tonne of fossil carbon isn’t the same as a tonne of new trees: why offsets can’t save us. The Conversation. Retrieved 11 March 2023, from https://theconversation.com/a-tonne-of-fossil-carbon-isnt-the-same-as-a-tonne-of-new-trees-why-offsets-cant-save-us-200901
Mowery, L. (2022). Net Zero vs Real Zero Emissions and What It Means for Your Business’ Goals. Green Business Bureau. Retrieved 14 March 2023, from https://greenbusinessbureau.com/topics/carbon-accounting/net-zero-vs-real-zero-emissions-and-what-it-means-for-your-business-goals/
National Grid ESO. (n.d.). What is net zero and zero carbon?. nationalgridESIO. Retrieved 16 March 2023, from https://www.nationalgrideso.com/future-energy/net-zero-explained/net-zero-zero-carbon
Nature-based Solutions Initiative. (2021). On the misuse of nature-based carbon ‘offsets’. Retrieved 16 March 2023, from https://www.naturebasedsolutionsinitiative.org/news/on-the-misuse-of-nature-based-carbon-offsets
Our Changing Climate. (2018, November 15). Can carbon offsets really save us from climate change?. [Video]. YouTube. https://www.YouTube.com/watch?v=xdW-6MXB0sI
Pipkorn, J., Reardon, C., & Dwyer, S. (2020). Zero energy and zero carbon homes. YourHome. Retrieved 14 March 2023, from https://www.yourhome.gov.au/live-adapt/zero-carbon
The Australia Institute. (2023). Polling – Carbon neutrality, net zero and carbon offsets. Retrieved 11 March 2023, from https://Australiainstitute.org.au/wp-content/uploads/2023/02/Polling-January-2023-Carbon-neutrality-net-zero-offsets-Web.pdf
Bernoville, T. (2022). What is the difference between carbon-neutral, net-zero and climate positive?. planA. Retrieved 14 March 2023, from https://plana.earth/academy/what-is-difference-between-carbon-neutral-net-zero-climate-positive
Carr, B. (2022, April 21). Exposing the Carbon Credit and Offset SCAM. [Video]. YouTube. https://www.YouTube.com/watch?v=A5GAaCTwc9s
Climate Active. (2019). Carbon offsets. Retrieved 14 March 2023, from https://www.climateactive.org.au/what-climate-active/carbon-offsets
Dyke, J., Watson, R., & Knorr, W. (2021). Climate scientists: concept of net zero is a dangerous trap. The Conversation. Retrieved 13 March 2023, from https://theconversation.com/climate-scientists-concept-of-net-zero-is-a-dangerous-trap-157368
Feik, N. (2023). The great stock ’n’ coal swindle. The Monthly. Retrieved 13 March 2023, from https://www.themonthly.com.au/issue/2023/march/nick-feik/great-stock-n-coal-swindle#mtr
Kuch, D. (2022). Now we know the flaws of carbon offsets, it’s time to get real about climate change, The Conversation. Retrieved 11 March 2023, from https://theconversation.com/now-we-know-the-flaws-of-carbon-offsets-its-time-to-get-real-about-climate-change-181071
Lyons, K., & Ssemwogerere, D. (2017). Carbon Colonialism: The Failure of Green Resources’ Carbon Offset Project in Uganda. The Oakland Institute. Retrieved 14 March 2023, from https://www.oaklandinstitute.org/sites/oaklandinstitute.org/files/uganda_carbon_colonialism.pdf
Morgan, J. (2021). Why carbon offsetting doesn't cut it. World Economic Forum. Retrieved 16 March 2023, from https://www.weforum.org/agenda/2021/09/greenpeace-international-carbon-offsetting-net-zero-pledges-climate-change-action/
Morgan, W. (2023). A tonne of fossil carbon isn’t the same as a tonne of new trees: why offsets can’t save us. The Conversation. Retrieved 11 March 2023, from https://theconversation.com/a-tonne-of-fossil-carbon-isnt-the-same-as-a-tonne-of-new-trees-why-offsets-cant-save-us-200901
Mowery, L. (2022). Net Zero vs Real Zero Emissions and What It Means for Your Business’ Goals. Green Business Bureau. Retrieved 14 March 2023, from https://greenbusinessbureau.com/topics/carbon-accounting/net-zero-vs-real-zero-emissions-and-what-it-means-for-your-business-goals/
National Grid ESO. (n.d.). What is net zero and zero carbon?. nationalgridESIO. Retrieved 16 March 2023, from https://www.nationalgrideso.com/future-energy/net-zero-explained/net-zero-zero-carbon
Nature-based Solutions Initiative. (2021). On the misuse of nature-based carbon ‘offsets’. Retrieved 16 March 2023, from https://www.naturebasedsolutionsinitiative.org/news/on-the-misuse-of-nature-based-carbon-offsets
Our Changing Climate. (2018, November 15). Can carbon offsets really save us from climate change?. [Video]. YouTube. https://www.YouTube.com/watch?v=xdW-6MXB0sI
Pipkorn, J., Reardon, C., & Dwyer, S. (2020). Zero energy and zero carbon homes. YourHome. Retrieved 14 March 2023, from https://www.yourhome.gov.au/live-adapt/zero-carbon
The Australia Institute. (2023). Polling – Carbon neutrality, net zero and carbon offsets. Retrieved 11 March 2023, from https://Australiainstitute.org.au/wp-content/uploads/2023/02/Polling-January-2023-Carbon-neutrality-net-zero-offsets-Web.pdf
Media Release - Newcastle can lead the way on climate action: Let’s lead with our votes
Candidates for the Federal seat of Newcastle laid out their commitments to climate action tonight in a forum hosted by local community groups.
Candidates responded to six climate commitments that are supported by science:
* Reduce Australia’s greenhouse gas emission by 75% from 2010 levels by 2030
* Generate 100% of Australia’s electricity from renewable energy and energy storage by 2030
* End all public funding and subsidies for coal, oil and gas and redirect those public funds and subsidies to enabling renewables
* Clean up transport and drive the shift to electric vehicles
* Increase Australia’s climate finance to $3B over 2020-2025 and scale up Australia’s contributions to global climate finance to provide a fair share by 2030
* Develop and deliver a Trees for Climate Plan to reduce climate pollution by at least 1 billion tonnes by 2030 and to enhance biodiversity outcomes.
A scorecard that summarises their responses is attached.
Both Charlotte McCabe (Greens candidate) and Emily Brollo (Animal Justice Party) committed to all 6 climate policies. Newcastle’s sitting member, Hon Sharon Claydon, responded no to 5 of the 6 policies, only committing to accelerating Australia’s transition to electric vehicles. Ms Claydon committed to reducing Greenhouse Gas emissions by 43% by 2030 (short of the 75% reduction commitment sought) and to generating 82% of Australia’s energy needs by 2030 (short of the 100% commitment sought).
“I was very disappointed that the Federal member for Newcastle, Sharon Clayon was unable to commit to the decisive climate and energy policies and actions we desperately need to protect Newcastle and the nation,” said Ms Alexa Stuart, School Strike for Climate Action leader.
Ms Claydon spoke in detail about the Australian Labor Party’s election platform, the ‘Powering Australia Plan’. (https://www.alp.org.au/policies/powering-australia)
Candidates from the Liberal Party, One Nation and United Australia Party were invited but declined to participate.
“This is the decisive decade to reduce Greenhouse Gas Emissions by three-quarters, according to the United Nations and the Intergovernmental Panel on Climate Change,” said Jacquie Svenson, convenor of Newcastle Climate Change Response.
“The Newcastle community cares deeply about climate action and it will influence how we vote,” said Ms Svenson. “For decades, Novocastrians have been putting solar on our roofs and advocating a fair and fast transition from fossil fuels.
“Floods, fires and heatwaves are becoming more frequent and intense. Listening to Binnie O’Dwyer tonight from her Lismore home which was flooded twice, we know we need to turn our concern into political action on 21 May.”
Guest speakers at tonight’s forum
Dr Karl Mallon: a leading international expert on climate change physical risk analysis who has worked for 30 years in climate change mitigation, policy and technical analysis worldwide.
Binnie O’Dwyer: normally lives in Lismore with her 2 teenagers and works as a solicitor at the Aboriginal Legal Service. Binnie’s home was flooded twice in the recent extreme weather events and her family are now dispersed.
For comment
Dr Jacquie Svenson, Newcastle Climate Change Response 0434 223 789
Ms Alexa Stuart, School Strikers for Climate Action 0423 361 030
Candidates responded to six climate commitments that are supported by science:
* Reduce Australia’s greenhouse gas emission by 75% from 2010 levels by 2030
* Generate 100% of Australia’s electricity from renewable energy and energy storage by 2030
* End all public funding and subsidies for coal, oil and gas and redirect those public funds and subsidies to enabling renewables
* Clean up transport and drive the shift to electric vehicles
* Increase Australia’s climate finance to $3B over 2020-2025 and scale up Australia’s contributions to global climate finance to provide a fair share by 2030
* Develop and deliver a Trees for Climate Plan to reduce climate pollution by at least 1 billion tonnes by 2030 and to enhance biodiversity outcomes.
A scorecard that summarises their responses is attached.
Both Charlotte McCabe (Greens candidate) and Emily Brollo (Animal Justice Party) committed to all 6 climate policies. Newcastle’s sitting member, Hon Sharon Claydon, responded no to 5 of the 6 policies, only committing to accelerating Australia’s transition to electric vehicles. Ms Claydon committed to reducing Greenhouse Gas emissions by 43% by 2030 (short of the 75% reduction commitment sought) and to generating 82% of Australia’s energy needs by 2030 (short of the 100% commitment sought).
“I was very disappointed that the Federal member for Newcastle, Sharon Clayon was unable to commit to the decisive climate and energy policies and actions we desperately need to protect Newcastle and the nation,” said Ms Alexa Stuart, School Strike for Climate Action leader.
Ms Claydon spoke in detail about the Australian Labor Party’s election platform, the ‘Powering Australia Plan’. (https://www.alp.org.au/policies/powering-australia)
Candidates from the Liberal Party, One Nation and United Australia Party were invited but declined to participate.
“This is the decisive decade to reduce Greenhouse Gas Emissions by three-quarters, according to the United Nations and the Intergovernmental Panel on Climate Change,” said Jacquie Svenson, convenor of Newcastle Climate Change Response.
“The Newcastle community cares deeply about climate action and it will influence how we vote,” said Ms Svenson. “For decades, Novocastrians have been putting solar on our roofs and advocating a fair and fast transition from fossil fuels.
“Floods, fires and heatwaves are becoming more frequent and intense. Listening to Binnie O’Dwyer tonight from her Lismore home which was flooded twice, we know we need to turn our concern into political action on 21 May.”
Guest speakers at tonight’s forum
Dr Karl Mallon: a leading international expert on climate change physical risk analysis who has worked for 30 years in climate change mitigation, policy and technical analysis worldwide.
Binnie O’Dwyer: normally lives in Lismore with her 2 teenagers and works as a solicitor at the Aboriginal Legal Service. Binnie’s home was flooded twice in the recent extreme weather events and her family are now dispersed.
For comment
Dr Jacquie Svenson, Newcastle Climate Change Response 0434 223 789
Ms Alexa Stuart, School Strikers for Climate Action 0423 361 030
Submission to Australian Senate - Oil and gas exploration and production in the Beetaloo Basin
6/7/2021
Submission to Australian Senate - Oil and gas exploration and production in the Beetaloo Basin by Alec Roberts
06/07/2021
Committee Secretary
Senate Standing Committees on Environment and Communications
PO Box 6100
Parliament House
Canberra ACT 2600
E: ec.sen@aph.gov.au
My concerns about the Oil and gas exploration and production in the Beetaloo Basin, with reference to the Industry Research and Development (Beetaloo Cooperative Drilling Program) Instrument 2021, which provides public money for oil and gas corporations.
Dear Senators,
Thank you for the opportunity to provide a submission into the Industry Research and Development (Beetaloo Cooperative Drilling Program) Instrument 2021 and taking the time to consider my submission.
I was lucky to travel through the Beetaloo Basin on an extended camping holiday with my partner, visiting the many beautiful places including Newcastle Waters, Daly Waters, and further north Mataranka. The natural beauty of the area is stunning, and it made a lasting impression on me.
For the purposes of the Industry Research and Development Act 1986, the Industry Research and Development (Beetaloo Cooperative Drilling Program) Instrument 2021 provides a mechanism for funding for exploration activities to be undertaken in the Beetaloo sub-basin to facilitate gas exploration in the Beetaloo sub-basin and to support the development of the Northern Territory gas industry. The development of Beetaloo Sub-basin to extract natural gas through fracking will have significant Groundwater impacts, Ecological impacts, Climate Change impacts, and the economics and energy security reasons behind the proposed program are flawed, and further government funding should be refused.
Natural gas extraction from the Beetaloo Basin does not appear to be commercially viable either for the domestic or overseas markets. Furthermore, if developed, would result in approximately 39 - 117 million tonnes of greenhouse gases per year (or 22% of Australia’s current emissions)[1], and cannot be permitted because its development would be inconsistent with the remaining carbon budget and the Paris Agreement climate target. This is not consistent with Northern Territory’s climate change policy, the principle of inter-generational equity nor the public interest, as it clearly assumes failure to meet the Paris Agreement temperature goals and worsening climate change impacts for Northern Territory and Australia.
This submission is focused on commercial viability, economics, gas supply and demand, climate change impacts, gas as a transition fuel and alternative fuels to natural gas. However, it would be remiss of me if I did not briefly mention some of the other potential impacts.
Groundwater and ecological impactsA recent CSIRO/GISERA study of stygofauna within aquifers of the Beetaloo Basin not only found species unique to this area but determined a high level of interconnectivity of ground water within the region.[2] The report noted that water flowed very quickly through the aquifer and it was "at potential risk to possible contamination from surface spills from any source". Any potential groundwater contamination caused by developing a fracking industry in the area could spread widely throughout the cattle grazing and horticulture region. [3]
The area is classed as semi-arid with rainfall linked to the north Australian monsoon that almost exclusively occurs between December and March.[4] As such, communities within the area such as Daly Waters, Larrimah, Newcastle Waters, Elliott, and Aboriginal land, pastoral leases, horticultural enterprises, cattle stations and remote Aboriginal communities rely on ground water for their livelihoods. The aquifer is also linked in the north to well know tourist and bird watcher destinations of Katherine, Mataranka, Roper River at Elsey National Park and Red Lily/57 Mile Waterhole.4
Contamination of the aquifer through surface spills or well failure has the potential to significantly affect those living in the area and their livelihoods together with the unique flora and fauna of the region.
Economics
Commercial viabilityNorthern Territory is a remote, high-cost location, with high pipeline transport costs, which will produce high-cost gas, with production costs of about $7.50/gigajoule ($6.39 - $9.17)23 at the well-head compared to around $5/gigajoule for coal seam gas (CSG) and around $3.40 for conventional gas.[5] Add the cost of transportation to Tennant Creek, $3/gigajoule to get it from Tennant Creek, delivery to the east coast gas market will likely cost more than $11/gigajoule.[6] However, wholesale gas prices for the east coast gas market in 2021 are estimated to be approximately $7-$8/gigajoule.[7] Furthermore, recent AEMO forecasts23 for domestic gas consumption for both residential/commercial and industrial sectors see decreases in demand which in turn may keep gas prices down. Without an increase in gas prices, gas from the Beetaloo Basin is predicted to be too expensive for the domestic market.
To export to Japan, Australia’s biggest gas customer, with LNG liquification costs of $4/gigajoule and shipping costs of $0.70/gigajoule, NT gas would cost over $16/gigajoule to deliver6, whereas the Japanese LNG import price is around $11-$12/gigajoule.[8] Effectively the price delivered to the Australian export terminal will be higher than the price required to be delivered as LNG to Japan. Market trends for Japan’s LNG import have shown a continued softening of demand.[9] Therefore it likely that Japanese LNG import price will remain the same or even decrease over time. Supporting this, recent AEMO forecasts23 of LNG export demand for Australia are flat (although LNG forecasts have a history of being overestimated). Without an increase in demand it is unlikely that prices would increase making NT gas too expensive to export.
Therefore, without a large increase in international gas prices the gas will be too expensive for either the international or domestic market.
Gas and the domestic marketGas supply on the east coast of Australia has tripled since 2014. However, domestic gas prices have also tripled in the same period in response to a huge demand for gas for LNG production and export. LNG exporters in Gladstone were unable to supply enough gas from their CSG production wells, with reserves grossly overestimated compared to their supply capacity. This resulted in existing low cost of production gas being redirected to the LNG export market increasing domestic gas prices.[10]
Domestic gas prices in Australia have remained at levels far in excess of international parity prices. Whilst prices have fallen somewhat, they have not fallen by nearly as much as those in Asia or Europe. Domestic prices have remained some 30-40% higher than ACCC calculated export parity prices (a.k.a. "netback" prices).[11] This may be explained as there is a lack of competition in the supply and delivery in the domestic gas market with only 5 producers and 2 pipeline owners. This is compounded with a lack of transparency of gas prices (there is no wholesale gas market with most gas traded bilaterally via contracts) that puts domestic and industrial gas buyers at a disadvantage.10
Consequently, gas has become uncompetitive as a fuel source for power generation in Australia and demand for gas-powered generation has fallen by 59% since 2014.[12] Subsequently, gas-powered generation has been running well below capacity.[13] Not surprising that at present there are no committed new commercial investments in gas-fired power generation.[14] Nevertheless, electricity prices for both households and businesses have been driven up by higher gas prices, because gas-fired power stations typically supply the electricity market during times of peak demand.11 Gas is effectively the price setter in the National Electricity Market; for every $1/GJ increase in the price of gas the price of electricity rises by $11/MWh.12
The CSIRO GenCost report[15] indicated that renewables (wind and solar photovoltaic) with storage (such as pumped hydro) were now cheaper than gas for electricity generation in Australia. As such, it is expected that demand for gas for electricity generation will decline in the future.
One of the key competitive advantages Australian industry has enjoyed has been low energy prices. Energy intensive industries and industries dependent on energy intensive inputs have become less competitive as prices for electricity and gas for combustion have increased. This has forced the closure of some major manufacturing and chemical plants, lead to the offshoring of production and undermined the profitability and viability of other gas users.11 Gas use in manufacturing as a consequence of these prices has fallen by 12% since 2014.12
AEMO forecasts further reductions in gas use as consumers fuel-switch away from gas appliances towards electrical devices, in particular for space conditioning. For example, the Commonwealth and NSW Government are exploring options to free-up gas demand through electrification, fuel switching and energy efficiency. [16]
Fuel switching from gas appliances towards electrical devices can often be more economic. A 2018 study of household fuel choice found that 98% of households with new solar financially favoured replacement of gas appliances with electric. With existing/no solar 60-65% of households still favoured replacement of gas appliances with electric. [17]
In the residential sector, for example, reverse-cycle air-conditioning is expected to reduce gas demand that could have arisen due to gas heating.[18] For those residents who cannot afford the capital costs of replacing gas appliances, these increased prices are leading to a worrying growth in energy poverty in the domestic residential sector. [19]
AEMO in 2018[20] estimated that in industry accounts for 42% of domestic gas demand, gas powered generation accounts for 29% of demand and residences accounted for the remaining 29%.
It should be noted that demand for natural gas has declined over recent years. From 2014 to 2020, domestic annual consumption of natural gas fell by approximately 19 per cent, with the major contributor of this fall in consumption being the reduction in the use of gas for power generation.[21] 23 Whereas domestic demand for gas has fallen for use in manufacturing by 14%, it has dropped by a staggering 59% for power generation by since 2014.12
The AEMO 2020 Gas Statement of Opportunities report[22] stated that their 2020 gas consumption forecast was lower than all previous forecasts for 2023 onwards, largely reflecting a reduced outlook for the LNG sector, along with a muted outlook for gas-powered generation as new utility-scale renewable capacity forecasts were higher than previously forecast. AEMO, in their latest report[23], predicted that domestic gas consumption was likely to decline, “as consumers invest in measures to increase energy efficiency, including switching away from gas consumption.”
Whereas AEMO has predicted no effective change to the level industrial gas use and residential and commercial gas use, demand for gas-powered generation is predicted to continue to fall by over 85% from 2019 levels by 2028.23 [24]
Economic recovery and jobs?It is dubious that projects such as the Beetaloo Basin gas will deliver the goods for an economic recovery. ACIL Allen’s report “The economic impacts of a potential shale gas development in the Northern Territory”[25] noted that between 82 – 252 ongoing jobs (including indirect employment generated by the local spending of the industry) would be created due the capital-intensive nature of the shale gas industry. Similarly, it would increase NT government revenues by only 0 - 29.1 million per year (<1% budget revenue).[26] The industry is not a large employer and pays little or no tax.[27] Analysis by The Australia Institute noted that the gas sector was one of the worst options to choose for mass job creation and that investment in other sectors would create many more jobs.[28]
Climate Change ImpactsThe impacts of climate change on the environment are significant and severe. The present scientific consensus is that the earth's climate is warming due to human activity (https://climate.nasa.gov/scientific-consensus/ ), and the negative impacts of increased greenhouse gas emissions are measurable globally and nationally.[29]
The seven hottest years globally have occurred in the last seven years, with the last decade warmer than any previous decade.[30] Furthermore, nineteen of the hottest years on record occurred in the last twenty years. [31] [32] The average global temperature now exceeds 1°C above pre-industrial (1850-1900) levels and is expected to exceed 1.5°C between 2030 and 2052.34
Australia has warmed faster than the global average and is on average 1.44 ± 0.24°C warmer than when national records began in 1910 with most of the warming occurring since 1950 with every decade since being warmer than the one before.[33] If comparing to a pre-industrial (1850-1900) baseline, then by 2019 Australia had warmed by greater than 1.5°C.30
The government is responsible for the environment, the health and wellbeing of its citizens, and the financial security of the nation. As we see the impact of increased carbon emissions, we also find evidence of the impact on Australian native wildlife, the Australian people and the wealth of the nation as noted by the catastrophic Black Summer bushfires, crippling drought and more recently floods.
To address the issue of dangerous climate change, Australia, along 196 other parties, is a signatory to the Paris Agreement, which entered into force on 4 November 2016. The Paris Agreement aims to strengthen the global response to the threat of climate change, by:
Holding the increase in the global average temperature to well below 2°C above pre-industrial levels and pursuing efforts to limit the temperature increase to 1.5°C above pre-industrial levels, recognizing that this would significantly reduce the risks and impacts of climate change.[34]
The draft climate change policy “Northern Territory Climate Change Response: Towards 2050”[35] details the NT Government’s objective to achieve net-zero emissions by 2050 and outlines NT governments approach to addressing climate risk and harnessing new opportunities, including building on “existing initiatives across the NT to reduce greenhouse gas emissions across all sectors”, in line with NT’s aspirational target of net zero emissions by 2050. It concedes that “all sectors in the Northern Territory need to be engaged to realise the benefits and that the transition to a low-carbon economy needs to be carefully managed to ensure ongoing economic investment in the Northern Territory.”
The IPCC report[36] provides an estimate for a global remaining carbon budget of 580 GtCO2 (excluding permafrost feedbacks) based on a 50% probability of limiting warming to 1.5 degrees relative to 1850 to 1900 during and beyond this century and a remaining carbon budget of 420 GtCO2 for a 67% chance.
Committed emissions from existing and proposed energy infrastructure represent more than the entire carbon budget that remains if mean warming is to be limited to 1.5 °C and perhaps two-thirds of the remaining carbon budget if mean warming is to be limited to less than 2 °C. Estimates suggest that little or no new CO2-emitting infrastructure can be commissioned, and that existing infrastructure may need to be retired early (or be retrofitted with carbon capture and storage technology) in order to meet the Paris Agreement climate goals.[37]
Australia’s remaining emission budget from Jan 2017 until 2050 for a 50% chance of warming to stay below 1.5C warming relative to pre-industrial levels was estimated to be 5.5 GTCO2e.36 Adding the GHG emissions expended in 2017[38], 2018[39], 2019[40] and 2020[41], this leaves just 3.3 Gt CO2e remaining as at December 2020. This leaves 6 years left at present emission rates of the 2013-2050 emission budget to stay below 1.5°C. Therefore, at current emissions rates, Australia will have exceeded its carbon budget for 2050 by 2026.
The International Energy Agency report “Net Zero by 2050: A Roadmap for the Global Energy Sector”[42] states that no new natural gas fields are needed for the world to reach net zero by 2050. It therefore follows that no new fossil fuel infrastructure development in Australia that is not carbon neutral, including the Beetaloo Basin gas, that is estimated to result 39 - 117 million tonnes of greenhouse gases each year, can be permitted because its approval would be inconsistent with the remaining carbon budget and the Paris Agreement climate target.
This production of Beetaloo Basin natural gas is not consistent with NT’s climate change policy, the principle of inter-generational equity nor the public interest, as it clearly assumes failure to meet the Paris Agreement temperature goals and worsening climate change impacts for the NT.
Natural gas as a “transition fuel”?
Natural gas has often been touted as the “transition fuel” for the electricity sector to replace coal’s greenhouse gas emissions and eventually paving the way for an emissions free future for Australia. This concept is out of date and I believe incorrect. It is simply too expensive and too emissions intensive to be so.
Fugitive EmissionsMethane leaks from natural gas production can make the process as carbon intensive as coal. The CSIRO report “Fugitive Greenhouse Gas emissions from Coal Seam Gas Production in Australia”[43] noted that fugitive emissions for Natural Gas in Australia as a whole are estimated to be 1.5% of gas extracted. However, they also noted that shale gas emissions were approximately 1.9% higher than conventional gas associated with water flow-back and ‘drill-out’ stages of gas production.
It should be noted that if fugitive emissions exceeded 3.1% then the emissions intensity of gas would match that of coal (due to the fact that methane is 86 times more powerful as a greenhouse gas than CO2 over 20 years and 34 times more powerful over a 100-year time period).14 Therefore based on estimates provided by CSIRO, the emissions intensity of shale gas as proposed for the Beetaloo basin would exceed those for coal and could not be considered a “transition fuel”.
Electricity Market moving away from gasAs noted above, the electricity market has already moved away from gas, with a 59% decline in usage in the National Electricity Market since 2014, whilst renewable energy has increased by 25% during the same period.14 Furthermore, flexible gas plants already in the grid are running well below capacity.13 AEMO forecast that increasing renewable generation developments in the NEM are expected to continue to drive down system normal demand for gas-powered generation. 22
The AEMO modelled the future electricity grid in its Integrated Systems Plan.[44] [45] The results showed for all scenarios that the transition from coal to renewable energy would not be via gas.13 The role of gas would be reduced with a decline in gas generation through to 2040.14 The report notes that to firm up the inherently variable distributed and large-scale renewable generation, there will be needed new flexible, dispatchable resources such as: utility-scale pumped hydro and large-scale battery energy storage systems, distributed batteries participating as virtual power plants, and demand side management.44 45 It also noted that new, flexible gas generators such as gas peaking plants could play a greater role if gas prices materially reduced, with gas prices remaining low at $4 to 6 per GJ.45 However this is unlikely as gas prices have tripled over the past decade and expected domestic gas prices are over 60% more than this price.13 [46] AEMO noted that the investment case for new gas-powered generation will critically depend on future gas prices, as gas-powered generation and batteries can both serve the daily peaking role that will be needed as variable renewable energy replaces coal-fired generation. In their 2020 Gas Statement of Opportunities report, AEMO predicted that as more coal-fired generation retired in the long term, gas consumption for gas-powered generation in the National Electricity Market was forecast to grow again in the early 2030s, recovering to levels similar to those forecast for 2020.20 However, in a later report, AEMO determined that by the 2030s, when significant investment in new dispatchable capacity is needed, new batteries will be more cost-effective than gas-powered generation. 45 Furthermore, the commissioning of the Snowy 2.0 pumped hydro project in 2026 will result in less reliance on gas-powered generation as a source of firm supply.22
AEMO noted that stronger interconnection between regions reduces the reliance on gas-powered generation, as alternative resources can be shared more effectively. 45 The expansion network interconnection enables the growth of variable renewable energy without a significant reliance on local gas generation.[47] Supporting this assertion, the AEMO announced a series of actionable transmission projects including interconnector upgrades and expansions and network augmentations supporting recently announced renewable energy zones.[48] 45 AEMO noted that as each of these new transmission projects is commissioned, the ability for national electricity market regions to share resources (particularly geographically diverse variable renewable energy) is increased, and therefore demand for gas-powered generation is forecast to decrease.22 The Marinus Link is forecast to be commissioned in 2036, with surplus renewable generation from Tasmania then being available to the mainland National Electricity Market, which would see further declines in gas-fired generation, despite continuing coal-fired generation retirements.22
Gas-powered generation can provide the synchronous generation needed to balance variable renewable supply, and so is a potential complement to storage. However, the current installation of synchronous condensers in South Australia and other eastern states to increase system strength and stabilise the electricity network will reduce the need for gas-fired generators acting in the role of synchronous generators as more renewables enter the grid.[49] Ancillary services are likely to utilise battery storage and synchronous condensers in the future and no longer require the use of gas-powered generation.
Transitioning away from Gas
The ACT is planning to go gas free by 2025. This is expected to reduce their overall emissions by 22%. As part of the ACT Climate Change Strategy 2019-2025, all government and public-school buildings will be completely powered by 100% renewable energy eliminating the need for natural gas. The ACT has also removed the mandatory requirement for new homes built in the ACT to be connected to the mains gas network and will begin to introduce new policies to replace gas appliances with electric alternatives. Some 14% of residents have already converted over to 100% electric. [50]
There are moves in other jurisdictions to remove the mandatory requirement for a gas connection in new developments such as in South Australia.
Alternatives to Natural Gas
Several technologies new or new to Australia are expected to reduce the use of natural gas as the Australian economy transitions to a net zero emissions economy and would replace the need for new gas such as proposed for the Beetaloo Basin. Please note that these technologies not only look to transition electricity generation away from natural gas but also for gas combustion for heat. These technologies could also address any gas supply shortfalls.
HydrogenHydrogen is a colourless, odourless, non-toxic gas that is an excellent carrier of energy and can be used for a broad range of energy applications including as a transport fuel, a substitute for natural gas and for electricity generation.[51] Hydrogen gas can be produced from water in a process known as electrolysis, and when powered by renewable energy, the hydrogen produced is free from carbon emissions, making it an attractive way to decarbonise transport, heating and electricity generation.51
AEMO stated that, “Hydrogen has the exciting potential to become an alternative energy storage technology and a new export commodity for Australia” which could be used to help decarbonise the domestic heat, transport and the industrial and commercial sectors in Australia and noted that development of the hydrogen industry would potentially impact both natural gas and electric demands. 44 [52]
Several developments involving green / renewable hydrogen are either planned or underway in Australia.
AEMO highlighted the potential for green steel production in Australia due to abundant renewable resources and the increased demand for low emissions industrial commodities worldwide.52 ‘Green steel’ can be made via a direct reduction process which uses hydrogen (made from renewable energy) as the heat source and reducing agent to produce pig iron. The by-product of the iron reduction process using hydrogen is water, rather than carbon dioxide in conventional steel making. Renewable energy is then used by an electric arc furnace to produce low-emissions green steel.
The Arrowsmith Hydrogen Project, which will be built at a facility in the town of Dongara, located 320km north of Perth, will utilise dedicated onsite renewable energy 85MW of solar power, supplemented by 75MW of wind generation capacity to generate 25 tonnes of green hydrogen a day and will be operational in 2022.[53]
ATCO’s Clean Energy Innovation Hub, located in Jandakot in Western Australia, is being used to trial the production, storage and use of renewable hydrogen to power a commercial-scale microgrid, testing the use of hydrogen in different settings and applications including in household appliances.[54] This includes optimising hydrogen storage solutions, blending hydrogen with natural gas and using hydrogen a direct use fuel. Green hydrogen will be produced from on-site solar using electrolysis, fuelling a range of gas appliances and blending hydrogen into the natural gas pipeline.
The $3.3 million development project will evaluate the potential for renewable hydrogen to be generated, stored, and used at a larger scale. ATCO aims to assess the practicalities of replacing natural gas with hydrogen at a city-wide scale across a municipality.[55]
The new chair of the Australian Energy Regulator, Clare Savage recently stated:
“The national gas industry could also undergo significant change as some jurisdictions move towards a zero carbon emissions policy. This could have significant consequences for the future of gas pipeline networks. In response, the AER recently supported the future recovery of Jemena’s investment in trialling the production of hydrogen from renewable energy for injection into its Sydney network. If hydrogen trials such as Jemena’s prove successful, the natural gas networks could be re-purposed to distribute hydrogen. If not, the economic life of the assets could be limited.” [56]
Biogas and BiomethaneBiogas is produced by the bacterial degradation of organic waste under anaerobic conditions and is composed principally of methane (50%-75%) and CO2 (25%-50%), with small amounts of oxygen, water and trace amounts of sulphur.[57] After cleaning (desulfurization and drying), biogas can be used to generate electricity and heat in cogeneration units (combined heat power (CHP)) or burnt to produce heat.57 [58] Biogas can also be upgraded (removal of CO2) to biomethane with approximately 98% methane which has similar properties as natural gas.57 58 Both Biogas and Biomethane are flexible renewable fuels that can be stored for later use, with Biomethane is suitable to be added to the natural gas grid.57
The development of Biogas and particularly Biomethane plants in Australia has been particularly slow compared to other countries, in particular Europe.[59] Below are a couple of recent developments in Australia:
Biogas and its industry offer many benefits:
A landmark report commissioned by Bioenergy Australia last year identified the total estimated biogas potential to be 371PJ (103TWh) of available energy, which is enough to decarbonise industrial, commercial, and residential gas users currently supplied by distributed gas networks across Australia.[63]
Australian business, industry and utilities recently signed an open letter to the Commonwealth Government advocating for biomethane to be injected into the gas distribution networks to enable the lowest cost transition to a decarbonised energy market and address a number of challenges including:
Power-to-GasA relatively new chemical energy storage technology that looks to provide medium to long-term storage is Power-to-Gas. Power-to-Gas (P2G) offers the possibility of converting surplus renewable electricity into chemical energy storage that can be later reconverted to electrical power to cover peak demand periods.[65]
The core element of a P2G plant is the electrolyser which converts otherwise unused or low value surplus electric energy generated by renewable energy sources into Hydrogen.[66] [67] P2G technology can take the form of power-to-hydrogen (P2H) utilising Hydrogen as the chemical storage fuel or further processed as power-to-methane (P2M) using methane as the chemical storage fuel.65 67 The produced gas as well as being used to reproduce electricity can be utilised by other sectors like transport or heating.[68]
The Hydrogen or methane is stored for later use. Hydrogen fuel cells and hydrogen combustion turbines generate electricity from hydrogen when needed such as when demand exceeds supply. The methane can also be used to create electricity later when needed using a gas turbine. These are flexible dispatchable technologies that will provide an important form of system flexibility under increasing levels of Variable Renewable Energy such as wind and solar.[69]
Both Renewable Hydrogen and Biogas/Biomethane can displace or replace natural gas as a fuel significantly reducing GHG emissions. These technologies show promise in Australia with the resources available locally. Once developed these would see assets such as the Beetaloo Basin Gas left stranded.
Summary
In summary, further government funding for exploration activities to be undertaken in the Beetaloo sub-basin to facilitate gas exploration in the Beetaloo sub-basin and to support the development of the Northern Territory gas industry should be refused.
Natural gas extraction from the Beetaloo Basin does not appear to be commercially viable either for the domestic or overseas market and investment in natural gas infrastructure for this area will potentially result in stranded assets.
The development of the Beetaloo Basin shale gas is estimated to result in 39 - 117 million tonnes of greenhouse gases each year. This cannot be permitted as there is insufficient carbon budget remaining for Australia to accommodate this project and would be inconsistent with NT’s own climate change policy and clearly assumes failure to meet the Paris Agreement temperature goals and worsening climate change impacts for the NT.
Natural gas is not a “transition fuel” for the electricity sector to replace coal’s greenhouse gas emissions and eventually paving the way for an emissions free future for Australia. In particular, shale gas is simply too emissions intensive to be so.
Several technologies new or new to Australia are expected to reduce the use of natural gas as the Australian economy transitions to a net zero emissions economy and would replace the need for new gas such as proposed for the Beetaloo Basin. Both Renewable Hydrogen and Biogas/Biomethane can displace or replace natural gas as a fuel significantly reducing GHG emissions. No new gas is needed.
Thank you for taking the time to read my submission.
Alec Roberts
[1] Bardon, J. (2020, February 29). How the Beetaloo gas field could jeopardise Australia's emissions target. Retrieved from https://www.abc.net.au/news/2020-02-29/beetaloo-basin-gas-field-could-jeopardise-paris-targets/12002164
[2] Rees GN, Oberprieler S, Nielsen D, Watson G, Shackleton M, Davis JA (2020). Characterisation of the stygofauna and microbial assemblages of the Beetaloo Sub-basin, Northern Territory. CSIRO, Australia.
[3] Bardon, J. (2021, February 17). Discovery of tiny shrimp in Beetaloo Basin could stall fracking plans, scientists warn. Retrieved from https://www.abc.net.au/news/2021-02-17/betaloo-micro-organism-new-species-fracking/13159678
[4] Fulton, S. & Knapton, A. (2015, February). Beetaloo Basin Hydrogeological Assessment. Retrieved from https://frackinginquiry.nt.gov.au/?a=410609
[5] West, M. (2020, January 2). Smithereens: Australia’s climate commitments blown if giant fossil fuel projects proceed. Retrieved from https://www.michaelwest.com.au/smithereens-australias-climate-commitments-blown-if-giant-fossil-fuel-projects-proceed/
[6] Robertson, B. (2017, July 31). Robertson, Bruce – 31 July 2017 Darwin Hearing Submission [Transcript]. The Scientific inquiry into Hydraulic Fracturing in the Northern Territory. Retrieved from https://frackinginquiry.nt.gov.au/submission-library
[7] De Atholia, T. & Walker, A. (2021, March 18). Understanding the East Coast Gas Market. Reserve Bank of Australia, Retrieved from https://www.rba.gov.au/publications/bulletin/2021/mar/understanding-the-east-coast-gas-market.html
[8] YCharts (2021, May). Japan Liquefied Natural Gas Import Price. Retrieved from https://ycharts.com/indicators/japan_liquefied_natural_gas_import_price
[9] International Trade Administration (2020, October 30). Japan – Country Commercial Guide. Liquified Natural Gas (LNG). Retrieved from https://www.trade.gov/knowledge-product/japan-liquefied-natural-gas-lng
[10] Rios, J. (2019, September 13). What’s next for Australia’s natural gas market? Retrieved from https://www.eecc.eu/blog/whats-next-for-australias-natural-gas-market
[11] Long, S. (2020, February 27). Gas giants misled governments and it is costing Australian jobs, ACCC boss says. Retrieved from https://www.abc.net.au/news/2020-02-27/gas-giants-misled-governments-accc-boss-rod-sims-says/12004254
[12] Robertson, B. (2020, July 23). IEEFA update: Australia sponsors a failing gas industry. Retrieved from https://ieefa.org/ieefa-update-australia-sponsors-a-failing-gas-industry/
[13] Morton, A. (2020, March 8). 'Expensive and underperforming': energy audit finds gas power running well below capacity. Retrieved from https://www.theguardian.com/environment/2020/mar/08/expensive-and-underperforming-energy-audit-finds-gas-power-running-well-below-capacity
[14] Robertson, B. (2020, January 30). IEEFA Australia: Gas is not a transition fuel, Prime Minister. Retrieved from https://ieefa.org/ieefa-australia-gas-is-not-a-transition-fuel-prime-minister/
[15] CSIRO (2019, December). GenCost 2019-20: preliminary results for stakeholder review. Retrieved from https://www.aemo.com.au/-/media/Files/Electricity/NEM/Planning_and_Forecasting/Inputs-Assumptions-Methodologies/2019/CSIRO-GenCost2019-20_DraftforReview.pdf
[16] Energy NSW. (2020, January 31). Memorandum of understanding, Retrieved from https://energy.nsw.gov.au/government-and-regulation/electricity-strategy/memorandum-understanding
[17] Alternative Technology Association (2018, July). Household fuel choice in the National Energy Market. Retrieved from https://renew.org.au/wp-content/uploads/2018/08/Household_fuel_choice_in_the_NEM_Revised_June_2018.pdf
[18] AEMO (2020a, July 30). 2020 ISP Appendix 10. Sector Coupling. Retrieved from https://aemo.com.au/-/media/files/major-publications/isp/2020/appendix--10.pdf?la=en
[19] Snow, J. (2014, February). Energy Policy Institute of Australia - Public Policy Paper - Paper 2/2014 The economic impact of high energy prices in Australia, Retrieved from http://oakleygreenwood.com.au/wp-content/uploads/2017/10/6_Snow_Jim_Public_Policy_Paper-6Feb2014.pdf
[20] AEMO (2018, June). 2018 Gas Statement of Opportunities, June 2018, For eastern and south-eastern Australia. Retrieved from https://aemo.com.au/en/energy-systems/gas/gas-forecasting-and-planning/gas-statement-of-opportunities-gsoo
[21] Pegasus Economics (2019, August). Report on the Narrabri Gas Project. Retrieved from https://8c4b987c-4d72-4044-ac79-99bcaca78791.filesusr.com/ugd/b097cb_c30b7e01a860476bbf6ef34101f4c34c.pdf
[22] AEMO (2020, March). Gas Statement of Opportunities, March 2020, For eastern and south-eastern Australia. Retrieved from https://aemo.com.au/en/energy-systems/gas/gas-forecasting-and-planning/gas-statement-of-opportunities-gsoo
[23] AEMO (2021, March). Gas Statement of Opportunities, March 2021. Retrieved from https://aemo.com.au/en/energy-systems/gas/gas-forecasting-and-planning/gas-statement-of-opportunities-gsoo
[24] AEMO (2020, March 27). National Electricity & Gas Forecasting 2020 GSOO Publication. Retrieved from http://forecasting.aemo.com.au/Gas/AnnualConsumption/Total
[25] ACIL Allen (2017, October). The economic impacts of a potential shale gas development in the Northern Territory. Retrieved from https://apo.org.au/node/118001
[26] Campbell, R. (2018, January 19). Economies of shale: Submission on the Draft Report of the Scientific Inquiry into Hydraulic Fracturing in the Northern Territory, Retrieved from https://australiainstitute.org.au/report/economies-of-shale/
[27] IEEFA (2019, November 25). IEEFA Australia: Oil and gas industry paying less tax than Telstra [PRESS RELEASE]. Retrieved from https://ieefa.org/ieefa-australia-oil-and-gas-industry-paying-less-tax-than-telstra/
[28] The Australian Institute (2020, July). Gas Fired Backfire Why a “gas fired recovery” would increase emissions and energy costs and squander our recovery spending. Retrieved from https://www.tai.org.au/sites/default/files/P908%20Gas-fired%20backfire%20%5Bweb%5D_0.pdf
[29] NASA (n.d.). Scientific Consensus: Earth's Climate is Warming. Retrieved from https://climate.nasa.gov/scientific-consensus/
[30] Steffen, W & Bradshaw, S (2021). Hitting Home: The Compounding Costs of Climate Inaction. Retrieved from https://www.climatecouncil.org.au/resources/hitting-home-compounding-costs-climate-inaction/.
[31] Hooke & Martín Duque. (2020). Impact of the Great Acceleration on Our Life-Support Systems, In Shroder, J.F. (ed.), Treatise on Geomorphology, Second Edition, Elsevier Inc, https://doi.org/10.1016/B978-0-12-818234-5.00035-3
[32] Hooke & Martín Duque. (2020). ‘Impact of the Great Acceleration on Our Life-Support Systems’, Reference Module in Earth Systems and Environmental Sciences, Elsevier, 2021, ISBN 9780124095489, https://doi.org/10.1016/B978-0-12-818234-5.00035-3. Retrieved from https://www.sciencedirect.com/science/article/pii/B9780128182345000353.
[33] BOM & CSIRO. (2020). State of the climate 2020. Retrieved from https://www.csiro.au/en/research/environmental-impacts/climate-change/State-of-the-Climate.
[34] IPCC (2018). Global Warming of 1.5°C: An IPCC Special Report on the impacts of global warming of 1.5°C above pre-industrial levels and related global greenhouse gas emission pathways, in the context of strengthening the global response to the threat of climate change, sustainable development, and efforts to eradicate poverty, Intergovernmental Panel on Climate Change. Retrieved from https://www.ipcc.ch/sr15/
[35] NT Government (n.d.). Northern Territory Climate Change Response: Towards 2050. Retrieved from https://haveyoursay.nt.gov.au/49504/documents/116898
[36] Meinshausen, M. (2019, March 19). Deriving a global 2013-2050 emission budget to stay below 1.5°C based on the IPCC Special Report on 1.5°C. Retrieved from https://www.climatechange.vic.gov.au/__data/assets/pdf_file/0018/421704/Deriving-a-1.5C-emissions-budget-for-Victoria.pdf
[37] Tong, D., Zhang, Q., Zheng, Y., Caldeira, K., Shearer, C., Hong, C., Qin, Y., & Davis, S. J. (2019). Committed emissions from existing energy infrastructure jeopardize 1.5 °C climate target. Nature, 572(7769), 373-377. https://doi-org.ezproxy.newcastle.edu.au/10.1038/s41586-019-1364-3
[38] Climate Council (2018). Australia’s Rising Greenhouse Gas Emissions. Retrieved from https://www.climatecouncil.org.au/wp-content/uploads/2018/06/CC_MVSA0143-Briefing-Paper-Australias-Rising-Emissions_V8-FA_Low-Res_Single-Pages3.pdf
[39] Cox, L. (2019, March 14). Australia's annual carbon emissions reach record high. Retrieved from https://www.theguardian.com/environment/2019/mar/14/australias-annual-carbon-emissions-reach-record-high
[40] DISER (2020, May). National Greenhouse Gas Inventory: December 2019. Retrieved from https://www.industry.gov.au/data-and-publications/national-greenhouse-gas-inventory-december-2019
[41] DISER (2021). Quarterly Update of Australia’s National Greenhouse Gas Inventory: December 2020, Australian Government Department of Industry, Science, Energy and Resources. Retrieved from https://www.industry.gov.au/data-and-publications/national-greenhouse-gas-inventory-quarterly-update-december-2020
[42] IEA (2021, May). Net Zero by 2050: A Roadmap for the Global Energy Sector. Retrieved from https://www.iea.org/reports/net-zero-by-2050
[43] CSIRO (2012). Fugitive Greenhouse Gas Emissions from Coal Seam Gas Production in Australia. Retrieved from https://publications.csiro.au/rpr/pub?pid=csiro:EP128173
[44] AEMO (2019, December 12). Draft 2020 Integrated System Plan - For the National Electricity Market. Retrieved from https://aemo.com.au/-/media/files/electricity/nem/planning_and_forecasting/isp/2019/draft-2020-integrated-system-plan.pdf?la=en
[45] AEMO (2020b, July 30). 2020 Integrated System Plan - For the National Electricity Market. Retrieved from https://aemo.com.au/-/media/files/major-publications/isp/2020/final-2020-integrated-system-plan.pdf?la=en
[46] ACCC (2020, January). Gas inquiry 2017-2025 – Interim Report. Retrieved from https://www.accc.gov.au/system/files/Gas%20inquiry%20-%20January%202020%20interim%20report%20-%20revised.pdf
[47] AEMO (2020c, July 30) 2020 ISP Appendix 2. Cost Benefit Analysis. Retrieved from https://aemo.com.au/-/media/files/major-publications/isp/2020/appendix--2.pdf?la=en
[48] Energy Source & Distribution (2020, July 30). AEMO reveals Integrated System Plan 2020. Retrieved from https://esdnews.com.au/aemo-reveals-integrated-system-plan-2020/
[49] Parkinson, G. (2020, May 25). Big spinning machines arrive in South Australia to hasten demise of gas generation. Retrieved from https://reneweconomy.com.au/big-spinning-machines-arrive-in-south-australia-to-hasten-demise-of-gas-generation-64767/
[50] Mazengarb, M. & Parkinson, G. (2019, September 16). ACT to phase out gas as it launches next stage to zero carbon strategy. Retrieved from https://reneweconomy.com.au/act-to-phase-out-gas-as-it-launches-next-stage-to-zero-carbon-strategy-92906/
[51] Tasmanian Government, Department of State Growth. (2020). Tasmanian Renewable Hydrogen Action Plan, ‘Renewables Tasmania’. Retrieved from https://renewablestasmania.tas.gov.au/innovation_and_investment/renewable_hydrogen
[52] AEMO (2020a, July 30). 2020 ISP Appendix 10. Sector Coupling. Retrieved from https://aemo.com.au/-/media/files/major-publications/isp/2020/appendix--10.pdf?la=en
[53] Mazengarb, M. (2020, April 29). Massive hydrogen project gets green light after securing $300m investment. Retrieved from https://reneweconomy.com.au/massive-hydrogen-project-gets-green-light-after-securing-300m-investment-68959/
[54] Energy Source & Distribution (2018, October 4). Nel awarded contract for Australia’s first hydrogen microgrid. Retrieved from https://esdnews.com.au/nel-awarded-contract-for-australias-first-hydrogen-microgrid/
[55] ARENA (2018, July 3). Green hydrogen innovation hub to be built in WA. Retrieved from https://arena.gov.au/news/green-hydrogen-innovation-hub-to-be-built-in-wa/
[56] West, M. (2020, July 3). A Savage Call: energy tsar calls time on Australia’s gas cartel. Retrieved from https://www.michaelwest.com.au/a-savage-call-energy-tsar-calls-time-on-australias-gas-cartel/
[57] Da Costa Gomez, C. (2013). ‘1 - Biogas as an energy option: an overview’, In A Wellinger, J Murphy & D Baxter (eds) The biogas handbook. Science, production and applications., Woodhead Publishing Limited, Cambridge, UK, pp. 1-16, doi: 10.1533/9780857097415.1.
[58] Beil, M. & Beyrich, W. (2013). ‘Biogas Upgrading to Biomethane’, In A Wellinger, J Murphy & D Baxter (eds) The biogas handbook. Science, production and applications., Woodhead Publishing Limited, Cambridge, UK, pp. 342-377, doi: https://doi.org/10.1533/9780857097415.3.342
[59] McCabe, B. (2018). How biomethane can help turn gas into a renewable energy source. Retrieved from https://theconversation.com/how-biomethane-can-help-turn-gas-into-a-renewable-energy-source-103912
[60] Jemena. (2021). Malabar Biomethane Project. Retrieved from https://jemena.com.au/about/innovation/malabar-biomethane-project
[61] Ecogeneration. (2021). The ‘bioHub’ buildout that will put waste to work. Retrieved from https://www.ecogeneration.com.au/the-biohub-buildout-that-will-put-waste-to-work/
[62] Carlu, E. Truong, T. Kundevski, M. (2019, May). Biogas opportunities for Australia. ENEA Consulting – March 2019. Retrieved from: https://www.energynetworks.com.au/resources/reports/biogas-opportunities-for-australia-enea-consulting/
[63] Hughes, J. (2020, July 15). Business, industry and utilities back biogas for net zero Australia. Retrieved from https://www.worldbiogasassociation.org/business-industry-and-utilities-back-biogas-for-net-zero-australia/
[64] Bioenergy Australia (2020, June 9). Joint letter in support of Australian biomethane market development. Retrieved from https://www.bioenergyaustralia.org.au/news/joint-letter-in-support-of-australian-biomethane/
[65] Bailera, M. & Lisbona, P. (2018). Energy storage in Spain: Forecasting electricity excess and assessment of power-to-gas potential up to 2050. Energy (Oxford), vol. 143, pp. 900-910, doi: https://doi.org/10.1016/j.energy.2017.11.069.
[66] Balan, O.M., Buga, M., Brunot, A., Badea, A. & Froelich, D. (2016). Technical and economic evaluation of Power-to-Gas in link with a 50 MW wind park. Journal of energy storage, vol. 8, pp. 111-118, doi: https://doi.org/10.1016/j.est.2016.10.002.
[67] Parra, D. & Patel, M.K. (2016). Techno-economic implications of the electrolyser technology and size for power-to-gas systems. International journal of hydrogen energy, vol. 41, no. 6, pp. 3748-3761, doi: https://doi.org/10.1016/j.ijhydene.2015.12.160.
[68] Weiss, T, Lücken, A & Shulz, D. (2013). An empirical approach to calculate short and long term energy storage needs of an electricity system. 48th International Universities' Power Engineering Conference (UPEC), Dublin, Ireland. pp. 1-6, doi:10.1109/UPEC.2013.6714953.
[69] McPherson, M., Johnson, N. & Strubegger, M. (2018). The role of electricity storage and hydrogen technologies in enabling global low-carbon energy transitions. Applied energy, vol. 216, pp. 649-661, doi: https://doi.org/10.1016/j.apenergy.2018.02.110.
Committee Secretary
Senate Standing Committees on Environment and Communications
PO Box 6100
Parliament House
Canberra ACT 2600
E: ec.sen@aph.gov.au
My concerns about the Oil and gas exploration and production in the Beetaloo Basin, with reference to the Industry Research and Development (Beetaloo Cooperative Drilling Program) Instrument 2021, which provides public money for oil and gas corporations.
Dear Senators,
Thank you for the opportunity to provide a submission into the Industry Research and Development (Beetaloo Cooperative Drilling Program) Instrument 2021 and taking the time to consider my submission.
I was lucky to travel through the Beetaloo Basin on an extended camping holiday with my partner, visiting the many beautiful places including Newcastle Waters, Daly Waters, and further north Mataranka. The natural beauty of the area is stunning, and it made a lasting impression on me.
For the purposes of the Industry Research and Development Act 1986, the Industry Research and Development (Beetaloo Cooperative Drilling Program) Instrument 2021 provides a mechanism for funding for exploration activities to be undertaken in the Beetaloo sub-basin to facilitate gas exploration in the Beetaloo sub-basin and to support the development of the Northern Territory gas industry. The development of Beetaloo Sub-basin to extract natural gas through fracking will have significant Groundwater impacts, Ecological impacts, Climate Change impacts, and the economics and energy security reasons behind the proposed program are flawed, and further government funding should be refused.
Natural gas extraction from the Beetaloo Basin does not appear to be commercially viable either for the domestic or overseas markets. Furthermore, if developed, would result in approximately 39 - 117 million tonnes of greenhouse gases per year (or 22% of Australia’s current emissions)[1], and cannot be permitted because its development would be inconsistent with the remaining carbon budget and the Paris Agreement climate target. This is not consistent with Northern Territory’s climate change policy, the principle of inter-generational equity nor the public interest, as it clearly assumes failure to meet the Paris Agreement temperature goals and worsening climate change impacts for Northern Territory and Australia.
This submission is focused on commercial viability, economics, gas supply and demand, climate change impacts, gas as a transition fuel and alternative fuels to natural gas. However, it would be remiss of me if I did not briefly mention some of the other potential impacts.
Groundwater and ecological impactsA recent CSIRO/GISERA study of stygofauna within aquifers of the Beetaloo Basin not only found species unique to this area but determined a high level of interconnectivity of ground water within the region.[2] The report noted that water flowed very quickly through the aquifer and it was "at potential risk to possible contamination from surface spills from any source". Any potential groundwater contamination caused by developing a fracking industry in the area could spread widely throughout the cattle grazing and horticulture region. [3]
The area is classed as semi-arid with rainfall linked to the north Australian monsoon that almost exclusively occurs between December and March.[4] As such, communities within the area such as Daly Waters, Larrimah, Newcastle Waters, Elliott, and Aboriginal land, pastoral leases, horticultural enterprises, cattle stations and remote Aboriginal communities rely on ground water for their livelihoods. The aquifer is also linked in the north to well know tourist and bird watcher destinations of Katherine, Mataranka, Roper River at Elsey National Park and Red Lily/57 Mile Waterhole.4
Contamination of the aquifer through surface spills or well failure has the potential to significantly affect those living in the area and their livelihoods together with the unique flora and fauna of the region.
Economics
Commercial viabilityNorthern Territory is a remote, high-cost location, with high pipeline transport costs, which will produce high-cost gas, with production costs of about $7.50/gigajoule ($6.39 - $9.17)23 at the well-head compared to around $5/gigajoule for coal seam gas (CSG) and around $3.40 for conventional gas.[5] Add the cost of transportation to Tennant Creek, $3/gigajoule to get it from Tennant Creek, delivery to the east coast gas market will likely cost more than $11/gigajoule.[6] However, wholesale gas prices for the east coast gas market in 2021 are estimated to be approximately $7-$8/gigajoule.[7] Furthermore, recent AEMO forecasts23 for domestic gas consumption for both residential/commercial and industrial sectors see decreases in demand which in turn may keep gas prices down. Without an increase in gas prices, gas from the Beetaloo Basin is predicted to be too expensive for the domestic market.
To export to Japan, Australia’s biggest gas customer, with LNG liquification costs of $4/gigajoule and shipping costs of $0.70/gigajoule, NT gas would cost over $16/gigajoule to deliver6, whereas the Japanese LNG import price is around $11-$12/gigajoule.[8] Effectively the price delivered to the Australian export terminal will be higher than the price required to be delivered as LNG to Japan. Market trends for Japan’s LNG import have shown a continued softening of demand.[9] Therefore it likely that Japanese LNG import price will remain the same or even decrease over time. Supporting this, recent AEMO forecasts23 of LNG export demand for Australia are flat (although LNG forecasts have a history of being overestimated). Without an increase in demand it is unlikely that prices would increase making NT gas too expensive to export.
Therefore, without a large increase in international gas prices the gas will be too expensive for either the international or domestic market.
Gas and the domestic marketGas supply on the east coast of Australia has tripled since 2014. However, domestic gas prices have also tripled in the same period in response to a huge demand for gas for LNG production and export. LNG exporters in Gladstone were unable to supply enough gas from their CSG production wells, with reserves grossly overestimated compared to their supply capacity. This resulted in existing low cost of production gas being redirected to the LNG export market increasing domestic gas prices.[10]
Domestic gas prices in Australia have remained at levels far in excess of international parity prices. Whilst prices have fallen somewhat, they have not fallen by nearly as much as those in Asia or Europe. Domestic prices have remained some 30-40% higher than ACCC calculated export parity prices (a.k.a. "netback" prices).[11] This may be explained as there is a lack of competition in the supply and delivery in the domestic gas market with only 5 producers and 2 pipeline owners. This is compounded with a lack of transparency of gas prices (there is no wholesale gas market with most gas traded bilaterally via contracts) that puts domestic and industrial gas buyers at a disadvantage.10
Consequently, gas has become uncompetitive as a fuel source for power generation in Australia and demand for gas-powered generation has fallen by 59% since 2014.[12] Subsequently, gas-powered generation has been running well below capacity.[13] Not surprising that at present there are no committed new commercial investments in gas-fired power generation.[14] Nevertheless, electricity prices for both households and businesses have been driven up by higher gas prices, because gas-fired power stations typically supply the electricity market during times of peak demand.11 Gas is effectively the price setter in the National Electricity Market; for every $1/GJ increase in the price of gas the price of electricity rises by $11/MWh.12
The CSIRO GenCost report[15] indicated that renewables (wind and solar photovoltaic) with storage (such as pumped hydro) were now cheaper than gas for electricity generation in Australia. As such, it is expected that demand for gas for electricity generation will decline in the future.
One of the key competitive advantages Australian industry has enjoyed has been low energy prices. Energy intensive industries and industries dependent on energy intensive inputs have become less competitive as prices for electricity and gas for combustion have increased. This has forced the closure of some major manufacturing and chemical plants, lead to the offshoring of production and undermined the profitability and viability of other gas users.11 Gas use in manufacturing as a consequence of these prices has fallen by 12% since 2014.12
AEMO forecasts further reductions in gas use as consumers fuel-switch away from gas appliances towards electrical devices, in particular for space conditioning. For example, the Commonwealth and NSW Government are exploring options to free-up gas demand through electrification, fuel switching and energy efficiency. [16]
Fuel switching from gas appliances towards electrical devices can often be more economic. A 2018 study of household fuel choice found that 98% of households with new solar financially favoured replacement of gas appliances with electric. With existing/no solar 60-65% of households still favoured replacement of gas appliances with electric. [17]
In the residential sector, for example, reverse-cycle air-conditioning is expected to reduce gas demand that could have arisen due to gas heating.[18] For those residents who cannot afford the capital costs of replacing gas appliances, these increased prices are leading to a worrying growth in energy poverty in the domestic residential sector. [19]
AEMO in 2018[20] estimated that in industry accounts for 42% of domestic gas demand, gas powered generation accounts for 29% of demand and residences accounted for the remaining 29%.
It should be noted that demand for natural gas has declined over recent years. From 2014 to 2020, domestic annual consumption of natural gas fell by approximately 19 per cent, with the major contributor of this fall in consumption being the reduction in the use of gas for power generation.[21] 23 Whereas domestic demand for gas has fallen for use in manufacturing by 14%, it has dropped by a staggering 59% for power generation by since 2014.12
The AEMO 2020 Gas Statement of Opportunities report[22] stated that their 2020 gas consumption forecast was lower than all previous forecasts for 2023 onwards, largely reflecting a reduced outlook for the LNG sector, along with a muted outlook for gas-powered generation as new utility-scale renewable capacity forecasts were higher than previously forecast. AEMO, in their latest report[23], predicted that domestic gas consumption was likely to decline, “as consumers invest in measures to increase energy efficiency, including switching away from gas consumption.”
Whereas AEMO has predicted no effective change to the level industrial gas use and residential and commercial gas use, demand for gas-powered generation is predicted to continue to fall by over 85% from 2019 levels by 2028.23 [24]
Economic recovery and jobs?It is dubious that projects such as the Beetaloo Basin gas will deliver the goods for an economic recovery. ACIL Allen’s report “The economic impacts of a potential shale gas development in the Northern Territory”[25] noted that between 82 – 252 ongoing jobs (including indirect employment generated by the local spending of the industry) would be created due the capital-intensive nature of the shale gas industry. Similarly, it would increase NT government revenues by only 0 - 29.1 million per year (<1% budget revenue).[26] The industry is not a large employer and pays little or no tax.[27] Analysis by The Australia Institute noted that the gas sector was one of the worst options to choose for mass job creation and that investment in other sectors would create many more jobs.[28]
Climate Change ImpactsThe impacts of climate change on the environment are significant and severe. The present scientific consensus is that the earth's climate is warming due to human activity (https://climate.nasa.gov/scientific-consensus/ ), and the negative impacts of increased greenhouse gas emissions are measurable globally and nationally.[29]
The seven hottest years globally have occurred in the last seven years, with the last decade warmer than any previous decade.[30] Furthermore, nineteen of the hottest years on record occurred in the last twenty years. [31] [32] The average global temperature now exceeds 1°C above pre-industrial (1850-1900) levels and is expected to exceed 1.5°C between 2030 and 2052.34
Australia has warmed faster than the global average and is on average 1.44 ± 0.24°C warmer than when national records began in 1910 with most of the warming occurring since 1950 with every decade since being warmer than the one before.[33] If comparing to a pre-industrial (1850-1900) baseline, then by 2019 Australia had warmed by greater than 1.5°C.30
The government is responsible for the environment, the health and wellbeing of its citizens, and the financial security of the nation. As we see the impact of increased carbon emissions, we also find evidence of the impact on Australian native wildlife, the Australian people and the wealth of the nation as noted by the catastrophic Black Summer bushfires, crippling drought and more recently floods.
To address the issue of dangerous climate change, Australia, along 196 other parties, is a signatory to the Paris Agreement, which entered into force on 4 November 2016. The Paris Agreement aims to strengthen the global response to the threat of climate change, by:
Holding the increase in the global average temperature to well below 2°C above pre-industrial levels and pursuing efforts to limit the temperature increase to 1.5°C above pre-industrial levels, recognizing that this would significantly reduce the risks and impacts of climate change.[34]
The draft climate change policy “Northern Territory Climate Change Response: Towards 2050”[35] details the NT Government’s objective to achieve net-zero emissions by 2050 and outlines NT governments approach to addressing climate risk and harnessing new opportunities, including building on “existing initiatives across the NT to reduce greenhouse gas emissions across all sectors”, in line with NT’s aspirational target of net zero emissions by 2050. It concedes that “all sectors in the Northern Territory need to be engaged to realise the benefits and that the transition to a low-carbon economy needs to be carefully managed to ensure ongoing economic investment in the Northern Territory.”
The IPCC report[36] provides an estimate for a global remaining carbon budget of 580 GtCO2 (excluding permafrost feedbacks) based on a 50% probability of limiting warming to 1.5 degrees relative to 1850 to 1900 during and beyond this century and a remaining carbon budget of 420 GtCO2 for a 67% chance.
Committed emissions from existing and proposed energy infrastructure represent more than the entire carbon budget that remains if mean warming is to be limited to 1.5 °C and perhaps two-thirds of the remaining carbon budget if mean warming is to be limited to less than 2 °C. Estimates suggest that little or no new CO2-emitting infrastructure can be commissioned, and that existing infrastructure may need to be retired early (or be retrofitted with carbon capture and storage technology) in order to meet the Paris Agreement climate goals.[37]
Australia’s remaining emission budget from Jan 2017 until 2050 for a 50% chance of warming to stay below 1.5C warming relative to pre-industrial levels was estimated to be 5.5 GTCO2e.36 Adding the GHG emissions expended in 2017[38], 2018[39], 2019[40] and 2020[41], this leaves just 3.3 Gt CO2e remaining as at December 2020. This leaves 6 years left at present emission rates of the 2013-2050 emission budget to stay below 1.5°C. Therefore, at current emissions rates, Australia will have exceeded its carbon budget for 2050 by 2026.
The International Energy Agency report “Net Zero by 2050: A Roadmap for the Global Energy Sector”[42] states that no new natural gas fields are needed for the world to reach net zero by 2050. It therefore follows that no new fossil fuel infrastructure development in Australia that is not carbon neutral, including the Beetaloo Basin gas, that is estimated to result 39 - 117 million tonnes of greenhouse gases each year, can be permitted because its approval would be inconsistent with the remaining carbon budget and the Paris Agreement climate target.
This production of Beetaloo Basin natural gas is not consistent with NT’s climate change policy, the principle of inter-generational equity nor the public interest, as it clearly assumes failure to meet the Paris Agreement temperature goals and worsening climate change impacts for the NT.
Natural gas as a “transition fuel”?
Natural gas has often been touted as the “transition fuel” for the electricity sector to replace coal’s greenhouse gas emissions and eventually paving the way for an emissions free future for Australia. This concept is out of date and I believe incorrect. It is simply too expensive and too emissions intensive to be so.
Fugitive EmissionsMethane leaks from natural gas production can make the process as carbon intensive as coal. The CSIRO report “Fugitive Greenhouse Gas emissions from Coal Seam Gas Production in Australia”[43] noted that fugitive emissions for Natural Gas in Australia as a whole are estimated to be 1.5% of gas extracted. However, they also noted that shale gas emissions were approximately 1.9% higher than conventional gas associated with water flow-back and ‘drill-out’ stages of gas production.
It should be noted that if fugitive emissions exceeded 3.1% then the emissions intensity of gas would match that of coal (due to the fact that methane is 86 times more powerful as a greenhouse gas than CO2 over 20 years and 34 times more powerful over a 100-year time period).14 Therefore based on estimates provided by CSIRO, the emissions intensity of shale gas as proposed for the Beetaloo basin would exceed those for coal and could not be considered a “transition fuel”.
Electricity Market moving away from gasAs noted above, the electricity market has already moved away from gas, with a 59% decline in usage in the National Electricity Market since 2014, whilst renewable energy has increased by 25% during the same period.14 Furthermore, flexible gas plants already in the grid are running well below capacity.13 AEMO forecast that increasing renewable generation developments in the NEM are expected to continue to drive down system normal demand for gas-powered generation. 22
The AEMO modelled the future electricity grid in its Integrated Systems Plan.[44] [45] The results showed for all scenarios that the transition from coal to renewable energy would not be via gas.13 The role of gas would be reduced with a decline in gas generation through to 2040.14 The report notes that to firm up the inherently variable distributed and large-scale renewable generation, there will be needed new flexible, dispatchable resources such as: utility-scale pumped hydro and large-scale battery energy storage systems, distributed batteries participating as virtual power plants, and demand side management.44 45 It also noted that new, flexible gas generators such as gas peaking plants could play a greater role if gas prices materially reduced, with gas prices remaining low at $4 to 6 per GJ.45 However this is unlikely as gas prices have tripled over the past decade and expected domestic gas prices are over 60% more than this price.13 [46] AEMO noted that the investment case for new gas-powered generation will critically depend on future gas prices, as gas-powered generation and batteries can both serve the daily peaking role that will be needed as variable renewable energy replaces coal-fired generation. In their 2020 Gas Statement of Opportunities report, AEMO predicted that as more coal-fired generation retired in the long term, gas consumption for gas-powered generation in the National Electricity Market was forecast to grow again in the early 2030s, recovering to levels similar to those forecast for 2020.20 However, in a later report, AEMO determined that by the 2030s, when significant investment in new dispatchable capacity is needed, new batteries will be more cost-effective than gas-powered generation. 45 Furthermore, the commissioning of the Snowy 2.0 pumped hydro project in 2026 will result in less reliance on gas-powered generation as a source of firm supply.22
AEMO noted that stronger interconnection between regions reduces the reliance on gas-powered generation, as alternative resources can be shared more effectively. 45 The expansion network interconnection enables the growth of variable renewable energy without a significant reliance on local gas generation.[47] Supporting this assertion, the AEMO announced a series of actionable transmission projects including interconnector upgrades and expansions and network augmentations supporting recently announced renewable energy zones.[48] 45 AEMO noted that as each of these new transmission projects is commissioned, the ability for national electricity market regions to share resources (particularly geographically diverse variable renewable energy) is increased, and therefore demand for gas-powered generation is forecast to decrease.22 The Marinus Link is forecast to be commissioned in 2036, with surplus renewable generation from Tasmania then being available to the mainland National Electricity Market, which would see further declines in gas-fired generation, despite continuing coal-fired generation retirements.22
Gas-powered generation can provide the synchronous generation needed to balance variable renewable supply, and so is a potential complement to storage. However, the current installation of synchronous condensers in South Australia and other eastern states to increase system strength and stabilise the electricity network will reduce the need for gas-fired generators acting in the role of synchronous generators as more renewables enter the grid.[49] Ancillary services are likely to utilise battery storage and synchronous condensers in the future and no longer require the use of gas-powered generation.
Transitioning away from Gas
The ACT is planning to go gas free by 2025. This is expected to reduce their overall emissions by 22%. As part of the ACT Climate Change Strategy 2019-2025, all government and public-school buildings will be completely powered by 100% renewable energy eliminating the need for natural gas. The ACT has also removed the mandatory requirement for new homes built in the ACT to be connected to the mains gas network and will begin to introduce new policies to replace gas appliances with electric alternatives. Some 14% of residents have already converted over to 100% electric. [50]
There are moves in other jurisdictions to remove the mandatory requirement for a gas connection in new developments such as in South Australia.
Alternatives to Natural Gas
Several technologies new or new to Australia are expected to reduce the use of natural gas as the Australian economy transitions to a net zero emissions economy and would replace the need for new gas such as proposed for the Beetaloo Basin. Please note that these technologies not only look to transition electricity generation away from natural gas but also for gas combustion for heat. These technologies could also address any gas supply shortfalls.
HydrogenHydrogen is a colourless, odourless, non-toxic gas that is an excellent carrier of energy and can be used for a broad range of energy applications including as a transport fuel, a substitute for natural gas and for electricity generation.[51] Hydrogen gas can be produced from water in a process known as electrolysis, and when powered by renewable energy, the hydrogen produced is free from carbon emissions, making it an attractive way to decarbonise transport, heating and electricity generation.51
AEMO stated that, “Hydrogen has the exciting potential to become an alternative energy storage technology and a new export commodity for Australia” which could be used to help decarbonise the domestic heat, transport and the industrial and commercial sectors in Australia and noted that development of the hydrogen industry would potentially impact both natural gas and electric demands. 44 [52]
Several developments involving green / renewable hydrogen are either planned or underway in Australia.
AEMO highlighted the potential for green steel production in Australia due to abundant renewable resources and the increased demand for low emissions industrial commodities worldwide.52 ‘Green steel’ can be made via a direct reduction process which uses hydrogen (made from renewable energy) as the heat source and reducing agent to produce pig iron. The by-product of the iron reduction process using hydrogen is water, rather than carbon dioxide in conventional steel making. Renewable energy is then used by an electric arc furnace to produce low-emissions green steel.
The Arrowsmith Hydrogen Project, which will be built at a facility in the town of Dongara, located 320km north of Perth, will utilise dedicated onsite renewable energy 85MW of solar power, supplemented by 75MW of wind generation capacity to generate 25 tonnes of green hydrogen a day and will be operational in 2022.[53]
ATCO’s Clean Energy Innovation Hub, located in Jandakot in Western Australia, is being used to trial the production, storage and use of renewable hydrogen to power a commercial-scale microgrid, testing the use of hydrogen in different settings and applications including in household appliances.[54] This includes optimising hydrogen storage solutions, blending hydrogen with natural gas and using hydrogen a direct use fuel. Green hydrogen will be produced from on-site solar using electrolysis, fuelling a range of gas appliances and blending hydrogen into the natural gas pipeline.
The $3.3 million development project will evaluate the potential for renewable hydrogen to be generated, stored, and used at a larger scale. ATCO aims to assess the practicalities of replacing natural gas with hydrogen at a city-wide scale across a municipality.[55]
The new chair of the Australian Energy Regulator, Clare Savage recently stated:
“The national gas industry could also undergo significant change as some jurisdictions move towards a zero carbon emissions policy. This could have significant consequences for the future of gas pipeline networks. In response, the AER recently supported the future recovery of Jemena’s investment in trialling the production of hydrogen from renewable energy for injection into its Sydney network. If hydrogen trials such as Jemena’s prove successful, the natural gas networks could be re-purposed to distribute hydrogen. If not, the economic life of the assets could be limited.” [56]
Biogas and BiomethaneBiogas is produced by the bacterial degradation of organic waste under anaerobic conditions and is composed principally of methane (50%-75%) and CO2 (25%-50%), with small amounts of oxygen, water and trace amounts of sulphur.[57] After cleaning (desulfurization and drying), biogas can be used to generate electricity and heat in cogeneration units (combined heat power (CHP)) or burnt to produce heat.57 [58] Biogas can also be upgraded (removal of CO2) to biomethane with approximately 98% methane which has similar properties as natural gas.57 58 Both Biogas and Biomethane are flexible renewable fuels that can be stored for later use, with Biomethane is suitable to be added to the natural gas grid.57
The development of Biogas and particularly Biomethane plants in Australia has been particularly slow compared to other countries, in particular Europe.[59] Below are a couple of recent developments in Australia:
- The Malabar Biomethane Project[60] is Australia’s first project to produce biomethane and inject it into the gas grid. The plant will be located at the Malabar Wastewater Treatment Plant in South Sydney and is expected to be completed in 2022.60
- Utilitas is planning to develop “bioHub’s” around Australia to redevelop infrastructure (such as wastewater treatment plants) with anaerobic digestors to produce biogas, biomethane and hydrogen.[61] The first site is being developed in Bundaberg, Qld, with planned sites in the Hunter Valley, NSW and Dandenong, Victoria.61
Biogas and its industry offer many benefits:
- Biogas is a renewable energy source that assists the decarbonisation of the economy. A study of the replacement of natural gas by biomethane in France reduced GHG emissions by greater than 85%.
- Biogas is a secure, continuous and dispatchable source of energy that can contribute to national energy supply.
- Biogas also provides an alternative route for waste treatment and, as such, can help divert waste from landfill.
- The biogas industry supports local economies and regional communities, creating jobs, and offering new income sources, particularly for farmers.
- Biogas transformed into biomethane is a renewable gas that can replace natural gas, and can be used in homes for cooking, heating, and hot-water, or as a fuel for gas vehicles. It can be injected into the gas grid or used directly on-site. As biomethane has similar characteristics to natural gas, its injection into the gas grid does not require any adaptation of the existing infrastructure (neither the gas grid nor customer equipment connected to it). This is an opportunity for the gas and transport sectors to further assist the energy transition. [62]
A landmark report commissioned by Bioenergy Australia last year identified the total estimated biogas potential to be 371PJ (103TWh) of available energy, which is enough to decarbonise industrial, commercial, and residential gas users currently supplied by distributed gas networks across Australia.[63]
Australian business, industry and utilities recently signed an open letter to the Commonwealth Government advocating for biomethane to be injected into the gas distribution networks to enable the lowest cost transition to a decarbonised energy market and address a number of challenges including:
- Provide complementary reliable and flexible renewable resources for variable renewable energy.
- Allow heavy industry dependent on process inputs and high-quality heat to decarbonise using existing gas connections.
- Provide a pathway for Heavy vehicle decarbonisation.
- Allow domestic gas customers to decarbonise their energy supply using existing networks and appliances.[64]
Power-to-GasA relatively new chemical energy storage technology that looks to provide medium to long-term storage is Power-to-Gas. Power-to-Gas (P2G) offers the possibility of converting surplus renewable electricity into chemical energy storage that can be later reconverted to electrical power to cover peak demand periods.[65]
The core element of a P2G plant is the electrolyser which converts otherwise unused or low value surplus electric energy generated by renewable energy sources into Hydrogen.[66] [67] P2G technology can take the form of power-to-hydrogen (P2H) utilising Hydrogen as the chemical storage fuel or further processed as power-to-methane (P2M) using methane as the chemical storage fuel.65 67 The produced gas as well as being used to reproduce electricity can be utilised by other sectors like transport or heating.[68]
The Hydrogen or methane is stored for later use. Hydrogen fuel cells and hydrogen combustion turbines generate electricity from hydrogen when needed such as when demand exceeds supply. The methane can also be used to create electricity later when needed using a gas turbine. These are flexible dispatchable technologies that will provide an important form of system flexibility under increasing levels of Variable Renewable Energy such as wind and solar.[69]
Both Renewable Hydrogen and Biogas/Biomethane can displace or replace natural gas as a fuel significantly reducing GHG emissions. These technologies show promise in Australia with the resources available locally. Once developed these would see assets such as the Beetaloo Basin Gas left stranded.
Summary
In summary, further government funding for exploration activities to be undertaken in the Beetaloo sub-basin to facilitate gas exploration in the Beetaloo sub-basin and to support the development of the Northern Territory gas industry should be refused.
Natural gas extraction from the Beetaloo Basin does not appear to be commercially viable either for the domestic or overseas market and investment in natural gas infrastructure for this area will potentially result in stranded assets.
The development of the Beetaloo Basin shale gas is estimated to result in 39 - 117 million tonnes of greenhouse gases each year. This cannot be permitted as there is insufficient carbon budget remaining for Australia to accommodate this project and would be inconsistent with NT’s own climate change policy and clearly assumes failure to meet the Paris Agreement temperature goals and worsening climate change impacts for the NT.
Natural gas is not a “transition fuel” for the electricity sector to replace coal’s greenhouse gas emissions and eventually paving the way for an emissions free future for Australia. In particular, shale gas is simply too emissions intensive to be so.
Several technologies new or new to Australia are expected to reduce the use of natural gas as the Australian economy transitions to a net zero emissions economy and would replace the need for new gas such as proposed for the Beetaloo Basin. Both Renewable Hydrogen and Biogas/Biomethane can displace or replace natural gas as a fuel significantly reducing GHG emissions. No new gas is needed.
Thank you for taking the time to read my submission.
Alec Roberts
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[68] Weiss, T, Lücken, A & Shulz, D. (2013). An empirical approach to calculate short and long term energy storage needs of an electricity system. 48th International Universities' Power Engineering Conference (UPEC), Dublin, Ireland. pp. 1-6, doi:10.1109/UPEC.2013.6714953.
[69] McPherson, M., Johnson, N. & Strubegger, M. (2018). The role of electricity storage and hydrogen technologies in enabling global low-carbon energy transitions. Applied energy, vol. 216, pp. 649-661, doi: https://doi.org/10.1016/j.apenergy.2018.02.110.
Submission to Australian Senate - Grid Reliability Fund Bill 2020 by Alec Roberts
18/09/2020
Committee Secretary
Senate Standing Committees on Environment and Communications
PO Box 6100
Parliament House
Canberra ACT 2600
E: ec.sen@aph.gov.au
My concerns about the Grid Reliability Fund Bill 2020
Dear Senators,
Thank you for the opportunity to provide a submission into the Grid Reliability Fund Bill 2020 and taking the time to consider my submission.
The $1 billion Grid Reliability Fund (GRF) is a positive move to increase investment in:
- energy storage projects including pumped hydro and batteries,
- transmission and distribution infrastructure, and
- grid stabilising technologies.[1]
However, there is no justification for expanding the CEFC’s mandate to include the funding of gas projects, especially those that are not commercially viable.
The Government needs to be clear. Is the objective of this bill to firm up the electricity grid (to provide reliability going forward as additional variable renewable energy enters the grid)? Or is the objective to provide a mechanism to burn more gas?
Australia will combust its carbon budget for 2050 by 2026 (See Figure 1 below) (a Senator’s term), therefore any gas infrastructure development would contribute to an unacceptable increase in greenhouse gas emissions and would be doomed to become a stranded asset.
CEFC objectives are being compromised
The object of the CEFC is “to facilitate increased flows of finance into the clean energy sector” through investing in businesses or projects for the development or commercialisation of clean energy technologies.[2] However, financial prudence is being abandoned, where loss making “investments” can be made by the CEFC. The proposed amendments included that CEFC would invest in technologies where individual investments under the GRF would not need to make a return. Additionally, the abandonment of building a zero-emission economy is embodied in proposed changes allowing GRF money to go to gas-powered generation (GPG), as no GRF projects need to be renewable energy projects.
Therefore, if a recommended project was GPG, (which is likely given the current short list of projects in the Underwriting New Generation Investments program)[3] such an investment would prop-up an otherwise uncommercial project, forcing out more efficient and potentially lower emission technologies from the market. This would likely lead to increased prices for electricity. This is not what we want in trying to decarbonise our electricity grid without increasing prices.
Low-emission technology needs to actually be net-zero-emission
The fuel substitution of natural gas for coal at a glance reduces emissions for electricity generation, but that doesn’t make natural gas a low-emission technology just because you write it into legislation. This appears to be inferred by the proposed changes:
“Item 33 expands the scope of “low-emission technology” to ensure the CEFC is able to invest in the GRF technologies described elsewhere in the Bill: specifically, those relating to energy storage, electricity generation, transmission or distribution or electricity grid stabilisation, and that support the achievement of low-emission energy systems in Australia. Any technology that meets this criteria will be considered a low-emission technology by default, and therefore within the CEFC’s technology remit.”[4]
Natural gas as a “transition fuel”?
Natural gas has often been touted as the low emission “transition fuel” for the electricity sector to replace coal’s greenhouse gas emissions and eventually paving the way for an emissions free future for Australia. The concept of gas as a transition fuel is out of date and I believe incorrect. It is simply too expensive and too emissions intensive to be so. Methane leaks from natural gas production, transportation and use can make the process nearly as carbon intensive as coal. The CEFC is already highly successful in driving investment in the most cost-effective low emissions technologies. Gas is not a low emissions technology[5] and Australia can transition to clean energy without it.
The use of gas in electricity production has reduced in recent years and modelling of the future electricity grid and further evidence has indicated that it is unlikely that gas will play a major role in the transition from coal-fired power plants to renewable energy and storage.
The electricity market has already moved away from gas in Eastern Australia. From 2014 to 2018, annual consumption of natural gas in NSW fell by 15 per cent, with the major contributor of this fall in consumption being the reduction in the use of gas for power generation.[6] Whereas domestic demand for gas has fallen for use in manufacturing by 14%, it has dropped by a staggering 59% for power generation by since 2014, 7 whilst renewable energy has increased by 25% during the same period.[7] Furthermore, flexible gas plants already in the grid are running well below capacity.[8] AEMO forecast that increasing renewable generation developments in the NEM are expected to continue to drive down system normal demand for GPG. [9]
The AEMO modelled the future electricity grid in its Integrated Systems Plan.[10] [11] The results showed for all scenarios that the transition from coal to renewable energy would not be via gas.8 The role of gas would be reduced with a decline in gas generation through to 2040.7 The report notes that to firm up the inherently variable distributed and large-scale renewable generation, there will be needed new flexible, dispatchable resources such as: utility-scale pumped hydro and large-scale battery energy storage systems, distributed batteries participating as virtual power plants, and demand side management.10 11 It also noted that new, flexible gas generators such as gas peaking plants could play a greater role if gas prices materially reduced, with gas prices remaining low at $4 to $6 per GJ.11 However this is unlikely as gas prices have tripled over the past decade and expected NSW gas prices (for example) are over 60% more than this price.8 [12] AEMO noted that the investment case for new GPG will critically depend on future gas prices, as GPG and batteries can both serve the daily peaking role that will be needed as variable renewable energy replaces coal-fired generation. In their 2020 Gas Statement of Opportunities report, AEMO predicted that as more coal-fired generation retired in the long term, gas consumption for GPG in the National Electricity Market was forecast to grow again in the early 2030s, recovering to levels similar to those forecast for 2020.9 However, in a later report, AEMO determined that by the 2030s, when significant investment in new dispatchable capacity is needed, new batteries will be more cost-effective than GPG. 11 Furthermore, the commissioning of the Snowy 2.0 pumped hydro project in 2026 will result in less reliance on GPG as a source of firm supply.9 Moreover, AEMO forecast that, demand for GPG is predicted to continue to fall by over 85% from 2019 levels by 2028.[13]
Stronger grid interconnections need less gas-powered generation
AEMO noted that stronger interconnection between regions reduces the reliance on GPG, as alternative resources can be shared more effectively. 11 The expansion of network interconnections enables the growth of variable renewable energy without a significant reliance on local gas generation.[14] Supporting this assertion, the AEMO announced a series of actionable transmission projects including interconnector upgrades and expansions and network augmentations supporting recently announced renewable energy zones.[15] 11 AEMO noted that as each of these new transmission projects is commissioned, the ability for national electricity market regions to share resources (particularly geographically diverse variable renewable energy) is increased, and therefore demand for GPG is forecast to decrease.9 The Marinus Link is forecast to be commissioned in 2036, with surplus renewable generation from Tasmania then being available to the mainland National Electricity Market, which would see further declines in gas-fired generation, despite continuing coal-fired generation retirements.9
Less need for gas for ancillary services
AEMO recently noted that GPG can provide the synchronous generation needed to balance variable renewable supply, and so is a potential complement to storage, with the ultimate mix depending upon the relative cost and availability of different storage technologies compared to future gas prices. 11 However, the current installation of synchronous condensers in South Australia and in the eastern states to increase system strength and stabilise the electricity network will reduce the need for gas-fired generators acting in the role of synchronous generators as more renewables enter the grid.[16] Ancillary services are likely to utilise battery storage and synchronous condensers in the future and no longer require the use of GPG.
Is investment in gas wise?
As an investment, gas is on shaky grounds. For example, since 2014, Santo’s write-downs are approaching $8bn. Internationally things are not better for gas. In the U.S., the number of operating drill rigs has fallen 73% in the last 12 months. And US LNG exports have more than halved so far in 2020. Deloitte estimates that almost a third of U.S. shale producers are technically insolvent at current oil prices.[17] Gas is in decline globally and further investment will lock in more unnecessary years of high emissions and will leave Australia with the economic burden of stranded gas assets.
Moving away from gas
The ACT is planning to go gas free by 2025. This is expected to reduce their overall emissions by 22%. As part of the ACT Climate Change Strategy 2019-2025, all government and public-school buildings will be completely powered by 100% renewable energy eliminating the need for natural gas. The ACT has also removed the mandatory requirement for new homes built in the ACT to be connected to the mains gas network and will begin to introduce new policies to replace gas appliances with electric alternatives. Some 14% of residents have already converted over to 100% electric. [18] There are moves in other jurisdictions to remove the mandatory requirement for a gas connection in new developments such as in South Australia.
AEMO forecasts further reductions in gas use as consumers fuel-switch away from gas appliances towards electrical devices, in particular for space conditioning. The Commonwealth and NSW Government are exploring options to free-up gas demand through electrification, fuel switching and energy efficiency. [19]
Fuel switching from gas appliances towards electrical devices can often be more economic. A 2018 study of household fuel choice found that 98% of households with new solar financially favoured replacement of gas appliances with electric. With existing/no solar 60-65% of households still favoured replacement of gas appliances with electric. [20]
In the residential sector, for example, reverse-cycle air-conditioning is expected to reduce gas demand that could have arisen due to gas heating.[21]
Therefore, it is unlikely that additional gas will be required in the Australian domestic gas market to meet residential, commercial, and industrial gas demand.
The role of natural gas in a low-carbon economy
To address the issue of dangerous climate change, Australia, along 196 other parties, is a signatory to the Paris Agreement, which entered into force on 4 November 2016. The Paris Agreement aims to strengthen the global response to the threat of climate change, by:
Holding the increase in the global average temperature to well below 2°C above pre-industrial levels and pursuing efforts to limit the temperature increase to 1.5°C above pre-industrial levels, recognizing that this would significantly reduce the risks and impacts of climate change.[22]
The IPCC report provides an estimate for a global remaining carbon budget of 580 GtCO2 (excluding permafrost feedbacks) based on a 50% probability of limiting warming to 1.5 degrees relative to 1850 to 1900 during and beyond this century and a remaining carbon budget of 420 GtCO2 for a 67% chance (See Figure 1 for details). [23]
Figure 1 Remaining Carbon Budget[24] (see below)
Committed emissions from existing and proposed energy infrastructure represent more than the entire carbon budget that remains if mean warming is to be limited to 1.5 °C and perhaps two-thirds of the remaining carbon budget if mean warming is to be limited to less than 2 °C. Estimates suggest that little or no new CO2-emitting infrastructure can be commissioned, and that existing infrastructure may need to be retired early (or be retrofitted with carbon capture and storage technology) in order to meet the Paris Agreement climate goals.[25]
Australia’s remaining emission budget from Jan 2017 until 2050 for a 50% chance of warming to stay below 1.5C warming relative to pre-industrial levels was estimated to be 5.5 GTCO2e.23 Adding the GHG emissions expended in 2017[26], 2018[27], and 2019[28], this leaves just 3.8 Gt CO2e remaining as at December 2019. This leaves 6-7 years left at present emission rates of the 2013-2050 emission budget to stay below 1.5°C. Therefore, at current emissions rates, Australia will have exceeded its carbon budget for 2050 by 2026.
It therefore follows that no new fossil fuel development in Australia that is not carbon neutral can be permitted because its approval would be inconsistent with the remaining carbon budget and the Paris Agreement climate target. It follows that gas infrastructure development would contribute to an unacceptable increase in greenhouse gas emissions.
Greenhouse gas and climate change – Fugitive emission
Fuel switching from coal to gas has in theory the potential to reduce emissions for electricity generation. GPG in a grid with high levels of renewable energy takes the form of gas peaking plants. Gas peaking plants have only 31% less emissions than coal (not the touted 50-60%).5 Fugitive emissions from the production, transportation and use of natural gas are likely to nullify that difference in emissions from coal. The CSIRO report “Fugitive Greenhouse Gas emissions from Coal Seam Gas Production in Australia” [29] noted that fugitive emissions for Natural Gas in Australia are estimated to be 1.5% of gas extracted. It should be noted that if fugitive emissions exceeded 3.1% then the emissions intensity would match that of coal (due to the fact that methane is 86 times more powerful as a greenhouse gas than CO2 over 20 years and 34 times more powerful over a 100-year time period).[30] They also noted that unconventional gas industry such as Coal Seam Gas would result in greater levels of fugitive emissions than the conventional gas industry.
Furthermore, fugitive emissions from the transportation and use of natural gas appear substantive and I await with trepidation for the results of Professor Bryce Kelly’s study into fugitive emissions in Sydney.[31] Although not related to GPG, I know from my own experience that gas leaks in suburbia are quite common. Until last week (when it was finally repaired) gas would bubble up through puddles after rain on the grass verge around the corner from my house.
Therefore, the use of natural gas to displace coal-fired power generation would not necessarily reduce CO2 emissions or be classed as a “low-emission energy system”.
In summary, whereas the $1 billion GRF is a great move to spur on investment in:
- energy storage projects including pumped hydro and batteries,
- transmission and distribution infrastructure, and
- grid stabilising technologies,
Gas can no longer be considered a transition fuel to a low carbon economy. Natural gas is not a low emission technology and the transition to a zero-carbon grid will not be through expansion of natural gas infrastructure. Gas also appears to be in decline globally and investment in natural gas infrastructure will potentially result in stranded assets. Surely any organisation investing in the expansion of the fossil fuel industry such as the Gas industry is taking unacceptable risks with our future as well as its own.
Thank you for taking the time to read my submission.
Alec Roberts
[1] DISER (n.d.a) Government priorities - Grid Reliability Fund. Retrieved from https://www.energy.gov.au/government-priorities/energy-programs/grid-reliability-fund
[2] Clean Energy Finance Corporation Act 2012 (Cth) (Austl.). Retrieved from https://www.legislation.gov.au/Details/C2017C00265
[3] DISER (n.d.b) Underwriting New Generation Investments program. Retrieved by https://www.energy.gov.au/government-priorities/energy-programs/underwriting-new-generation-investments-program
[4] DISER (n.d.c) Clean Energy Finance Corporation Amendment (Grid Reliability Fund) Bill 2020. Retrieved from https://www.aph.gov.au/Parliamentary_Business/Bills_LEGislation/Bills_Search_Results/Result?bId=r6581
[5] ABC Radio - The Signal (2020, September 18) Why Gas? [Audio podcast]. Retrieved https://www.abc.net.au/radio/programs/the-signal/why-gas/12675674
[6] Pegasus Economics (2019, August) Report on the Narrabri Gas Project. Retrieved from https://8c4b987c-4d72-4044-ac79-99bcaca78791.filesusr.com/ugd/b097cb_c30b7e01a860476bbf6ef34101f4c34c.pdf
[7] Robertson, B. (2020, July 23). IEEFA update: Australia sponsors a failing gas industry. Retrieved from https://ieefa.org/ieefa-update-australia-sponsors-a-failing-gas-industry/
[8] Morton, A. (2020, March 8). 'Expensive and underperforming': energy audit finds gas power running well below capacity. Retrieved from https://www.theguardian.com/environment/2020/mar/08/expensive-and-underperforming-energy-audit-finds-gas-power-running-well-below-capacity
[9] AEMO (2020, March). Gas Statement of Opportunities, March 2020, For eastern and south-eastern Australia. Retrieved from https://aemo.com.au/en/energy-systems/gas/gas-forecasting-and-planning/gas-statement-of-opportunities-gsoo
[10] AEMO (2019, December 12). Draft 2020 Integrated System Plan - For the National Electricity Market. Retrieved from https://aemo.com.au/-/media/files/electricity/nem/planning_and_forecasting/isp/2019/draft-2020-integrated-system-plan.pdf?la=en
[11] AEMO (2020b, July 30). 2020 Integrated System Plan - For the National Electricity Market. Retrieved from https://aemo.com.au/-/media/files/major-publications/isp/2020/final-2020-integrated-system-plan.pdf?la=en
[12] ACCC (2020, January) Gas inquiry 2017-2025 – Interim Report. Retrieved from https://www.accc.gov.au/system/files/Gas%20inquiry%20-%20January%202020%20interim%20report%20-%20revised.pdf
[13] AEMO (2020, March 27) National Electricity & Gas Forecasting 2020 GSOO Publication. Retrieved from http://forecasting.aemo.com.au/Gas/AnnualConsumption/Total
[14] AEMO (2020c, July 30) 2020 ISP Appendix 2. Cost Benefit Analysis. Retrieved from https://aemo.com.au/-/media/files/major-publications/isp/2020/appendix--2.pdf?la=en
[15] Energy Source & Distribution (2020, July 30). AEMO reveals Integrated System Plan 2020. Retrieved from https://esdnews.com.au/aemo-reveals-integrated-system-plan-2020/
[16] Parkinson, G. (2020, May 25) Big spinning machines arrive in South Australia to hasten demise of gas generation. Retrieved from https://reneweconomy.com.au/big-spinning-machines-arrive-in-south-australia-to-hasten-demise-of-gas-generation-64767/
[17] Robertson, B. (2020, July 23). IEEFA update: Australia sponsors a failing gas industry. Retrieved from https://ieefa.org/ieefa-update-australia-sponsors-a-failing-gas-industry/
[18] Mazengarb, M. & Parkinson, G. (2019, September 16). ACT to phase out gas as it launches next stage to zero carbon strategy. Retrieved from https://reneweconomy.com.au/act-to-phase-out-gas-as-it-launches-next-stage-to-zero-carbon-strategy-92906/
[19] Energy NSW. (2020, January 31). Memorandum of understanding, Retrieved from https://energy.nsw.gov.au/government-and-regulation/electricity-strategy/memorandum-understanding
[20] Alternative Technology Association (2018, July) Household fuel choice in the National Energy Market. Retrieved from https://renew.org.au/wp-content/uploads/2018/08/Household_fuel_choice_in_the_NEM_Revised_June_2018.pdf
[21] AEMO (2020a, July 30). 2020 ISP Appendix 10. Sector Coupling. Retrieved from https://aemo.com.au/-/media/files/major-publications/isp/2020/appendix--10.pdf?la=en
[22] IPCC (2018). Global Warming of 1.5°C: An IPCC Special Report on the impacts of global warming of 1.5°C above pre-industrial levels and related global greenhouse gas emission pathways, in the context of strengthening the global response to the threat of climate change, sustainable development, and efforts to eradicate poverty, Intergovernmental Panel on Climate Change. Retrieved from https://www.ipcc.ch/sr15/
[23] Meinshausen, M. (2019, March 19). Deriving a global 2013-2050 emission budget to stay below 1.5°C based on the IPCC Special Report on 1.5°C. Retrieved from https://www.climatechange.vic.gov.au/__data/assets/pdf_file/0018/421704/Deriving-a-1.5C-emissions-budget-for-Victoria.pdf
[24] Figueres, C., Schellnhuber, H. J., Whiteman, G., Rockström, J., Hobley, A., & Rahmstorf, S. (2017). Three years to safeguard our climate. Nature, 546(7660), 593–595. https://doi-org.ezproxy.newcastle.edu.au/10.1038/546593a
[25] Tong, D., Zhang, Q., Zheng, Y., Caldeira, K., Shearer, C., Hong, C., Qin, Y., & Davis, S. J. (2019). Committed emissions from existing energy infrastructure jeopardize 1.5 °C climate target. Nature, 572(7769), 373-377. https://doi-org.ezproxy.newcastle.edu.au/10.1038/s41586-019-1364-3
[26] Climate Council (2018) Australia’s Rising Greenhouse Gas Emissions. Retrieved from https://www.climatecouncil.org.au/wp-content/uploads/2018/06/CC_MVSA0143-Briefing-Paper-Australias-Rising-Emissions_V8-FA_Low-Res_Single-Pages3.pdf
[27] Cox, L. (2019, March 14). Australia's annual carbon emissions reach record high. Retrieved from https://www.theguardian.com/environment/2019/mar/14/australias-annual-carbon-emissions-reach-record-high
[28] DISER (2020, May) National Greenhouse Gas Inventory: December 2019. Retrieved from https://www.industry.gov.au/data-and-publications/national-greenhouse-gas-inventory-december-2019
[29] CSIRO (2012). Fugitive Greenhouse Gas Emissions from Coal Seam Gas Production in Australia. Retrieved from https://publications.csiro.au/rpr/pub?pid=csiro:EP128173
[30] Robertson, B. (2020, January 30). IEEFA Australia: Gas is not a transition fuel, Prime Minister. Retrieved from https://ieefa.org/ieefa-australia-gas-is-not-a-transition-fuel-prime-minister/
[31] O'Malley, N. (2020, September 13). Sydney awash with leaks as research shows the climate cost of gas. Retrieved from https://amp.smh.com.au/environment/climate-change/sydney-awash-with-leaks-as-research-shows-the-climate-cost-of-gas-20200828-p55qd5.html
Letter requesting UniSuper divest from gas investments by Alec Roberts
5 September 2020
UniSuper
Level 1, 385 Bourke Street
Melbourne VIC 3000
E: enquiry@unisuper.com.au
Dear UniSuper,
I am writing to challenge the fund’s stated view that “gas will be an important transition fuel to a low carbon world”. I ask that you reconsider this position and divest from all companies seeking to expand gas production.
I am a member of UniSuper and have my investment options in Sustainable High Growth and Global Environment Opportunities so not to be investing in Fossil Fuels. However, this is not enough. UniSuper need to divest fully from Fossil Fuels including gas and oil.
The divestment of several thermal coal mining companies was a great first step in aligning UniSuper’s portfolio with my principles.
I ask that you apply the same reasoning to gas producers, recognising the decline in gas production required to limit global warming to 1.5°C, and divest from all companies whose future prospects rely on expanding the sector.
Natural gas as a “transition fuel”?
Natural gas has often been touted as the “transition fuel” for the electricity sector to replace coal’s greenhouse gas emissions and eventually paving the way for an emissions free future for Australia.
In response to an open letter on April 8 calling for UniSuper to immediately divest from companies that are actively undermining climate action, UniSuper Chairman Ian Martin stated that "Our base case is that gas will be an important transition fuel to a low carbon world."[1] This supported UniSuper’s “Climate risks and our investments” document which noted Natural Gas as being often cited as a transition fuel and that “In order for natural gas to fulfil its role as a transition fuel, infrastructure will need to be built.”[2]
The concept of gas as a transition fuel is out of date and I believe incorrect. It is simply too expensive and too emissions intensive to be so. Methane leaks from natural gas production can make the process nearly as carbon intensive as coal.
The use of gas in electricity production has reduced in recent years and modelling of the future electricity grid and further evidence has indicated that it is unlikely that gas will play a major role in the transition from coal-fired power plants to renewable energy and storage.
The electricity market has already moved away from gas in Eastern Australia, with a 59% decline in usage in the National Electricity Market since 2014, whilst renewable energy has increased by 25% during the same period.[3] Furthermore, flexible gas plants already in the grid are running well below capacity.[4] AEMO forecast that increasing renewable generation developments in the NEM are expected to continue to drive down system normal demand for gas-powered generation (GPG). [5]
The AEMO modelled the future electricity grid in its Integrated Systems Plan.[6] [7] The results showed for all scenarios that the transition from coal to renewable energy would not be via gas.10 The role of gas would be reduced with a decline in gas generation through to 2040.9 The report notes that to firm up the inherently variable distributed and large-scale renewable generation, there will be needed new flexible, dispatchable resources such as: utility-scale pumped hydro and large-scale battery energy storage systems, distributed batteries participating as virtual power plants, and demand side management.12 13 It also noted that new, flexible gas generators such as gas peaking plants could play a greater role if gas prices materially reduced, with gas prices remaining low at $4 to $6 per GJ.13 However this is unlikely as gas prices have tripled over the past decade and expected NSW gas prices (for example) are over 60% more than this price.10 [8] AEMO noted that the investment case for new GPG will critically depend on future gas prices, as GPG and batteries can both serve the daily peaking role that will be needed as variable renewable energy replaces coal-fired generation. In their 2020 Gas Statement of Opportunities report, AEMO predicted that as more coal-fired generation retired in the long term, gas consumption for GPG in the National Electricity Market was forecast to grow again in the early 2030s, recovering to levels similar to those forecast for 2020.11 However, in a later report, AEMO determined that by the 2030s, when significant investment in new dispatchable capacity is needed, new batteries will be more cost-effective than GPG. 13 Furthermore, the commissioning of the Snowy 2.0 pumped hydro project in 2026 will result in less reliance on GPG as a source of firm supply.11
AEMO noted that stronger interconnection between regions reduces the reliance on GPG, as alternative resources can be shared more effectively. 13 The expansion of network interconnections enables the growth of variable renewable energy without a significant reliance on local gas generation.[9] Supporting this assertion, the AEMO announced a series of actionable transmission projects including interconnector upgrades and expansions and network augmentations supporting recently announced renewable energy zones.[10] 13 AEMO noted that as each of these new transmission projects is commissioned, the ability for national electricity market regions to share resources (particularly geographically diverse variable renewable energy) is increased, and therefore demand for GPG is forecast to decrease.11 The Marinus Link is forecast to be commissioned in 2036, with surplus renewable generation from Tasmania then being available to the mainland National Electricity Market, which would see further declines in gas-fired generation, despite continuing coal-fired generation retirements.11
AEMO recently noted that GPG can provide the synchronous generation needed to balance variable renewable supply, and so is a potential complement to storage, with the ultimate mix depending upon the relative cost and availability of different storage technologies compared to future gas prices. 5 However, the current installation of synchronous condensers in South Australia and in the eastern states to increase system strength and stabilise the electricity network will reduce the need for gas-fired generators acting in the role of synchronous generators as more renewables enter the grid.[11] Ancillary services are likely to utilise battery storage and synchronous condensers in the future and no longer require the use of GPG.
Need for additional gas?
Gas demand has been declining in recent years and predictions are that gas demand will not increase in the future and may decrease, therefore it is unlikely that additional gas will be required in the Eastern Australian domestic gas market to meet residential, commercial, and industrial gas demand.
From 2014 to 2018, annual consumption of natural gas in NSW fell by 15 per cent, with the major contributor of this fall in consumption being the reduction in the use of gas for power generation.[12] Whereas domestic demand for gas has fallen for use in manufacturing by 14%, it has dropped by a staggering 59% for power generation by since 2014. 9
ACCC recently stated that “overall consumption of gas in the east coast was largely unchanged over the first five months of 2020 relative to 2019”[13] and that the COVID-19 pandemic has not had a material effect on the overall level of production or consumption in the East Coast Gas Market. However, they stated that it is unknown whether the contraction in economic activity brought about by the COVID-19 pandemic will result in a decline in domestic and/or international demand for gas in 2021.
Commercial and Industrial gas user (C&I) consumption is predicted to be flat or fall. C&I’s utilise gas for applications such as a heat source for boilers and furnaces, for producing steam, or for drying processes, and as a feedstock to produce fertilisers, explosives, chemicals, and plastics. ACCC reported that a number of suppliers expected GPG and C&I demand to be lower in 2020 and that many C&I users reported that they are slowing production due to the COVID-19 pandemic which raised the potential for significant adverse consequences for these users in having to pay for gas that they cannot use or on-sell (with take or pay contract obligations). ACCC concluded that there is now a considerable degree of uncertainty surrounding the demand for gas by gas users (non GPG) following the COVID-19 pandemic and the impact this has had on economic activity, both domestically and internationally.19
Whereas 2019 was somewhat of an anomalous year with failures in Coal Powered Generation resulting in additional GPG being utilised, the ACCC reported that GPG demand over the first five months of 2020 was 36% lower than over the same period in 2019.
Furthermore, AEMO forecast that, demand for GPG is predicted to continue to fall by over 85% from 2019 levels by 2028.[14]
As an investment, gas is on shaky grounds. Since 2014, Santo’s write-downs are approaching $8bn. Internationally things are not better for gas. In the U.S., the number of operating drill rigs has fallen 73% in the last 12 months. And US LNG exports have more than halved so far in 2020. Deloitte estimates that almost a third of U.S. shale producers are technically insolvent at current oil prices.[15]
Moving away from gas
The ACT is planning to go gas free by 2025. This is expected to reduce their overall emissions by 22%. As part of the ACT Climate Change Strategy 2019-2025, all government and public-school buildings will be completely powered by 100% renewable energy eliminating the need for natural gas. The ACT has also removed the mandatory requirement for new homes built in the ACT to be connected to the mains gas network and will begin to introduce new policies to replace gas appliances with electric alternatives. Some 14% of residents have already converted over to 100% electric. [16] There are moves in other jurisdictions to remove the mandatory requirement for a gas connection in new developments such as in South Australia.
AEMO forecasts further reductions in gas use as consumers fuel-switch away from gas appliances towards electrical devices, in particular for space conditioning. The Commonwealth and NSW Government are exploring options to free-up gas demand through electrification, fuel switching and energy efficiency. [17]
Fuel switching from gas appliances towards electrical devices can often be more economic. A 2018 study of household fuel choice found that 98% of households with new solar financially favoured replacement of gas appliances with electric. With existing/no solar 60-65% of households still favoured replacement of gas appliances with electric. [18]
In the residential sector, for example, reverse-cycle air-conditioning is expected to reduce gas demand that could have arisen due to gas heating.[19]
Therefore, it is unlikely that additional gas will be required in the Australian domestic gas market to meet residential, commercial, and industrial gas demand.
The role of natural gas in a low-carbon economy
To address the issue of dangerous climate change, Australia, along 196 other parties, is a signatory to the Paris Agreement, which entered into force on 4 November 2016. The Paris Agreement aims to strengthen the global response to the threat of climate change, by:
Holding the increase in the global average temperature to well below 2°C above pre-industrial levels and pursuing efforts to limit the temperature increase to 1.5°C above pre-industrial levels, recognizing that this would significantly reduce the risks and impacts of climate change.[20]
The IPCC report provides an estimate for a global remaining carbon budget of 580 GtCO2 (excluding permafrost feedbacks) based on a 50% probability of limiting warming to 1.5 degrees relative to 1850 to 1900 during and beyond this century and a remaining carbon budget of 420 GtCO2 for a 67% chance (See Figure 1 for details). [21]
Figure 1 Remaining Carbon Budget[22] - see above
Committed emissions from existing and proposed energy infrastructure represent more than the entire carbon budget that remains if mean warming is to be limited to 1.5 °C and perhaps two-thirds of the remaining carbon budget if mean warming is to be limited to less than 2 °C. Estimates suggest that little or no new CO2-emitting infrastructure can be commissioned, and that existing infrastructure may need to be retired early (or be retrofitted with carbon capture and storage technology) in order to meet the Paris Agreement climate goals.[23]
Australia’s remaining emission budget from Jan 2017 until 2050 for a 50% chance of warming to stay below 1.5C warming relative to pre-industrial levels was estimated to be 5.5 GTCO2e.29 Adding the GHG emissions expended in 2017[24], 2018[25], and 2019[26], this leaves just 3.8 Gt CO2e remaining as at December 2019. This leaves 6-7 years left at present emission rates of the 2013-2050 emission budget to stay below 1.5°C. Therefore, at current emissions rates, Australia will have exceeded its carbon budget for 2050 by 2026.
It therefore follows that no new fossil fuel development in Australia that is not carbon neutral can be permitted because its approval would be inconsistent with the remaining carbon budget and the Paris Agreement climate target. It follows that gas infrastructure development would contribute to an unacceptable increase in greenhouse gas emissions. This includes Santo’s Narrabri Gas Project, which is estimated to result in 94.2 million tonnes of greenhouse gases over the life of the project
Greenhouse gas and climate change – Fugitive emission
The CSIRO report “Fugitive Greenhouse Gas emissions from Coal Seam Gas Production in Australia” [27] noted that fugitive emissions for Natural Gas in Australia are estimated to be 1.5% of gas extracted. It should be noted that if fugitive emissions exceeded 3.1% then the emissions intensity would match that of coal (due to the fact that methane is 86 times more powerful as a greenhouse gas than CO2 over 20 years and 34 times more powerful over a 100-year time period).[28] They also noted that unconventional gas industry such as Coal Seam Gas would result in greater levels of fugitive emissions than the conventional gas industry.
Therefore, the use of natural gas to displace coal-fired power generation would not necessarily reduce CO2 emissions.
Alternative sources of gas
Other alternative sources of gas exist that have significantly lower emissions than the natural gas and in the long term could replace the need for new natural gas infrastructure.
It should be noted that these technologies Green Hydrogen, Biogas and Biomethane not only look to transition electricity generation away from natural gas but also for other uses such as combustion for heat.
Hydrogen
Hydrogen is a colourless, odourless, non-toxic gas that is an excellent carrier of energy and can be used for a broad range of energy applications including as a transport fuel, a substitute for natural gas and for electricity generation.[29] Hydrogen gas can be produced from water in a process known as electrolysis, and when powered by renewable energy, the hydrogen produced is free from carbon emissions, making it an attractive way to decarbonise transport, heating and electricity generation.40
AEMO stated that, “Hydrogen has the exciting potential to become an alternative energy storage technology and a new export commodity for Australia” which could be used to help decarbonise the domestic heat, transport and the industrial and commercial sectors in Australia and noted that development of the hydrogen industry would potentially impact both natural gas and electric demands.24 12
Several developments involving green / renewable hydrogen are either planned or underway in Australia.
AEMO highlighted the potential for green steel production in Australia due to abundant renewable resources and the increased demand for low emissions industrial commodities worldwide. 24 ‘Green steel’ can be made via a direct reduction process which uses hydrogen (made from renewable energy) as the heat source and reducing agent to produce pig iron. The by-product of the iron reduction process using hydrogen is water, rather than carbon dioxide in conventional steel making. Renewable energy is then used by an electric arc furnace to produce low-emissions green steel.
The Arrowsmith Hydrogen Project, which will be built at a facility in the town of Dongara, located 320km north of Perth, will utilise dedicated onsite renewable energy 85MW of solar power, supplemented by 75MW of wind generation capacity to generate 25 tonnes of green hydrogen a day and will be operational in 2022.[30]
ATCO’s Clean Energy Innovation Hub, located in Jandakot in Western Australia, is being used to trial the production, storage and use of renewable hydrogen to power a commercial-scale microgrid, testing the use of hydrogen in different settings and applications including in household appliances.[31] This includes optimising hydrogen storage solutions, blending hydrogen with natural gas and using hydrogen as direct use fuel. Green hydrogen will be produced from on-site solar using electrolysis, fuelling a range of gas appliances and blending hydrogen into the natural gas pipeline.
The $3.3 million development project will evaluate the potential for renewable hydrogen to be generated, stored, and used at a larger scale. ATCO aims to assess the practicalities of replacing natural gas with hydrogen at a city-wide scale across a municipality.[32]
The new chair of the Australian Energy Regulator, Clare Savage recently stated:
“The national gas industry could also undergo significant change as some jurisdictions move towards a zero carbon emissions policy. This could have significant consequences for the future of gas pipeline networks. In response, the AER recently supported the future recovery of Jemena’s investment in trialling the production of hydrogen from renewable energy for injection into its Sydney network. If hydrogen trials such as Jemena’s prove successful, the natural gas networks could be re-purposed to distribute hydrogen. If not, the economic life of the assets could be limited.” [33]
Biogas and Biomethane
Biogas is a renewable energy source, that is continuous and dispatchable, reliable, and local source of energy. Biogas can be converted into heat and/or electricity using boilers, generators or with Combined Heat and Power units.[34] Biogas also provides an alternative route for waste treatment and, as such, can help divert waste from landfill. Biogas consists primarily of methane and carbon dioxide, with trace amounts of other gases such as hydrogen sulphide, water vapour, oxygen, and ammonia.[35] Biogas can also be upgraded into biomethane: a renewable gas that can replace natural gas with a chemical composition very similar to natural gas. Biomethane is produced from the separation of methane from the other gases. 46
Biogas and its industry offer many benefits:
Australian business, industry and utilities recently signed an open letter to the Commonwealth Government advocating for biomethane to be injected into the gas distribution networks to enable the lowest cost transition to a decarbonised energy market and address a number of challenges including:
Both Renewable Hydrogen and Biogas/Biomethane can displace or replace natural gas as a fuel significantly reducing GHG emissions. These technologies show promise in Australia with the resources available locally. Once developed these would see future assets such as Santo’s proposed Narrabri Gas project left stranded.
In summary, gas can no longer be considered a transition fuel to a low carbon economy. Surely any company seeking to expand the fossil fuel industry such as the Gas industry is taking unacceptable risks with our future as well as its own and is not ethically compatible with my retirement savings and those of my fellow members.
I and my fellow members will continue to campaign until UniSuper has divested from all such companies.
Thank you for taking the time to read my letter and I look forward to your response.
Sincerely,
Alec Roberts
REFERENCES
[1] UniSuper (2020, May 8). Letter in response to UniSuper Divest open letter 8 May 2020. Retrieved from https://unisuperdivest.org/wp-content/uploads/2020/05/Letter-in-response-to-UniSuper-Divest-open-letter-8-May-2020.pdf
[2] UniSuper (2019, November) Climate risk and our investments. Retrieved from https://www.unisuper.com.au/~/media/files/forms%20and%20downloads/investment%20documents/climate-risk-and-our-investments.pdf?la=en
[3] Robertson, B. (2020, July 23). IEEFA update: Australia sponsors a failing gas industry. Retrieved from https://ieefa.org/ieefa-update-australia-sponsors-a-failing-gas-industry/
[4] Morton, A. (2020, March 8). 'Expensive and underperforming': energy audit finds gas power running well below capacity. Retrieved from https://www.theguardian.com/environment/2020/mar/08/expensive-and-underperforming-energy-audit-finds-gas-power-running-well-below-capacity
[5] AEMO (2020, March). Gas Statement of Opportunities, March 2020, For eastern and south-eastern Australia. Retrieved from https://aemo.com.au/en/energy-systems/gas/gas-forecasting-and-planning/gas-statement-of-opportunities-gsoo
[6] AEMO (2019, December 12). Draft 2020 Integrated System Plan - For the National Electricity Market. Retrieved from https://aemo.com.au/-/media/files/electricity/nem/planning_and_forecasting/isp/2019/draft-2020-integrated-system-plan.pdf?la=en
[7] AEMO (2020b, July 30). 2020 Integrated System Plan - For the National Electricity Market. Retrieved from https://aemo.com.au/-/media/files/major-publications/isp/2020/final-2020-integrated-system-plan.pdf?la=en
[8] ACCC (2020, January) Gas inquiry 2017-2025 – Interim Report. Retrieved from https://www.accc.gov.au/system/files/Gas%20inquiry%20-%20January%202020%20interim%20report%20-%20revised.pdf
[9] AEMO (2020c, July 30) 2020 ISP Appendix 2. Cost Benefit Analysis. Retrieved from https://aemo.com.au/-/media/files/major-publications/isp/2020/appendix--2.pdf?la=en
[10] Energy Source & Distribution (2020, July 30). AEMO reveals Integrated System Plan 2020. Retrieved from https://esdnews.com.au/aemo-reveals-integrated-system-plan-2020/
[11] Parkinson, G. (2020, May 25) Big spinning machines arrive in South Australia to hasten demise of gas generation. Retrieved from https://reneweconomy.com.au/big-spinning-machines-arrive-in-south-australia-to-hasten-demise-of-gas-generation-64767/
[12] Pegasus Economics (2019, August) Report on the Narrabri Gas Project. Retrieved from https://8c4b987c-4d72-4044-ac79-99bcaca78791.filesusr.com/ugd/b097cb_c30b7e01a860476bbf6ef34101f4c34c.pdf
[13] ACCC (2020, July) Gas inquiry 2017–2025 Interim report July 2020. Retrieved from https://www.accc.gov.au/system/files/Gas%20inquiry%20July%202020%20interim%20report.pdf
[14] AEMO (2020, March 27) National Electricity & Gas Forecasting 2020 GSOO Publication. Retrieved from http://forecasting.aemo.com.au/Gas/AnnualConsumption/Total
[15] Robertson, B. (2020, July 23). IEEFA update: Australia sponsors a failing gas industry. Retrieved from https://ieefa.org/ieefa-update-australia-sponsors-a-failing-gas-industry/
[16] Mazengarb, M. & Parkinson, G. (2019, September 16). ACT to phase out gas as it launches next stage to zero carbon strategy. Retrieved from https://reneweconomy.com.au/act-to-phase-out-gas-as-it-launches-next-stage-to-zero-carbon-strategy-92906/
[17] Energy NSW. (2020, January 31). Memorandum of understanding, Retrieved from https://energy.nsw.gov.au/government-and-regulation/electricity-strategy/memorandum-understanding
[18] Alternative Technology Association (2018, July) Household fuel choice in the National Energy Market. Retrieved from https://renew.org.au/wp-content/uploads/2018/08/Household_fuel_choice_in_the_NEM_Revised_June_2018.pdf
[19] AEMO (2020a, July 30). 2020 ISP Appendix 10. Sector Coupling. Retrieved from https://aemo.com.au/-/media/files/major-publications/isp/2020/appendix--10.pdf?la=en
[20] IPCC (2018). Global Warming of 1.5°C: An IPCC Special Report on the impacts of global warming of 1.5°C above pre-industrial levels and related global greenhouse gas emission pathways, in the context of strengthening the global response to the threat of climate change, sustainable development, and efforts to eradicate poverty, Intergovernmental Panel on Climate Change. Retrieved from https://www.ipcc.ch/sr15/
[21] Meinshausen, M. (2019, March 19). Deriving a global 2013-2050 emission budget to stay below 1.5°C based on the IPCC Special Report on 1.5°C. Retrieved from https://www.climatechange.vic.gov.au/__data/assets/pdf_file/0018/421704/Deriving-a-1.5C-emissions-budget-for-Victoria.pdf
[22] Figueres, C., Schellnhuber, H. J., Whiteman, G., Rockström, J., Hobley, A., & Rahmstorf, S. (2017). Three years to safeguard our climate. Nature, 546(7660), 593–595. https://doi-org.ezproxy.newcastle.edu.au/10.1038/546593a
[23] Tong, D., Zhang, Q., Zheng, Y., Caldeira, K., Shearer, C., Hong, C., Qin, Y., & Davis, S. J. (2019). Committed emissions from existing energy infrastructure jeopardize 1.5 °C climate target. Nature, 572(7769), 373-377. https://doi-org.ezproxy.newcastle.edu.au/10.1038/s41586-019-1364-3
[24] Climate Council (2018) Australia’s Rising Greenhouse Gas Emissions. Retrieved from https://www.climatecouncil.org.au/wp-content/uploads/2018/06/CC_MVSA0143-Briefing-Paper-Australias-Rising-Emissions_V8-FA_Low-Res_Single-Pages3.pdf
[25] Cox, L. (2019, March 14). Australia's annual carbon emissions reach record high. Retrieved from https://www.theguardian.com/environment/2019/mar/14/australias-annual-carbon-emissions-reach-record-high
[26] DISER (2020, May) National Greenhouse Gas Inventory: December 2019. Retrieved from https://www.industry.gov.au/data-and-publications/national-greenhouse-gas-inventory-december-2019
[27] CSIRO (2012). Fugitive Greenhouse Gas Emissions from Coal Seam Gas Production in Australia. Retrieved from https://publications.csiro.au/rpr/pub?pid=csiro:EP128173
[28] Robertson, B. (2020, January 30). IEEFA Australia: Gas is not a transition fuel, Prime Minister. Retrieved from https://ieefa.org/ieefa-australia-gas-is-not-a-transition-fuel-prime-minister/
[29] Tasmanian Government. (n.d.). Hydrogen. Retrieved from https://www.stategrowth.tas.gov.au/energy_and_resources/energy/hydrogen
[30] Mazengarb, M. (2020, April 29). Massive hydrogen project gets green light after securing $300m investment. Retrieved from https://reneweconomy.com.au/massive-hydrogen-project-gets-green-light-after-securing-300m-investment-68959/
[31] Energy Source & Distribution (2018, October 4). Nel awarded contract for Australia’s first hydrogen microgrid. Retrieved from https://esdnews.com.au/nel-awarded-contract-for-australias-first-hydrogen-microgrid/
[32] ARENA (2018, July 3). Green hydrogen innovation hub to be built in WA. Retrieved from https://arena.gov.au/news/green-hydrogen-innovation-hub-to-be-built-in-wa/
[33] West, M. (2020, July 3). A Savage Call: energy tsar calls time on Australia’s gas cartel. Retrieved from https://www.michaelwest.com.au/a-savage-call-energy-tsar-calls-time-on-australias-gas-cartel/
[34] Ramos-Suárez, J. L., Ritter, A., Mata González, J., & Camacho Pérez, A. (2019). Biogas from animal manure: A sustainable energy opportunity in the Canary Islands. Renewable and Sustainable Energy Reviews, 104, 137–150. https://doi-org.ezproxy.newcastle.edu.au/10.1016/j.rser.2019.01.025t
[35] Carlu, E. Truong, T. Kundevski, M. (2019, May). Biogas opportunities for Australia. ENEA Consulting – March 2019. Retrieved from: https://www.energynetworks.com.au/resources/reports/biogas-opportunities-for-australia-enea-consulting/
[36] Hughes, J. (2020, July 15). Business, industry and utilities back biogas for net zero Australia. Retrieved from https://www.worldbiogasassociation.org/business-industry-and-utilities-back-biogas-for-net-zero-australia/
[37] Bioenergy Australia (2020, June 9). Joint letter in support of Australian biomethane market development. Retrieved from https://www.bioenergyaustralia.org.au/news/joint-letter-in-support-of-australian-biomethane/
UniSuper
Level 1, 385 Bourke Street
Melbourne VIC 3000
E: enquiry@unisuper.com.au
Dear UniSuper,
I am writing to challenge the fund’s stated view that “gas will be an important transition fuel to a low carbon world”. I ask that you reconsider this position and divest from all companies seeking to expand gas production.
I am a member of UniSuper and have my investment options in Sustainable High Growth and Global Environment Opportunities so not to be investing in Fossil Fuels. However, this is not enough. UniSuper need to divest fully from Fossil Fuels including gas and oil.
The divestment of several thermal coal mining companies was a great first step in aligning UniSuper’s portfolio with my principles.
I ask that you apply the same reasoning to gas producers, recognising the decline in gas production required to limit global warming to 1.5°C, and divest from all companies whose future prospects rely on expanding the sector.
Natural gas as a “transition fuel”?
Natural gas has often been touted as the “transition fuel” for the electricity sector to replace coal’s greenhouse gas emissions and eventually paving the way for an emissions free future for Australia.
In response to an open letter on April 8 calling for UniSuper to immediately divest from companies that are actively undermining climate action, UniSuper Chairman Ian Martin stated that "Our base case is that gas will be an important transition fuel to a low carbon world."[1] This supported UniSuper’s “Climate risks and our investments” document which noted Natural Gas as being often cited as a transition fuel and that “In order for natural gas to fulfil its role as a transition fuel, infrastructure will need to be built.”[2]
The concept of gas as a transition fuel is out of date and I believe incorrect. It is simply too expensive and too emissions intensive to be so. Methane leaks from natural gas production can make the process nearly as carbon intensive as coal.
The use of gas in electricity production has reduced in recent years and modelling of the future electricity grid and further evidence has indicated that it is unlikely that gas will play a major role in the transition from coal-fired power plants to renewable energy and storage.
The electricity market has already moved away from gas in Eastern Australia, with a 59% decline in usage in the National Electricity Market since 2014, whilst renewable energy has increased by 25% during the same period.[3] Furthermore, flexible gas plants already in the grid are running well below capacity.[4] AEMO forecast that increasing renewable generation developments in the NEM are expected to continue to drive down system normal demand for gas-powered generation (GPG). [5]
The AEMO modelled the future electricity grid in its Integrated Systems Plan.[6] [7] The results showed for all scenarios that the transition from coal to renewable energy would not be via gas.10 The role of gas would be reduced with a decline in gas generation through to 2040.9 The report notes that to firm up the inherently variable distributed and large-scale renewable generation, there will be needed new flexible, dispatchable resources such as: utility-scale pumped hydro and large-scale battery energy storage systems, distributed batteries participating as virtual power plants, and demand side management.12 13 It also noted that new, flexible gas generators such as gas peaking plants could play a greater role if gas prices materially reduced, with gas prices remaining low at $4 to $6 per GJ.13 However this is unlikely as gas prices have tripled over the past decade and expected NSW gas prices (for example) are over 60% more than this price.10 [8] AEMO noted that the investment case for new GPG will critically depend on future gas prices, as GPG and batteries can both serve the daily peaking role that will be needed as variable renewable energy replaces coal-fired generation. In their 2020 Gas Statement of Opportunities report, AEMO predicted that as more coal-fired generation retired in the long term, gas consumption for GPG in the National Electricity Market was forecast to grow again in the early 2030s, recovering to levels similar to those forecast for 2020.11 However, in a later report, AEMO determined that by the 2030s, when significant investment in new dispatchable capacity is needed, new batteries will be more cost-effective than GPG. 13 Furthermore, the commissioning of the Snowy 2.0 pumped hydro project in 2026 will result in less reliance on GPG as a source of firm supply.11
AEMO noted that stronger interconnection between regions reduces the reliance on GPG, as alternative resources can be shared more effectively. 13 The expansion of network interconnections enables the growth of variable renewable energy without a significant reliance on local gas generation.[9] Supporting this assertion, the AEMO announced a series of actionable transmission projects including interconnector upgrades and expansions and network augmentations supporting recently announced renewable energy zones.[10] 13 AEMO noted that as each of these new transmission projects is commissioned, the ability for national electricity market regions to share resources (particularly geographically diverse variable renewable energy) is increased, and therefore demand for GPG is forecast to decrease.11 The Marinus Link is forecast to be commissioned in 2036, with surplus renewable generation from Tasmania then being available to the mainland National Electricity Market, which would see further declines in gas-fired generation, despite continuing coal-fired generation retirements.11
AEMO recently noted that GPG can provide the synchronous generation needed to balance variable renewable supply, and so is a potential complement to storage, with the ultimate mix depending upon the relative cost and availability of different storage technologies compared to future gas prices. 5 However, the current installation of synchronous condensers in South Australia and in the eastern states to increase system strength and stabilise the electricity network will reduce the need for gas-fired generators acting in the role of synchronous generators as more renewables enter the grid.[11] Ancillary services are likely to utilise battery storage and synchronous condensers in the future and no longer require the use of GPG.
Need for additional gas?
Gas demand has been declining in recent years and predictions are that gas demand will not increase in the future and may decrease, therefore it is unlikely that additional gas will be required in the Eastern Australian domestic gas market to meet residential, commercial, and industrial gas demand.
From 2014 to 2018, annual consumption of natural gas in NSW fell by 15 per cent, with the major contributor of this fall in consumption being the reduction in the use of gas for power generation.[12] Whereas domestic demand for gas has fallen for use in manufacturing by 14%, it has dropped by a staggering 59% for power generation by since 2014. 9
ACCC recently stated that “overall consumption of gas in the east coast was largely unchanged over the first five months of 2020 relative to 2019”[13] and that the COVID-19 pandemic has not had a material effect on the overall level of production or consumption in the East Coast Gas Market. However, they stated that it is unknown whether the contraction in economic activity brought about by the COVID-19 pandemic will result in a decline in domestic and/or international demand for gas in 2021.
Commercial and Industrial gas user (C&I) consumption is predicted to be flat or fall. C&I’s utilise gas for applications such as a heat source for boilers and furnaces, for producing steam, or for drying processes, and as a feedstock to produce fertilisers, explosives, chemicals, and plastics. ACCC reported that a number of suppliers expected GPG and C&I demand to be lower in 2020 and that many C&I users reported that they are slowing production due to the COVID-19 pandemic which raised the potential for significant adverse consequences for these users in having to pay for gas that they cannot use or on-sell (with take or pay contract obligations). ACCC concluded that there is now a considerable degree of uncertainty surrounding the demand for gas by gas users (non GPG) following the COVID-19 pandemic and the impact this has had on economic activity, both domestically and internationally.19
Whereas 2019 was somewhat of an anomalous year with failures in Coal Powered Generation resulting in additional GPG being utilised, the ACCC reported that GPG demand over the first five months of 2020 was 36% lower than over the same period in 2019.
Furthermore, AEMO forecast that, demand for GPG is predicted to continue to fall by over 85% from 2019 levels by 2028.[14]
As an investment, gas is on shaky grounds. Since 2014, Santo’s write-downs are approaching $8bn. Internationally things are not better for gas. In the U.S., the number of operating drill rigs has fallen 73% in the last 12 months. And US LNG exports have more than halved so far in 2020. Deloitte estimates that almost a third of U.S. shale producers are technically insolvent at current oil prices.[15]
Moving away from gas
The ACT is planning to go gas free by 2025. This is expected to reduce their overall emissions by 22%. As part of the ACT Climate Change Strategy 2019-2025, all government and public-school buildings will be completely powered by 100% renewable energy eliminating the need for natural gas. The ACT has also removed the mandatory requirement for new homes built in the ACT to be connected to the mains gas network and will begin to introduce new policies to replace gas appliances with electric alternatives. Some 14% of residents have already converted over to 100% electric. [16] There are moves in other jurisdictions to remove the mandatory requirement for a gas connection in new developments such as in South Australia.
AEMO forecasts further reductions in gas use as consumers fuel-switch away from gas appliances towards electrical devices, in particular for space conditioning. The Commonwealth and NSW Government are exploring options to free-up gas demand through electrification, fuel switching and energy efficiency. [17]
Fuel switching from gas appliances towards electrical devices can often be more economic. A 2018 study of household fuel choice found that 98% of households with new solar financially favoured replacement of gas appliances with electric. With existing/no solar 60-65% of households still favoured replacement of gas appliances with electric. [18]
In the residential sector, for example, reverse-cycle air-conditioning is expected to reduce gas demand that could have arisen due to gas heating.[19]
Therefore, it is unlikely that additional gas will be required in the Australian domestic gas market to meet residential, commercial, and industrial gas demand.
The role of natural gas in a low-carbon economy
To address the issue of dangerous climate change, Australia, along 196 other parties, is a signatory to the Paris Agreement, which entered into force on 4 November 2016. The Paris Agreement aims to strengthen the global response to the threat of climate change, by:
Holding the increase in the global average temperature to well below 2°C above pre-industrial levels and pursuing efforts to limit the temperature increase to 1.5°C above pre-industrial levels, recognizing that this would significantly reduce the risks and impacts of climate change.[20]
The IPCC report provides an estimate for a global remaining carbon budget of 580 GtCO2 (excluding permafrost feedbacks) based on a 50% probability of limiting warming to 1.5 degrees relative to 1850 to 1900 during and beyond this century and a remaining carbon budget of 420 GtCO2 for a 67% chance (See Figure 1 for details). [21]
Figure 1 Remaining Carbon Budget[22] - see above
Committed emissions from existing and proposed energy infrastructure represent more than the entire carbon budget that remains if mean warming is to be limited to 1.5 °C and perhaps two-thirds of the remaining carbon budget if mean warming is to be limited to less than 2 °C. Estimates suggest that little or no new CO2-emitting infrastructure can be commissioned, and that existing infrastructure may need to be retired early (or be retrofitted with carbon capture and storage technology) in order to meet the Paris Agreement climate goals.[23]
Australia’s remaining emission budget from Jan 2017 until 2050 for a 50% chance of warming to stay below 1.5C warming relative to pre-industrial levels was estimated to be 5.5 GTCO2e.29 Adding the GHG emissions expended in 2017[24], 2018[25], and 2019[26], this leaves just 3.8 Gt CO2e remaining as at December 2019. This leaves 6-7 years left at present emission rates of the 2013-2050 emission budget to stay below 1.5°C. Therefore, at current emissions rates, Australia will have exceeded its carbon budget for 2050 by 2026.
It therefore follows that no new fossil fuel development in Australia that is not carbon neutral can be permitted because its approval would be inconsistent with the remaining carbon budget and the Paris Agreement climate target. It follows that gas infrastructure development would contribute to an unacceptable increase in greenhouse gas emissions. This includes Santo’s Narrabri Gas Project, which is estimated to result in 94.2 million tonnes of greenhouse gases over the life of the project
Greenhouse gas and climate change – Fugitive emission
The CSIRO report “Fugitive Greenhouse Gas emissions from Coal Seam Gas Production in Australia” [27] noted that fugitive emissions for Natural Gas in Australia are estimated to be 1.5% of gas extracted. It should be noted that if fugitive emissions exceeded 3.1% then the emissions intensity would match that of coal (due to the fact that methane is 86 times more powerful as a greenhouse gas than CO2 over 20 years and 34 times more powerful over a 100-year time period).[28] They also noted that unconventional gas industry such as Coal Seam Gas would result in greater levels of fugitive emissions than the conventional gas industry.
Therefore, the use of natural gas to displace coal-fired power generation would not necessarily reduce CO2 emissions.
Alternative sources of gas
Other alternative sources of gas exist that have significantly lower emissions than the natural gas and in the long term could replace the need for new natural gas infrastructure.
It should be noted that these technologies Green Hydrogen, Biogas and Biomethane not only look to transition electricity generation away from natural gas but also for other uses such as combustion for heat.
Hydrogen
Hydrogen is a colourless, odourless, non-toxic gas that is an excellent carrier of energy and can be used for a broad range of energy applications including as a transport fuel, a substitute for natural gas and for electricity generation.[29] Hydrogen gas can be produced from water in a process known as electrolysis, and when powered by renewable energy, the hydrogen produced is free from carbon emissions, making it an attractive way to decarbonise transport, heating and electricity generation.40
AEMO stated that, “Hydrogen has the exciting potential to become an alternative energy storage technology and a new export commodity for Australia” which could be used to help decarbonise the domestic heat, transport and the industrial and commercial sectors in Australia and noted that development of the hydrogen industry would potentially impact both natural gas and electric demands.24 12
Several developments involving green / renewable hydrogen are either planned or underway in Australia.
AEMO highlighted the potential for green steel production in Australia due to abundant renewable resources and the increased demand for low emissions industrial commodities worldwide. 24 ‘Green steel’ can be made via a direct reduction process which uses hydrogen (made from renewable energy) as the heat source and reducing agent to produce pig iron. The by-product of the iron reduction process using hydrogen is water, rather than carbon dioxide in conventional steel making. Renewable energy is then used by an electric arc furnace to produce low-emissions green steel.
The Arrowsmith Hydrogen Project, which will be built at a facility in the town of Dongara, located 320km north of Perth, will utilise dedicated onsite renewable energy 85MW of solar power, supplemented by 75MW of wind generation capacity to generate 25 tonnes of green hydrogen a day and will be operational in 2022.[30]
ATCO’s Clean Energy Innovation Hub, located in Jandakot in Western Australia, is being used to trial the production, storage and use of renewable hydrogen to power a commercial-scale microgrid, testing the use of hydrogen in different settings and applications including in household appliances.[31] This includes optimising hydrogen storage solutions, blending hydrogen with natural gas and using hydrogen as direct use fuel. Green hydrogen will be produced from on-site solar using electrolysis, fuelling a range of gas appliances and blending hydrogen into the natural gas pipeline.
The $3.3 million development project will evaluate the potential for renewable hydrogen to be generated, stored, and used at a larger scale. ATCO aims to assess the practicalities of replacing natural gas with hydrogen at a city-wide scale across a municipality.[32]
The new chair of the Australian Energy Regulator, Clare Savage recently stated:
“The national gas industry could also undergo significant change as some jurisdictions move towards a zero carbon emissions policy. This could have significant consequences for the future of gas pipeline networks. In response, the AER recently supported the future recovery of Jemena’s investment in trialling the production of hydrogen from renewable energy for injection into its Sydney network. If hydrogen trials such as Jemena’s prove successful, the natural gas networks could be re-purposed to distribute hydrogen. If not, the economic life of the assets could be limited.” [33]
Biogas and Biomethane
Biogas is a renewable energy source, that is continuous and dispatchable, reliable, and local source of energy. Biogas can be converted into heat and/or electricity using boilers, generators or with Combined Heat and Power units.[34] Biogas also provides an alternative route for waste treatment and, as such, can help divert waste from landfill. Biogas consists primarily of methane and carbon dioxide, with trace amounts of other gases such as hydrogen sulphide, water vapour, oxygen, and ammonia.[35] Biogas can also be upgraded into biomethane: a renewable gas that can replace natural gas with a chemical composition very similar to natural gas. Biomethane is produced from the separation of methane from the other gases. 46
Biogas and its industry offer many benefits:
- Biogas is a renewable energy source that assists the decarbonisation of the economy. A study of the replacement of natural gas by biomethane in France reduced GHG emissions by greater than 85%.
- Biogas is a secure, continuous and dispatchable source of energy that can contribute to national energy supply.
- Biogas also provides an alternative route for waste treatment and, as such, can help divert waste from landfill.
- The biogas industry supports local economies and regional communities, creating jobs, and offering new income sources, particularly for farmers.
- Biogas transformed into biomethane is a renewable gas that can replace natural gas, and can be used in homes for cooking, heating, and hot-water, or as a fuel for gas vehicles. It can be injected into the gas grid or used directly on-site. As biomethane has similar characteristics to natural gas, its injection into the gas grid does not require any adaptation of the existing infrastructure (neither the gas grid nor customer equipment connected to it). This is an opportunity for the gas and transport sectors to further assist the energy transition. 35
Australian business, industry and utilities recently signed an open letter to the Commonwealth Government advocating for biomethane to be injected into the gas distribution networks to enable the lowest cost transition to a decarbonised energy market and address a number of challenges including:
- Provide complementary reliable and flexible renewable resources for variable renewable energy.
- Allow heavy industry dependent on process inputs and high-quality heat to decarbonise using existing gas connections.
- Provide a pathway for Heavy vehicle decarbonisation.
- Allow domestic gas customers to decarbonise their energy supply using existing networks and appliances.[37]
Both Renewable Hydrogen and Biogas/Biomethane can displace or replace natural gas as a fuel significantly reducing GHG emissions. These technologies show promise in Australia with the resources available locally. Once developed these would see future assets such as Santo’s proposed Narrabri Gas project left stranded.
In summary, gas can no longer be considered a transition fuel to a low carbon economy. Surely any company seeking to expand the fossil fuel industry such as the Gas industry is taking unacceptable risks with our future as well as its own and is not ethically compatible with my retirement savings and those of my fellow members.
I and my fellow members will continue to campaign until UniSuper has divested from all such companies.
Thank you for taking the time to read my letter and I look forward to your response.
Sincerely,
Alec Roberts
REFERENCES
[1] UniSuper (2020, May 8). Letter in response to UniSuper Divest open letter 8 May 2020. Retrieved from https://unisuperdivest.org/wp-content/uploads/2020/05/Letter-in-response-to-UniSuper-Divest-open-letter-8-May-2020.pdf
[2] UniSuper (2019, November) Climate risk and our investments. Retrieved from https://www.unisuper.com.au/~/media/files/forms%20and%20downloads/investment%20documents/climate-risk-and-our-investments.pdf?la=en
[3] Robertson, B. (2020, July 23). IEEFA update: Australia sponsors a failing gas industry. Retrieved from https://ieefa.org/ieefa-update-australia-sponsors-a-failing-gas-industry/
[4] Morton, A. (2020, March 8). 'Expensive and underperforming': energy audit finds gas power running well below capacity. Retrieved from https://www.theguardian.com/environment/2020/mar/08/expensive-and-underperforming-energy-audit-finds-gas-power-running-well-below-capacity
[5] AEMO (2020, March). Gas Statement of Opportunities, March 2020, For eastern and south-eastern Australia. Retrieved from https://aemo.com.au/en/energy-systems/gas/gas-forecasting-and-planning/gas-statement-of-opportunities-gsoo
[6] AEMO (2019, December 12). Draft 2020 Integrated System Plan - For the National Electricity Market. Retrieved from https://aemo.com.au/-/media/files/electricity/nem/planning_and_forecasting/isp/2019/draft-2020-integrated-system-plan.pdf?la=en
[7] AEMO (2020b, July 30). 2020 Integrated System Plan - For the National Electricity Market. Retrieved from https://aemo.com.au/-/media/files/major-publications/isp/2020/final-2020-integrated-system-plan.pdf?la=en
[8] ACCC (2020, January) Gas inquiry 2017-2025 – Interim Report. Retrieved from https://www.accc.gov.au/system/files/Gas%20inquiry%20-%20January%202020%20interim%20report%20-%20revised.pdf
[9] AEMO (2020c, July 30) 2020 ISP Appendix 2. Cost Benefit Analysis. Retrieved from https://aemo.com.au/-/media/files/major-publications/isp/2020/appendix--2.pdf?la=en
[10] Energy Source & Distribution (2020, July 30). AEMO reveals Integrated System Plan 2020. Retrieved from https://esdnews.com.au/aemo-reveals-integrated-system-plan-2020/
[11] Parkinson, G. (2020, May 25) Big spinning machines arrive in South Australia to hasten demise of gas generation. Retrieved from https://reneweconomy.com.au/big-spinning-machines-arrive-in-south-australia-to-hasten-demise-of-gas-generation-64767/
[12] Pegasus Economics (2019, August) Report on the Narrabri Gas Project. Retrieved from https://8c4b987c-4d72-4044-ac79-99bcaca78791.filesusr.com/ugd/b097cb_c30b7e01a860476bbf6ef34101f4c34c.pdf
[13] ACCC (2020, July) Gas inquiry 2017–2025 Interim report July 2020. Retrieved from https://www.accc.gov.au/system/files/Gas%20inquiry%20July%202020%20interim%20report.pdf
[14] AEMO (2020, March 27) National Electricity & Gas Forecasting 2020 GSOO Publication. Retrieved from http://forecasting.aemo.com.au/Gas/AnnualConsumption/Total
[15] Robertson, B. (2020, July 23). IEEFA update: Australia sponsors a failing gas industry. Retrieved from https://ieefa.org/ieefa-update-australia-sponsors-a-failing-gas-industry/
[16] Mazengarb, M. & Parkinson, G. (2019, September 16). ACT to phase out gas as it launches next stage to zero carbon strategy. Retrieved from https://reneweconomy.com.au/act-to-phase-out-gas-as-it-launches-next-stage-to-zero-carbon-strategy-92906/
[17] Energy NSW. (2020, January 31). Memorandum of understanding, Retrieved from https://energy.nsw.gov.au/government-and-regulation/electricity-strategy/memorandum-understanding
[18] Alternative Technology Association (2018, July) Household fuel choice in the National Energy Market. Retrieved from https://renew.org.au/wp-content/uploads/2018/08/Household_fuel_choice_in_the_NEM_Revised_June_2018.pdf
[19] AEMO (2020a, July 30). 2020 ISP Appendix 10. Sector Coupling. Retrieved from https://aemo.com.au/-/media/files/major-publications/isp/2020/appendix--10.pdf?la=en
[20] IPCC (2018). Global Warming of 1.5°C: An IPCC Special Report on the impacts of global warming of 1.5°C above pre-industrial levels and related global greenhouse gas emission pathways, in the context of strengthening the global response to the threat of climate change, sustainable development, and efforts to eradicate poverty, Intergovernmental Panel on Climate Change. Retrieved from https://www.ipcc.ch/sr15/
[21] Meinshausen, M. (2019, March 19). Deriving a global 2013-2050 emission budget to stay below 1.5°C based on the IPCC Special Report on 1.5°C. Retrieved from https://www.climatechange.vic.gov.au/__data/assets/pdf_file/0018/421704/Deriving-a-1.5C-emissions-budget-for-Victoria.pdf
[22] Figueres, C., Schellnhuber, H. J., Whiteman, G., Rockström, J., Hobley, A., & Rahmstorf, S. (2017). Three years to safeguard our climate. Nature, 546(7660), 593–595. https://doi-org.ezproxy.newcastle.edu.au/10.1038/546593a
[23] Tong, D., Zhang, Q., Zheng, Y., Caldeira, K., Shearer, C., Hong, C., Qin, Y., & Davis, S. J. (2019). Committed emissions from existing energy infrastructure jeopardize 1.5 °C climate target. Nature, 572(7769), 373-377. https://doi-org.ezproxy.newcastle.edu.au/10.1038/s41586-019-1364-3
[24] Climate Council (2018) Australia’s Rising Greenhouse Gas Emissions. Retrieved from https://www.climatecouncil.org.au/wp-content/uploads/2018/06/CC_MVSA0143-Briefing-Paper-Australias-Rising-Emissions_V8-FA_Low-Res_Single-Pages3.pdf
[25] Cox, L. (2019, March 14). Australia's annual carbon emissions reach record high. Retrieved from https://www.theguardian.com/environment/2019/mar/14/australias-annual-carbon-emissions-reach-record-high
[26] DISER (2020, May) National Greenhouse Gas Inventory: December 2019. Retrieved from https://www.industry.gov.au/data-and-publications/national-greenhouse-gas-inventory-december-2019
[27] CSIRO (2012). Fugitive Greenhouse Gas Emissions from Coal Seam Gas Production in Australia. Retrieved from https://publications.csiro.au/rpr/pub?pid=csiro:EP128173
[28] Robertson, B. (2020, January 30). IEEFA Australia: Gas is not a transition fuel, Prime Minister. Retrieved from https://ieefa.org/ieefa-australia-gas-is-not-a-transition-fuel-prime-minister/
[29] Tasmanian Government. (n.d.). Hydrogen. Retrieved from https://www.stategrowth.tas.gov.au/energy_and_resources/energy/hydrogen
[30] Mazengarb, M. (2020, April 29). Massive hydrogen project gets green light after securing $300m investment. Retrieved from https://reneweconomy.com.au/massive-hydrogen-project-gets-green-light-after-securing-300m-investment-68959/
[31] Energy Source & Distribution (2018, October 4). Nel awarded contract for Australia’s first hydrogen microgrid. Retrieved from https://esdnews.com.au/nel-awarded-contract-for-australias-first-hydrogen-microgrid/
[32] ARENA (2018, July 3). Green hydrogen innovation hub to be built in WA. Retrieved from https://arena.gov.au/news/green-hydrogen-innovation-hub-to-be-built-in-wa/
[33] West, M. (2020, July 3). A Savage Call: energy tsar calls time on Australia’s gas cartel. Retrieved from https://www.michaelwest.com.au/a-savage-call-energy-tsar-calls-time-on-australias-gas-cartel/
[34] Ramos-Suárez, J. L., Ritter, A., Mata González, J., & Camacho Pérez, A. (2019). Biogas from animal manure: A sustainable energy opportunity in the Canary Islands. Renewable and Sustainable Energy Reviews, 104, 137–150. https://doi-org.ezproxy.newcastle.edu.au/10.1016/j.rser.2019.01.025t
[35] Carlu, E. Truong, T. Kundevski, M. (2019, May). Biogas opportunities for Australia. ENEA Consulting – March 2019. Retrieved from: https://www.energynetworks.com.au/resources/reports/biogas-opportunities-for-australia-enea-consulting/
[36] Hughes, J. (2020, July 15). Business, industry and utilities back biogas for net zero Australia. Retrieved from https://www.worldbiogasassociation.org/business-industry-and-utilities-back-biogas-for-net-zero-australia/
[37] Bioenergy Australia (2020, June 9). Joint letter in support of Australian biomethane market development. Retrieved from https://www.bioenergyaustralia.org.au/news/joint-letter-in-support-of-australian-biomethane/
Newcastle Climate Change Response Inc.Submission to Council’s Climate Action Plan 2020-2025
31/8/2020
Newcastle Climate Change Response Inc.
Submission to Council’s Climate Action Plan 2020-2025
(“the Plan”)
In general Newcastle Climate Change Response Inc. endorses the actions taken by CN to reduce its own (operational) emissions, and these are to be commended. However, when these emissions are only 0.6% of City-wide emissions (2.5% when Summer Hill Waste Management Centre is included) against a total of 3.84m Tonnes across the LGA (business, residential, educational and operational), and 2 billion tonnes of CO2e emissions originate from Hunter coal exports worldwide, there are key ways the current Climate Action Plan needs to be strengthened so that we are to genuinely play our unique role in stopping global warming.
Here is NCCR Inc.’s feedback on the Plan.
Do you support the vision?: YES (but it needs some work).
Do you have any feedback on the proposed Targets?:
YES: The Plan needs to include Council-wide emissions reduction targets, not mere implementation targets (e.g. % renewable energy).
We need to achieve net zero CO2e emissions city-wide (including business, residential, education & Summer Hill, and including gas) by 2030, which means a cut of 3.84 million tonnes (Council's current city-wide emissions, assuming those 2008 figures are still correct of course. We note the out of date nature of the figures included) plus emissions from natural gas (which are omitted from the Plan entirely).
Do you have any feedback on the proposed timeframe to achieve Net Zero Emissions for CN?:
YES: As above, to be consistent with actions that are to have a 2/3 chance of the Earth staying below 1.5 degrees C of warming above pre-industrial levels1, Council’s target needs to be Net Zero Emissions by 2030, citywide.
Do you have any other feedback on the Plan?:
YES:
Do you have suggestions on how CN can work with the community to support the transition to a net zero emission City?:
YES: Cultural & fiscal incentives to business to get those business emissions DOWN. Compulsory reporting; awards, recognition & rate cuts for those that do the right thing; seminars & support for those that are still learning how (see for example the Hunter SDG Taskforce and the Carbon Neutral Adelaide Awards https://s3-ap-southeast-2.amazonaws.com/cna-public-assets/general-downloads/Carbon-Neutral-Adelaide-Awards_Booklet_2019.pdf.); a climate safe procurement & tender policy & more charging points for commercial (& private) electric vehicles.
Happy to discuss.
Regards
Jacquie Svenson
Co-Convenor
For Newcastle Climate Change Response Inc.
1 See ClimateWorks Australia 2020: Decarbonisation Futures: Solutions, Actions & Benchmarks for a Net Zero Emissions Australia. Retrieved from https://www.climateworksaustralia.org/wp-content/uploads/2020/04/Decarbonisation-Futures-March-2020-full-report-.pdf
Here is NCCR Inc.’s feedback on the Plan.
Do you support the vision?: YES (but it needs some work).
Do you have any feedback on the proposed Targets?:
YES: The Plan needs to include Council-wide emissions reduction targets, not mere implementation targets (e.g. % renewable energy).
We need to achieve net zero CO2e emissions city-wide (including business, residential, education & Summer Hill, and including gas) by 2030, which means a cut of 3.84 million tonnes (Council's current city-wide emissions, assuming those 2008 figures are still correct of course. We note the out of date nature of the figures included) plus emissions from natural gas (which are omitted from the Plan entirely).
Do you have any feedback on the proposed timeframe to achieve Net Zero Emissions for CN?:
YES: As above, to be consistent with actions that are to have a 2/3 chance of the Earth staying below 1.5 degrees C of warming above pre-industrial levels1, Council’s target needs to be Net Zero Emissions by 2030, citywide.
Do you have any other feedback on the Plan?:
YES:
- Business emissions - Noting that in our council area 70-83% of emissions are from business (and mostly the top 20), cutting these must be a major, funded, detailed part of the plan (beyond the aspirational graph Chart 10, pathways for which are not detailed anywhere in the Plan!).
- Council must take its unique opportunity to massively impact global emissions falling to safe levels by working with Councils & industry across the region to lead our fast & just transition away from coal mining & exports. When 2b tonnes of global CO2e emissions originate from our port, this MUST be part of Council's work plan. Council has proved with the Plan that it can cut its own emissions, but these were already tiny: to make real impact, we must also work to help get our region out of coal.
Do you have suggestions on how CN can work with the community to support the transition to a net zero emission City?:
YES: Cultural & fiscal incentives to business to get those business emissions DOWN. Compulsory reporting; awards, recognition & rate cuts for those that do the right thing; seminars & support for those that are still learning how (see for example the Hunter SDG Taskforce and the Carbon Neutral Adelaide Awards https://s3-ap-southeast-2.amazonaws.com/cna-public-assets/general-downloads/Carbon-Neutral-Adelaide-Awards_Booklet_2019.pdf.); a climate safe procurement & tender policy & more charging points for commercial (& private) electric vehicles.
Happy to discuss.
Regards
Jacquie Svenson
Co-Convenor
For Newcastle Climate Change Response Inc.
1 See ClimateWorks Australia 2020: Decarbonisation Futures: Solutions, Actions & Benchmarks for a Net Zero Emissions Australia. Retrieved from https://www.climateworksaustralia.org/wp-content/uploads/2020/04/Decarbonisation-Futures-March-2020-full-report-.pdf
Narrabri Gas Project - Submission to supplementary material by Alec Roberts
21 August 2020
Office of the Independent Planning Commission NSW
Level 3, 201 Elizabeth Street, Sydney, NSW 2000
P: (02) 9383 2100 E: ipcn@ipcn.nsw.gov.au
Dear Independent Planning Commission,
This is a submission objecting to the Narrabri Gas Project in accordance with the Commission’s ‘Additional Material’ policy[1] and in response to the following new material provided to the Commission:
Most of my response to the designated additional material is from my original submission.[3] However, as this submission must specifically relate to the new material only, parts of the original submission will be quoted here as required to address the new material only.
Please note that this document does not supersede my original submission but is in addition to it.
Similar to my original submission, this submission will focus on the areas of economics, gas supply and demand, climate change impacts, gas as a transition fuel and alternative fuels to natural gas. However, comment will be provided in association with Groundwater Impacts and Ecological Impacts – Koalas.
Groundwater - Assertions that the Project is located in a major recharge zone for the GABSantos refuted the assertion that the Project is in a major recharge area of the GAB, and that this poses an unacceptable risk to aquifers of the GAB.
In my original submission I stated:
“The Pilliga Sandstone Aquifer is a high-quality shallow groundwater that local communities rely on for water for stock, domestic and irrigation purposes and is one of the main aquifers in the southern Great Artesian Basin. The Pilliga Sandstone is also the main outcropping aquifer in the Pilliga forest region within the project area, and this region and along with outcropping along the Warrambungle Range are recharge beds for the Great Artesian Basin in NSW.[4] [5] A near-surface aquifer, the Namoi Alluvium, is also a major water resource for agriculture in the region. Together these form the main source of water these communities rely on for their livelihoods.
The contamination of groundwater is a major environmental risk with Coal Seam Gas, with the major potential contamination from ‘produced water’ which is pumped from the underlying coal seams to depressurize the seams and allow gas to be released and be extracted. CSG produced water is typically of poor quality due to being located within the coal seams. The Narrabri region produced water is high in salinity and contains high levels of heavy metals, boron and fluoride and presents a major risk to groundwater contamination in the area.
Given a number of leaks and/or spills of produced water have already occurred within the 70 appraisal and exploration wells in the area, there is a strong likelihood with 850 wells that significant leaks and/or spills of produced water will occur throughout the life of the project risking contamination of the aquifers / recharge beds for the Great Artesian Basin and affecting the livelihoods of those that depend on this valuable resource.” 3
The potential contamination of the aquifers flies in the face with the assessment that the project will “not result in significant impacts on people or the environment”.
Ecology – KoalaSantos stated (in quoting the NGP EIS) that the impacts of the Project on the current Koala population will not lead to a long-term extinction of a viable local population.
In my original submission I stated:
“The Pilliga Forest has been classified as a priority area for koala conservation. Energy and Environment Minister Matt Kean recently set a goal of doubling the number of koalas by 2050 in a bid to defy projections the marsupial could become extinct in the wild in NSW by mid-century.[6] The Narrabri Gas project will result in the fragmentation of 85,000 hectares of the Pilliga Forest. Fragmented islands of koala habitat such as will result from this development which will result in unhealthy koala populations. Koalas need wide corridors to spread out to ensure effective breeding. Koala corridors are vital and are recognised generally as such in the new Koala SEPP and acknowledged by the NSW Chief Scientist (2016):
“Koala populations need large areas of connected habitat to maintain their viability. Habitat loss and fragmentation has resulted in population decline and has been identified as a significant threat to the species persistence in NSW.”[7]
Recent studies within the project area suggest a dramatic decline in koala populations. Surveys of the Pilliga forests in the 1990s suggest that the forests were carrying the largest population of koalas west of the Great Dividing Range in NSW, with the population estimated at 15,000. Repeat surveys within the Pilliga forests show a decline of over 80% since the 1990s.7
The impact of extreme weather events such as drought and extreme heatwaves on koalas is expected to increase with climate change and may also exacerbate other threats such as disease.[8] The Pilliga forest koalas are likely to have faced extreme (but less frequent and long) heat events in the past and responded by retreating to creek lines with either available free water or a higher moisture content in the leaves of their food trees. However, land clearing within and on the periphery of the forests and from road construction since the early 1900s has resulted in creeks within the Pilliga forests silting up. Habitats that would have once likely functioned as a refuge during times of drought are now highly disturbed and are unlikely to provide the required level of protection for koalas.7
The planned significant fragmentation of habitat by the Narrabri Gas project will exacerbate the problems caused by earlier land clearance and may lead to the local extinction of the Koala. The potential local extinct of a vulnerable species appears to contradict the assessment that the project will “not result in significant impacts on people or the environment”.3
Why the Project is needed
Santos stated that a “growing component of energy demand will need to be met by natural gas supply to complement renewables growth and battery storage in Australia as ageing coal-fired power plants close over coming decades.”
The use of gas in electricity production has reduced in recent years and modelling of the future electricity grid and further evidence has indicated that it is unlikely that gas will play a major role in the transition from coal-fired power plants to renewable energy and storage.
In my original submission, I noted that,
“the electricity market has already moved away from gas, with a 59% decline in usage in the National Electricity Market since 2014, whilst renewable energy has increased by 25% during the same period.[9] Furthermore, flexible gas plants already in the grid are running well below capacity.[10] AEMO forecast that increasing renewable generation developments in the NEM are expected to continue to drive down system normal demand for gas-powered generation. [11]
The AEMO modelled the future electricity grid in its Integrated Systems Plan.[12] [13] The results showed for all scenarios that the transition from coal to renewable energy would not be via gas.10 The role of gas would be reduced with a decline in gas generation through to 2040.9 The report notes that to firm up the inherently variable distributed and large-scale renewable generation, there will be needed new flexible, dispatchable resources such as: utility-scale pumped hydro and large-scale battery energy storage systems, distributed batteries participating as virtual power plants, and demand side management.12 13 It also noted that new, flexible gas generators such as gas peaking plants could play a greater role if gas prices materially reduced, with gas prices remaining low at $4 to 6 per GJ.13 However this is unlikely as gas prices have tripled over the past decade and expected NSW gas prices are over 60% more than this price.10 [14] AEMO noted that the investment case for new gas-powered generation will critically depend on future gas prices, as gas-powered generation and batteries can both serve the daily peaking role that will be needed as variable renewable energy replaces coal-fired generation. In their 2020 Gas Statement of Opportunities report, AEMO predicted that as more coal-fired generation retired in the long term, gas consumption for gas-powered generation in the National Electricity Market was forecast to grow again in the early 2030s, recovering to levels similar to those forecast for 2020.11 However, in a later report, AEMO determined that by the 2030s, when significant investment in new dispatchable capacity is needed, new batteries will be more cost-effective than gas-powered generation. 13 Furthermore, the commissioning of the Snowy 2.0 pumped hydro project in 2026 will result in less reliance on gas-powered generation as a source of firm supply.11”3
“AEMO noted that stronger interconnection between regions reduces the reliance on gas-powered generation, as alternative resources can be shared more effectively. 13 The expansion network interconnection enables the growth of variable renewable energy without a significant reliance on local gas generation.[15] Supporting this assertion, the AEMO announced a series of actionable transmission projects including interconnector upgrades and expansions and network augmentations supporting recently announced renewable energy zones.[16] 13 AEMO noted that as each of these new transmission projects is commissioned, the ability for national electricity market regions to share resources (particularly geographically diverse variable renewable energy) is increased, and therefore demand for gas-powered generation is forecast to decrease.11 The Marinus Link is forecast to be commissioned in 2036, with surplus renewable generation from Tasmania then being available to the mainland National Electricity Market, which would see further declines in gas-fired generation, despite continuing coal-fired generation retirements.11 ”3
Therefore, it is highly unlikely that a “growing component of energy demand will need to be met by natural gas supply to complement renewables growth and battery storage in Australia as ageing coal-fired power plants close over coming decades”.
Santos quoted from the 2020 ISP that
“GPG can provide the synchronous generation needed to balance variable renewable supply, and so is a potential complement to storage. The ultimate mix will depend upon the relative cost and availability of different storage technologies compared to future gas prices.”
In my original submission, I stated,
“However, the current installation of synchronous condensers in South Australia and other eastern states to increase system strength and stabilise the electricity network will reduce the need for gas-fired generators acting in the role of synchronous generators as more renewables enter the grid.[17] Ancillary services are likely to utilise battery storage and synchronous condensers in the future and no longer require the use of gas-powered generation.”3
Santos stated that, “Additional gas is required in the domestic gas market to meet residential, commercial and industrial gas demand.”
Gas demand has been declining in recent years and predictions are that gas demand will not increase in the future and may decrease, therefore it is unlikely that additional gas will be required in the domestic gas market to meet residential, commercial, and industrial gas demand.
In my original submission, I noted that,
“demand for natural gas in NSW has declined over recent years. From 2014 to 2018, annual consumption of natural gas in NSW fell by 15 per cent, with the major contributor of this fall in consumption being the reduction in the use of gas for power generation.[18] Whereas domestic demand for gas has fallen for use in manufacturing by 14%, it has dropped by a staggering 59% for power generation by since 2014. 9 “
ACCC recently stated that “overall consumption of gas in the east coast was largely unchanged over the first five months of 2020 relative to 2019”[19] and that the COVID-19 pandemic has not had a material effect on the overall level of production or consumption in the East Coast Gas Market. However, they stated that it is unknown whether the contraction in economic activity brought about by the COVID-19 pandemic will result in a decline in domestic and/or international demand for gas in 2021.
Commercial and Industrial (C&I) gas users utilise gas for applications such as a heat source for boilers and furnaces, for producing steam, or for drying processes, and as a feedstock to produce fertilisers, explosives, chemicals, and plastics. ACCC reported that a number of suppliers expected Gas Powered Generation (GPG) and C&I demand to be lower in 2020 and that many C&I users reported that they are slowing production due to the COVID-19 pandemic which raised the potential for significant adverse consequences for these users in having to pay for gas that they cannot use or on-sell (with take or pay contract obligations). ACCC concluded that there is now a considerable degree of uncertainty surrounding the demand for gas by gas users (non GPG) following the COVID-19 pandemic and the impact this has had on economic activity, both domestically and internationally.19
Whereas 2019 was somewhat of an anomalous year with failures in Coal Powered Generation resulting in additional GPG being utilised, the ACCC reported that GPG demand over the first five months of 2020 was 36% lower than over the same period in 2019.
In my original submission I noted that AEMO forecast that, “demand for gas-powered generation is predicted to continue to fall by over 85% from 2019 levels by 2028.[20]” 3
In my original submission I noted that,
“The ACT is planning to go gas free by 2025. This is expected to reduce their overall emissions by 22%. As part of the ACT Climate Change Strategy 2019-2025, all government and public-school buildings will be completely powered by 100% renewable energy eliminating the need for natural gas. The ACT has also removed the mandatory requirement for new homes built in the ACT to be connected to the mains gas network and will begin to introduce new policies to replace gas appliances with electric alternatives. Some 14% of residents have already converted over to 100% electric. [21]” and that “There are moves in other jurisdictions to remove the mandatory requirement for a gas connection in new developments such as in South Australia.”3
In my original submission I noted that,
“AEMO forecasts further reductions in gas use as consumers fuel-switch away from gas appliances towards electrical devices, in particular for space conditioning. The Commonwealth and NSW Government are exploring options to free-up gas demand through electrification, fuel switching and energy efficiency. [22]
Fuel switching from gas appliances towards electrical devices can often be more economic. A 2018 study of household fuel choice found that 98% of households with new solar financially favoured replacement of gas appliances with electric. With existing/no solar 60-65% of households still favoured replacement of gas appliances with electric. [23]
In the residential sector, for example, reverse-cycle air-conditioning is expected to reduce gas demand that could have arisen due to gas heating.[24]”3
Therefore, it is unlikely that additional gas will be required in the domestic gas market to meet residential, commercial, and industrial gas demand.
Downward pressure on NSW gas prices and more jobs
Santos quoted the ACIL Allen analysis findings that,
“By the later 2020s and beyond, the Project will be among the lower cost resources.”
As lower cost supplies dry up the higher cost supplies will be utilised including NGP. NGP will only be “among the lower cost contingent resources” because lower cost supplies will be less available.
However, in my original submission I noted that,
“according to an AEMO commissioned report, gas extraction costs from this field will be over twice the cost of other existing fields in the eastern gas region.9 According to AEMO, the Narrabri Gas Project is ranked 41 out of 51 actual and undeveloped gas projects and there are 18 developed and 22 undeveloped gas projects with lower estimated production costs than the Narrabri Gas Project. 18
Santos quoted the ACIL Allen analysis findings that,
“The Project can place downward pressure on gas prices in NSW, potentially by between 4 per cent and 12 per cent from 2025 onwards. Even if 40 TJ per day is provided to establish a local fertiliser plant, a 3 per cent to 9 per cent price reduction in Sydney is estimated.”
It should be noted that this analysis is based on the spot market only under pure market conditions and not Gas Supply Agreement (GSA) prices. As noted by ACIL Allen, “Most wholesale gas is sold and transported under bilateral agreements between producers, pipeline owners, retailers and major users.” “the eastern Australian market continues to operate primarily based on long-term bilateral contracts, with the spot markets used largely to manage operational and contract imbalances” and “The spot prices provide an indication of short-term and seasonal variations in the supply demand balance and bear little relationship to long-term contract prices.” And that “Spot prices are a good indication of possible prices in short term contacts of up to 18 months. They are not a good indication of prices in longer term gas sales contracts.“ Information obtained by the ACCC from gas suppliers in the east coast indicated that suppliers were unlikely to use expected future LNG spot prices to assess prices in domestic contracts with a term beyond three years.14
ACIL Allen further noted, “Most of the gas traded in the east Australian gas market is under long term gas sales agreements. It is difficult to model the impact of contracts on average prices of gas at different points in the market as the terms and prices contained in these gas sales agreements are not public.”
ACIL ALLEN noted that future prices in GSAs are likely to be driven primarily by:
— the marginal cost of undeveloped, contingent, and prospective resources after around 2026.
— longer term LNG price movements which in turn will be influenced by movements in oil prices, global economic conditions, and global LNG production capacity
— transmission pipeline capacity and the efficiency of the transmission system and capacity trading
— the level of competition in the eastern Australian gas market.
ACIL Allen also noted that with the commissioning of LNG import terminals “the pricing dynamics in the eastern Australian market will increasingly be influenced by LNG import pricing, and away from export parity pricing.”
In my original submission I noted,
“The marginal source of supply (the final source of gas supply needed to meet demand) is likely to set floor price in negotiations between gas suppliers and buyers in NSW.[25] This cost of production together with transmission costs to Sydney is currently some 20% less than the proposed Narrabri Gas Project. Furthermore, future marginal source of supply may be satisfied by imported LNG (where wholesale gas prices would be set to import parity levels) or through existing or developed lower cost domestic supplies (such as noted by AEMO). 18 Under these circumstances, the Narrabri Gas Project would not provide the marginal source of supply for wholesale gas in NSW, and is thus unlikely to exert any influence over wholesale gas prices in NSW over the near or long term and therefore not contribute to any reduction in domestic gas prices.”3
The ACIL Allen modelling showed an overall increase in gas prices of over 30% in the medium term rising to over 40% in the longer term. The modelling indicated that the NGP would reduce the amount of increase in gas prices somewhat than without it for the spot market.
However, the estimated NGP production costs of $6.40/GJ used in the modelling that are based on ACIL Allen’s internal data are below the AEMO estimates that the NGP will have costs at a minimum $7.28/GJ.9 Using the AEMO estimates may give a different result with a reduced ability to “place downward pressure on gas prices”.
How these modelling results would potentially affect real gas prices over time for such a small potential reduction in gas price increase is drawn into question. Factors such as export parity, import parity, producers’ marginal costs of production are more likely to affect contract prices and thus overall gas prices. Therefore, this analysis may not be able to show whether the “Project can place downward pressure on gas prices in NSW”.
Santos quoted the ACIL Allen analysis findings that,
“Because of Santos’ commitment that all the gas produced from the Project will be available for the domestic market, a new competitive source of supply close to Sydney is expected and this will lead to more competitive prices on long term gas contracts, particularly into the late 2020s and 2030s.”
ACIL Allen’s analysis suggested that delivery of NGP gas delivered to Sydney would be competitive with Queensland supplied gas. However, this assumed NGP production costs of $6.40/GJ. If the AEMO estimate of a minimum production cost of $7.28/GJ is used then NGP is no longer competitive with Queensland supplied gas to Sydney.9
As for any changes to the level of competition, this is not an open market and has little visibility, it has very limited numbers of producers (5) (of which Santos is already one), a limited number of retailers (6), and an even limited number of pipeline owners (2), and GSA contract prices which make up the majority of gas demand are undisclosed.
The ACCC noted that the response of the LNG producers to increased domestic demand in 2019 highlighted their ability to divert gas into the domestic market when required and suggested Queensland gas could meet forecast demand should risks associated with southern states’ production arise. They also noted that, “The capacity of LNG producers to seemingly increase domestic supplies to keep the East Coast Gas Market supplied with just enough gas may also point to broader competition and market power concerns.”14
In my previous submission I noted that,
“Domestic gas prices in Australia have remained at levels far in excess of international parity prices. Whilst prices have fallen somewhat, they have not fallen by nearly as much as those in Asia or Europe. Domestic prices have remained some 30-40% higher than ACCC calculated export parity prices (a.k.a. "netback" prices).[26]”3
Of increasing concern to the ACCC is the widening divergence between domestic prices offers and the LNG netback price. Domestic prices in Queensland now diverge from export parity LNG netback prices by more than $2/GJ. ACCC find this extremely concerning, as it raises serious questions about the level of competition among producers in the East Coast Gas Market.19
Of even further concern to the ACCC is that since September 2019 there have been 18 LNG spot cargoes sold by Queensland LNG producers, with the prices received for these spot cargoes well below the prices being offered to the domestic market.19
The ACCC concluded that the spot cargo sales, together with the divergence that has occurred between LNG netback prices and domestic prices, brings into question what is driving the pricing strategies of LNG producers and other suppliers in the East Coast Gas Market, and the extent to which it reflects a more fundamental lack of competition amongst suppliers.
The problems with competition in the Australian gas market are complex and there is a lack of understanding on how these could be resolved.19 It is unlikely that projected reductions in the increases in gas spot prices by the NGP would have a significant impact on competition in the East Coast Gas Market.
The role of natural gas in a low-carbon economy
Santos stated that “Some submitters suggested that the Project should not be approved as it would contribute to an unacceptable increase in greenhouse gas emissions and that any forecast shortage in energy demand could be met by renewable sources of energy generation.”
As stated in my original submission,
“To address the issue of dangerous climate change, Australia, along 196 other parties, is a signatory to the Paris Agreement, which entered into force on 4 November 2016. The Paris Agreement aims to strengthen the global response to the threat of climate change, by:
Holding the increase in the global average temperature to well below 2°C above pre-industrial levels and pursuing efforts to limit the temperature increase to 1.5°C above pre-industrial levels, recognizing that this would significantly reduce the risks and impacts of climate change.[27]
NSW Climate Change Policy Framework details the NSW Government’s objective to achieve net-zero emissions by 2050.[28] This long-term objective “sets a clear statement of government’s intent, commitment and level of ambition and sets expectations about future emissions constraints that will help the private sector to plan and act.” The Policy Framework states that the NSW Government will investigate how to embed consideration of climate change mitigation and adaptation across government operations including service delivery, infrastructure, purchasing decisions and regulatory frameworks. Furthermore, it states that Agencies will undertake additional policy investigation for sectors with significant opportunities and risks, including primary industries emissions and adaptation (Department of Primary Industries).
The IPCC report provides an estimate for a global remaining carbon budget of 580 GtCO2 (excluding permafrost feedbacks) based on a 50% probability of limiting warming to 1.5 degrees relative to 1850 to 1900 during and beyond this century and a remaining carbon budget of 420 GtCO2 for a 67% chance. [29]
Committed emissions from existing and proposed energy infrastructure represent more than the entire carbon budget that remains if mean warming is to be limited to 1.5 °C and perhaps two-thirds of the remaining carbon budget if mean warming is to be limited to less than 2 °C. Estimates suggest that little or no new CO2-emitting infrastructure can be commissioned, and that existing infrastructure may need to be retired early (or be retrofitted with carbon capture and storage technology) in order to meet the Paris Agreement climate goals.[30]
Australia’s remaining emission budget from Jan 2017 until 2050 for a 50% chance of warming to stay below 1.5C warming relative to pre-industrial levels was estimated to be 5.5 GTCO2e.29 Adding the GHG emissions expended in 2017[31], 2018[32], and 2019[33], this leaves just 3.8 Gt CO2e remaining as at December 2019. This leaves 6-7 years left at present emission rates of the 2013-2050 emission budget to stay below 1.5°C. Therefore, at current emissions rates, Australia will have exceeded its carbon budget for 2050 by 2026.
It therefore follows that no new fossil fuel development in Australia that is not carbon neutral, including the Narrabri Gas Project, that is estimated to result in 94.2 million tonnes of greenhouse gases over the life of the project, can be permitted because its approval would be inconsistent with the remaining carbon budget and the Paris Agreement climate target.”3 It follows that the NGP would contribute to an unacceptable increase in greenhouse gas emissions.
Santos further states “These submissions ignore the critical role of natural gas in the transition to a low-carbon economy, recognised by the International Energy Agency, or the relative contribution of the Project to Australia’s overall greenhouse gas (GHG) emissions, which is not significant.”
In my original submission I noted that,
“Natural gas has often been touted as the “transition fuel” for the electricity sector to replace coal’s greenhouse gas emissions and eventually paving the way for an emissions free future for Australia. This has been used as an argument for the approval of the Narrabri Gas project. This concept is out of date and I believe incorrect. It is simply too expensive and too emissions intensive to be so. Furthermore, the concept is based on the replacement of coal with gas which is effectively for electricity generation only. Gas is also utilised for heat through combustion both industrially and domestically producing greenhouse gases.”
The response to the role of natural gas in the transition to a low-carbon economy can be found in my response to the following sections “Why the Project is needed”, “Greenhouse gas and climate change - Reservoir CO2 production”, and “Greenhouse gas and climate change – Fugitive emissions”
Greenhouse gas and climate change - Reservoir CO2 production
As noted in my original submission the Narrabri Gas field has high levels of CO2 which will be vented into the atmosphere as part of gas extraction adding to the fugitive emissions from the implementation of this project.[34] Santos disputes Dr Grogan’s findings on the high levels of fugitive CO2 emissions from NGP. I suggest you review Dr Grogan’s work with respect to the NGP; Dr Grogan is an independent expert in the field with specific knowledge on CO2 processes in geological formations.[35]
Santos claims Narrabri gas has a very low CO2 content compared to "some existing sources of natural gas in the east coast gas market" but does not say where. As noted, the predicted fugitive CO2 gas emissions are high (up to 24%). I would like to see what these existing sources are and are they being used?
Santos also claim that they will " beneficially re-use CO2 where relevant in further support of achievement of emissions reduction targets" but appear not to be capturing and reusing any of the significant CO2 fugitive emissions resulting from gas extraction from the Narrabri Gas Project.
Finally, with respect to CO2 fugitive emissions, Santos state that the NGP will be subject to the GHG Safeguard Mechanism to manage their emissions (including CO2 fugitive emissions).[36] However, this is unlikely to have any positive effect on emissions, as less than 9% of companies subject to the Safeguard Mechanism have had to surrender carbon credits in 2018-2019 due to the scheme’s weak rules.[37]
Greenhouse gas and climate change – Fugitive emissions
Santos disputes that the Narrabri Gas Project EIS had underestimated the predicted fugitive methane emissions. Santos uses an “allowed” factor in its EIS of 0.0058% of methane fugitive emissions, according to the Australian Government National Greenhouse and Energy Reporting (Measurement) Determination 2008, clause 3.72.
As noted in my original submission,
“The CSIRO report “Fugitive Greenhouse Gas emissions from Coal Seam Gas Production in Australia” [38] noted that fugitive emissions for Natural Gas in Australia are estimated to be 1.5% of gas extracted. It should be noted that if fugitive emissions exceeded 3.1% then the emissions intensity would match that of coal (due to the fact that methane is 86 times more powerful as a greenhouse gas than CO2 over 20 years and 34 times more powerful over a 100-year time period).[39] They also noted that unconventional gas industry such as Coal Seam Gas would result in greater levels of fugitive emissions than the conventional gas industry.”
Methane leaks from natural gas production can make the process nearly as carbon intensive as coal. Therefore, Santos’s claim that “If the natural gas produced by the Project was simply used to displace coal-fired power generation in the Australian energy market, it would be expected that this would also reduce CO2 emissions.” may not necessarily be true due to fugitive emissions (both methane and CO2).
Santos states that
“demand will remain irrespective of whether the Project is approved and, if the Project is refused, the demand will simply need to be met by other energy sources including but not limited to LNG import into NSW via approved and planned facilities. These alternative sources of gas could be expected to have higher emissions impacts due to transportation requirements including liquefaction, transportation, regasification and other sources of emissions.”
Whereas imported gas via gas import terminals may have reasonably high emissions due to the liquefaction process, my original submission detailed other alternative sources of gas that had significantly lower emissions than the NGP and in the long term could replace the need for new gas such as proposed by the NGP.
It should be noted that these technologies Green Hydrogen and Biogas and Biomethane not only look to transition electricity generation away from natural gas but also for other uses such as combustion for heat.
From my original submission,
“Hydrogen
Hydrogen is a colourless, odourless, non-toxic gas that is an excellent carrier of energy and can be used for a broad range of energy applications including as a transport fuel, a substitute for natural gas and for electricity generation.[40] Hydrogen gas can be produced from water in a process known as electrolysis, and when powered by renewable energy, the hydrogen produced is free from carbon emissions, making it an attractive way to decarbonise transport, heating and electricity generation.40
AEMO stated that, “Hydrogen has the exciting potential to become an alternative energy storage technology and a new export commodity for Australia” which could be used to help decarbonise the domestic heat, transport and the industrial and commercial sectors in Australia and noted that development of the hydrogen industry would potentially impact both natural gas and electric demands.24 12
Several developments involving green / renewable hydrogen are either planned or underway in Australia.
AEMO highlighted the potential for green steel production in Australia due to abundant renewable resources and the increased demand for low emissions industrial commodities worldwide. 24 ‘Green steel’ can be made via a direct reduction process which uses hydrogen (made from renewable energy) as the heat source and reducing agent to produce pig iron. The by-product of the iron reduction process using hydrogen is water, rather than carbon dioxide in conventional steel making. Renewable energy is then used by an electric arc furnace to produce low-emissions green steel.
The Arrowsmith Hydrogen Project, which will be built at a facility in the town of Dongara, located 320km north of Perth, will utilise dedicated onsite renewable energy 85MW of solar power, supplemented by 75MW of wind generation capacity to generate 25 tonnes of green hydrogen a day and will be operational in 2022.[41]
ATCO’s Clean Energy Innovation Hub, located in Jandakot in Western Australia, is being used to trial the production, storage and use of renewable hydrogen to power a commercial-scale microgrid, testing the use of hydrogen in different settings and applications including in household appliances.[42] This includes optimising hydrogen storage solutions, blending hydrogen with natural gas and using hydrogen a direct use fuel. Green hydrogen will be produced from on-site solar using electrolysis, fuelling a range of gas appliances and blending hydrogen into the natural gas pipeline.
The $3.3 million development project will evaluate the potential for renewable hydrogen to be generated, stored, and used at a larger scale. ATCO aims to assess the practicalities of replacing natural gas with hydrogen at a city-wide scale across a municipality.[43]
The new chair of the Australian Energy Regulator, Clare Savage recently stated:
“The national gas industry could also undergo significant change as some jurisdictions move towards a zero carbon emissions policy. This could have significant consequences for the future of gas pipeline networks. In response, the AER recently supported the future recovery of Jemena’s investment in trialling the production of hydrogen from renewable energy for injection into its Sydney network. If hydrogen trials such as Jemena’s prove successful, the natural gas networks could be re-purposed to distribute hydrogen. If not, the economic life of the assets could be limited.” [44]
Biogas and BiomethaneBiogas is a renewable energy source, that is continuous and dispatchable, reliable, and local source of energy. Biogas can be converted into heat and/or electricity using boilers, generators or with Combined Heat and Power units.[45] Biogas also provides an alternative route for waste treatment and, as such, can help divert waste from landfill. Biogas consists primarily of methane and carbon dioxide, with trace amounts of other gases such as hydrogen sulphide, water vapour, oxygen, and ammonia.[46] Biogas can also be upgraded into biomethane: a renewable gas that can replace natural gas with a chemical composition very similar to natural gas. Biomethane is produced from the separation of methane from the other gases. 46
Biogas and its industry offer many benefits:
Australian business, industry and utilities recently signed an open letter to the Commonwealth Government advocating for biomethane to be injected into the gas distribution networks to enable the lowest cost transition to a decarbonised energy market and address a number of challenges including:
Both Renewable Hydrogen and Biogas/Biomethane can displace or replace natural gas as a fuel significantly reducing GHG emissions. These technologies show promise in Australia with the resources available locally. Once developed these would see assets such as the Narrabri Gas project left stranded.”3
Due to the above reasons I strongly object to the Narrabri Gas Project. Thank you again for the opportunity to comment. I look forward to hearing from you regarding this submission.
Yours sincerely,
Alec Roberts
[1] IPCN (n.d.) Policies - Additional material. Retrieved from https://www.ipcn.nsw.gov.au/policies
[2] Santos (2020, August 10) Narrabri Gas Project (SSD 6456) Submission to IPC following public hearing. Retrieved from https://www.ipcn.nsw.gov.au/resources/pac/media/files/pac/projects/2020/03/narrabri-gas-project/correspondence/santos-submission/200810-santos-_final-submission-incl-attachments.pdf
[3] Roberts, A. (2020, August 3) Submission on Narrabri Gas Project - Alec Roberts. Retrieved from https://www.newcastleclimatechangeresponse.org.au/news/submission-on-narrabri-gas-project-alec-roberts
[4] CSIRO (2018, August) Potential water impacts of coal seam gas in the Pilliga Sandstone. Retrieved from https://gisera.csiro.au/wp-content/uploads/2018/08/18-00384_GISERA_FACTSHEET_SGW-GABFluxFinalReport2pp_WEB_180807.pdf
[5] Sreekanth, J., Cui, T., Pickett, T. & Barrett, D. (2017) Uncertainty analysis of CSG-induced GAB flux and water balance changes in the Narrabri Gas Project area. CSIRO, Australia. Retrieved from https://publications.csiro.au/rpr/download?pid=csiro:EP173269&dsid=DS3
[6] Hannam, P. (2020, July 26). Matt Kean aims to double koala population by 2050. Retrieved from https://www.smh.com.au/environment/conservation/matt-kean-aims-to-double-koala-population-by-2050-20200725-p55fdc.html
[7] NSW Chief Scientist & Engineer (2016, December). Report of the Independent Review into the Decline of Koala Populations in Key Areas of NSW. Retrieved from https://www.chiefscientist.nsw.gov.au/__data/assets/pdf_file/0010/94519/161202-NSWCSE-koala-report.pdf
[8] Lunney, Daniel & Crowther, Mathew & Wallis, Ian & Foley, William & Lemon, John & Wheeler, Rob & Madani, George & Orscheg, C. & Griffith, Joanna & Krockenberger, Mark & Retamales, Melissa & Stalenberg, Eleanor. (2012). Koalas and climate change: a case study on the Liverpool Plains, north-west NSW. 10.7882/FS.2012.022.
[9] Robertson, B. (2020, July 23). IEEFA update: Australia sponsors a failing gas industry. Retrieved from https://ieefa.org/ieefa-update-australia-sponsors-a-failing-gas-industry/
[10] Morton, A. (2020, March 8). 'Expensive and underperforming': energy audit finds gas power running well below capacity. Retrieved from https://www.theguardian.com/environment/2020/mar/08/expensive-and-underperforming-energy-audit-finds-gas-power-running-well-below-capacity
[11] AEMO (2020, March). Gas Statement of Opportunities, March 2020, For eastern and south-eastern Australia. Retrieved from https://aemo.com.au/en/energy-systems/gas/gas-forecasting-and-planning/gas-statement-of-opportunities-gsoo
[12] AEMO (2019, December 12). Draft 2020 Integrated System Plan - For the National Electricity Market. Retrieved from https://aemo.com.au/-/media/files/electricity/nem/planning_and_forecasting/isp/2019/draft-2020-integrated-system-plan.pdf?la=en
[13] AEMO (2020b, July 30). 2020 Integrated System Plan - For the National Electricity Market. Retrieved from https://aemo.com.au/-/media/files/major-publications/isp/2020/final-2020-integrated-system-plan.pdf?la=en
[14] ACCC (2020, January) Gas inquiry 2017-2025 – Interim Report. Retrieved from https://www.accc.gov.au/system/files/Gas%20inquiry%20-%20January%202020%20interim%20report%20-%20revised.pdf
[15] AEMO (2020c, July 30) 2020 ISP Appendix 2. Cost Benefit Analysis. Retrieved from https://aemo.com.au/-/media/files/major-publications/isp/2020/appendix--2.pdf?la=en
[16] Energy Source & Distribution (2020, July 30). AEMO reveals Integrated System Plan 2020. Retrieved from https://esdnews.com.au/aemo-reveals-integrated-system-plan-2020/
[17] Parkinson, G. (2020, May 25) Big spinning machines arrive in South Australia to hasten demise of gas generation. Retrieved from https://reneweconomy.com.au/big-spinning-machines-arrive-in-south-australia-to-hasten-demise-of-gas-generation-64767/
[18] Pegasus Economics (2019, August) Report on the Narrabri Gas Project. Retrieved from https://8c4b987c-4d72-4044-ac79-99bcaca78791.filesusr.com/ugd/b097cb_c30b7e01a860476bbf6ef34101f4c34c.pdf
[19] ACCC (2020, July) Gas inquiry 2017–2025 Interim report July 2020. Retrieved from https://www.accc.gov.au/system/files/Gas%20inquiry%20July%202020%20interim%20report.pdf
[20] AEMO (2020, March 27) National Electricity & Gas Forecasting 2020 GSOO Publication. Retrieved from http://forecasting.aemo.com.au/Gas/AnnualConsumption/Total
[21] Mazengarb, M. & Parkinson, G. (2019, September 16). ACT to phase out gas as it launches next stage to zero carbon strategy. Retrieved from https://reneweconomy.com.au/act-to-phase-out-gas-as-it-launches-next-stage-to-zero-carbon-strategy-92906/
[22] Energy NSW. (2020, January 31). Memorandum of understanding, Retrieved from https://energy.nsw.gov.au/government-and-regulation/electricity-strategy/memorandum-understanding
[23] Alternative Technology Association (2018, July) Household fuel choice in the National Energy Market. Retrieved from https://renew.org.au/wp-content/uploads/2018/08/Household_fuel_choice_in_the_NEM_Revised_June_2018.pdf
[24] AEMO (2020a, July 30). 2020 ISP Appendix 10. Sector Coupling. Retrieved from https://aemo.com.au/-/media/files/major-publications/isp/2020/appendix--10.pdf?la=en
[25] ACCC (2020, January) Gas inquiry 2017-2025 – Interim Report. Retrieved from https://www.accc.gov.au/system/files/Gas%20inquiry%20-%20January%202020%20interim%20report%20-%20revised.pdf
[26] Long, S. (2020, February 27). Gas giants misled governments and it is costing Australian jobs, ACCC boss says. Retrieved from https://www.abc.net.au/news/2020-02-27/gas-giants-misled-governments-accc-boss-rod-sims-says/12004254
[27] IPCC (2018). Global Warming of 1.5°C: An IPCC Special Report on the impacts of global warming of 1.5°C above pre-industrial levels and related global greenhouse gas emission pathways, in the context of strengthening the global response to the threat of climate change, sustainable development, and efforts to eradicate poverty, Intergovernmental Panel on Climate Change. Retrieved from https://www.ipcc.ch/sr15/
[28] OEH (2018). NSW Climate Change Policy Framework. Retrieved from https://www.environment.nsw.gov.au/-/media/OEH/Corporate-Site/Documents/Climate-change/nsw-climate-change-policy-framework-160618.pdf
[29] Meinshausen, M. (2019, March 19). Deriving a global 2013-2050 emission budget to stay below 1.5°C based on the IPCC Special Report on 1.5°C. Retrieved from https://www.climatechange.vic.gov.au/__data/assets/pdf_file/0018/421704/Deriving-a-1.5C-emissions-budget-for-Victoria.pdf
[30] Tong, D., Zhang, Q., Zheng, Y., Caldeira, K., Shearer, C., Hong, C., Qin, Y., & Davis, S. J. (2019). Committed emissions from existing energy infrastructure jeopardize 1.5 °C climate target. Nature, 572(7769), 373-377. https://doi-org.ezproxy.newcastle.edu.au/10.1038/s41586-019-1364-3
[31] Climate Council (2018) Australia’s Rising Greenhouse Gas Emissions. Retrieved from https://www.climatecouncil.org.au/wp-content/uploads/2018/06/CC_MVSA0143-Briefing-Paper-Australias-Rising-Emissions_V8-FA_Low-Res_Single-Pages3.pdf
[32] Cox, L. (2019, March 14). Australia's annual carbon emissions reach record high. Retrieved from https://www.theguardian.com/environment/2019/mar/14/australias-annual-carbon-emissions-reach-record-high
[33] DISER (2020, May) National Greenhouse Gas Inventory: December 2019. Retrieved from https://www.industry.gov.au/data-and-publications/national-greenhouse-gas-inventory-december-2019
[34] Grogan, A. (2020, April 8). Cherry-Picking: Santos selects convenient data to deflect Narrabri gas challenge. Retrieved from https://www.michaelwest.com.au/cherry-picking-santos-selects-convenient-data-to-deflect-narrabri-gas-challenge/
[35] NWPA (2020, April). Narrabri Gas Project - Greenhouse Gas Claims Refuted. Retrieved from https://nwprotectionadvocacy.com/wp-content/uploads/2020/03/NARRABRI-GAS-PROJECT-GHG-claims-refuted-April-2020_web.pdf
[36] Clean Energy Regulator (2019, October 28). The safeguard mechanism. Retrieved from http://www.cleanenergyregulator.gov.au/NGER/The-safeguard-mechanism
[37] Mazengarb, M. (2020, April 1). Industrial emissions grow as polluters side-step safeguard caps. Retrieved from https://reneweconomy.com.au/industrial-emissions-grow-as-polluters-side-step-safeguard-caps-30115/
[38] CSIRO (2012). Fugitive Greenhouse Gas Emissions from Coal Seam Gas Production in Australia. Retrieved from https://publications.csiro.au/rpr/pub?pid=csiro:EP128173
[39] Robertson, B. (2020, January 30). IEEFA Australia: Gas is not a transition fuel, Prime Minister. Retrieved from https://ieefa.org/ieefa-australia-gas-is-not-a-transition-fuel-prime-minister/
[40] Tasmanian Government. (n.d.). Hydrogen. Retrieved from https://www.stategrowth.tas.gov.au/energy_and_resources/energy/hydrogen
[41] Mazengarb, M. (2020, April 29). Massive hydrogen project gets green light after securing $300m investment. Retrieved from https://reneweconomy.com.au/massive-hydrogen-project-gets-green-light-after-securing-300m-investment-68959/
[42] Energy Source & Distribution (2018, October 4). Nel awarded contract for Australia’s first hydrogen microgrid. Retrieved from https://esdnews.com.au/nel-awarded-contract-for-australias-first-hydrogen-microgrid/
[43] ARENA (2018, July 3). Green hydrogen innovation hub to be built in WA. Retrieved from https://arena.gov.au/news/green-hydrogen-innovation-hub-to-be-built-in-wa/
[44] West, M. (2020, July 3). A Savage Call: energy tsar calls time on Australia’s gas cartel. Retrieved from https://www.michaelwest.com.au/a-savage-call-energy-tsar-calls-time-on-australias-gas-cartel/
[45] Ramos-Suárez, J. L., Ritter, A., Mata González, J., & Camacho Pérez, A. (2019). Biogas from animal manure: A sustainable energy opportunity in the Canary Islands. Renewable and Sustainable Energy Reviews, 104, 137–150. https://doi-org.ezproxy.newcastle.edu.au/10.1016/j.rser.2019.01.025t
[46] Carlu, E. Truong, T. Kundevski, M. (2019, May). Biogas opportunities for Australia. ENEA Consulting – March 2019. Retrieved from: https://www.energynetworks.com.au/resources/reports/biogas-opportunities-for-australia-enea-consulting/
[47] Hughes, J. (2020, July 15). Business, industry and utilities back biogas for net zero Australia. Retrieved from https://www.worldbiogasassociation.org/business-industry-and-utilities-back-biogas-for-net-zero-australia/
[48] Bioenergy Australia (2020, June 9). Joint letter in support of Australian biomethane market development. Retrieved from https://www.bioenergyaustralia.org.au/news/joint-letter-in-support-of-australian-biomethane/
Office of the Independent Planning Commission NSW
Level 3, 201 Elizabeth Street, Sydney, NSW 2000
P: (02) 9383 2100 E: ipcn@ipcn.nsw.gov.au
Dear Independent Planning Commission,
This is a submission objecting to the Narrabri Gas Project in accordance with the Commission’s ‘Additional Material’ policy[1] and in response to the following new material provided to the Commission:
- the document entitled ‘Submission to IPC following public hearing’ (including attachments), provided by the Applicant on 10 August 2020[2], and
- the Department’s ‘Response to Independent Planning Commission Questions’, provided to the Commission on 14 August 2020
Most of my response to the designated additional material is from my original submission.[3] However, as this submission must specifically relate to the new material only, parts of the original submission will be quoted here as required to address the new material only.
Please note that this document does not supersede my original submission but is in addition to it.
Similar to my original submission, this submission will focus on the areas of economics, gas supply and demand, climate change impacts, gas as a transition fuel and alternative fuels to natural gas. However, comment will be provided in association with Groundwater Impacts and Ecological Impacts – Koalas.
Groundwater - Assertions that the Project is located in a major recharge zone for the GABSantos refuted the assertion that the Project is in a major recharge area of the GAB, and that this poses an unacceptable risk to aquifers of the GAB.
In my original submission I stated:
“The Pilliga Sandstone Aquifer is a high-quality shallow groundwater that local communities rely on for water for stock, domestic and irrigation purposes and is one of the main aquifers in the southern Great Artesian Basin. The Pilliga Sandstone is also the main outcropping aquifer in the Pilliga forest region within the project area, and this region and along with outcropping along the Warrambungle Range are recharge beds for the Great Artesian Basin in NSW.[4] [5] A near-surface aquifer, the Namoi Alluvium, is also a major water resource for agriculture in the region. Together these form the main source of water these communities rely on for their livelihoods.
The contamination of groundwater is a major environmental risk with Coal Seam Gas, with the major potential contamination from ‘produced water’ which is pumped from the underlying coal seams to depressurize the seams and allow gas to be released and be extracted. CSG produced water is typically of poor quality due to being located within the coal seams. The Narrabri region produced water is high in salinity and contains high levels of heavy metals, boron and fluoride and presents a major risk to groundwater contamination in the area.
Given a number of leaks and/or spills of produced water have already occurred within the 70 appraisal and exploration wells in the area, there is a strong likelihood with 850 wells that significant leaks and/or spills of produced water will occur throughout the life of the project risking contamination of the aquifers / recharge beds for the Great Artesian Basin and affecting the livelihoods of those that depend on this valuable resource.” 3
The potential contamination of the aquifers flies in the face with the assessment that the project will “not result in significant impacts on people or the environment”.
Ecology – KoalaSantos stated (in quoting the NGP EIS) that the impacts of the Project on the current Koala population will not lead to a long-term extinction of a viable local population.
In my original submission I stated:
“The Pilliga Forest has been classified as a priority area for koala conservation. Energy and Environment Minister Matt Kean recently set a goal of doubling the number of koalas by 2050 in a bid to defy projections the marsupial could become extinct in the wild in NSW by mid-century.[6] The Narrabri Gas project will result in the fragmentation of 85,000 hectares of the Pilliga Forest. Fragmented islands of koala habitat such as will result from this development which will result in unhealthy koala populations. Koalas need wide corridors to spread out to ensure effective breeding. Koala corridors are vital and are recognised generally as such in the new Koala SEPP and acknowledged by the NSW Chief Scientist (2016):
“Koala populations need large areas of connected habitat to maintain their viability. Habitat loss and fragmentation has resulted in population decline and has been identified as a significant threat to the species persistence in NSW.”[7]
Recent studies within the project area suggest a dramatic decline in koala populations. Surveys of the Pilliga forests in the 1990s suggest that the forests were carrying the largest population of koalas west of the Great Dividing Range in NSW, with the population estimated at 15,000. Repeat surveys within the Pilliga forests show a decline of over 80% since the 1990s.7
The impact of extreme weather events such as drought and extreme heatwaves on koalas is expected to increase with climate change and may also exacerbate other threats such as disease.[8] The Pilliga forest koalas are likely to have faced extreme (but less frequent and long) heat events in the past and responded by retreating to creek lines with either available free water or a higher moisture content in the leaves of their food trees. However, land clearing within and on the periphery of the forests and from road construction since the early 1900s has resulted in creeks within the Pilliga forests silting up. Habitats that would have once likely functioned as a refuge during times of drought are now highly disturbed and are unlikely to provide the required level of protection for koalas.7
The planned significant fragmentation of habitat by the Narrabri Gas project will exacerbate the problems caused by earlier land clearance and may lead to the local extinction of the Koala. The potential local extinct of a vulnerable species appears to contradict the assessment that the project will “not result in significant impacts on people or the environment”.3
Why the Project is needed
Santos stated that a “growing component of energy demand will need to be met by natural gas supply to complement renewables growth and battery storage in Australia as ageing coal-fired power plants close over coming decades.”
The use of gas in electricity production has reduced in recent years and modelling of the future electricity grid and further evidence has indicated that it is unlikely that gas will play a major role in the transition from coal-fired power plants to renewable energy and storage.
In my original submission, I noted that,
“the electricity market has already moved away from gas, with a 59% decline in usage in the National Electricity Market since 2014, whilst renewable energy has increased by 25% during the same period.[9] Furthermore, flexible gas plants already in the grid are running well below capacity.[10] AEMO forecast that increasing renewable generation developments in the NEM are expected to continue to drive down system normal demand for gas-powered generation. [11]
The AEMO modelled the future electricity grid in its Integrated Systems Plan.[12] [13] The results showed for all scenarios that the transition from coal to renewable energy would not be via gas.10 The role of gas would be reduced with a decline in gas generation through to 2040.9 The report notes that to firm up the inherently variable distributed and large-scale renewable generation, there will be needed new flexible, dispatchable resources such as: utility-scale pumped hydro and large-scale battery energy storage systems, distributed batteries participating as virtual power plants, and demand side management.12 13 It also noted that new, flexible gas generators such as gas peaking plants could play a greater role if gas prices materially reduced, with gas prices remaining low at $4 to 6 per GJ.13 However this is unlikely as gas prices have tripled over the past decade and expected NSW gas prices are over 60% more than this price.10 [14] AEMO noted that the investment case for new gas-powered generation will critically depend on future gas prices, as gas-powered generation and batteries can both serve the daily peaking role that will be needed as variable renewable energy replaces coal-fired generation. In their 2020 Gas Statement of Opportunities report, AEMO predicted that as more coal-fired generation retired in the long term, gas consumption for gas-powered generation in the National Electricity Market was forecast to grow again in the early 2030s, recovering to levels similar to those forecast for 2020.11 However, in a later report, AEMO determined that by the 2030s, when significant investment in new dispatchable capacity is needed, new batteries will be more cost-effective than gas-powered generation. 13 Furthermore, the commissioning of the Snowy 2.0 pumped hydro project in 2026 will result in less reliance on gas-powered generation as a source of firm supply.11”3
“AEMO noted that stronger interconnection between regions reduces the reliance on gas-powered generation, as alternative resources can be shared more effectively. 13 The expansion network interconnection enables the growth of variable renewable energy without a significant reliance on local gas generation.[15] Supporting this assertion, the AEMO announced a series of actionable transmission projects including interconnector upgrades and expansions and network augmentations supporting recently announced renewable energy zones.[16] 13 AEMO noted that as each of these new transmission projects is commissioned, the ability for national electricity market regions to share resources (particularly geographically diverse variable renewable energy) is increased, and therefore demand for gas-powered generation is forecast to decrease.11 The Marinus Link is forecast to be commissioned in 2036, with surplus renewable generation from Tasmania then being available to the mainland National Electricity Market, which would see further declines in gas-fired generation, despite continuing coal-fired generation retirements.11 ”3
Therefore, it is highly unlikely that a “growing component of energy demand will need to be met by natural gas supply to complement renewables growth and battery storage in Australia as ageing coal-fired power plants close over coming decades”.
Santos quoted from the 2020 ISP that
“GPG can provide the synchronous generation needed to balance variable renewable supply, and so is a potential complement to storage. The ultimate mix will depend upon the relative cost and availability of different storage technologies compared to future gas prices.”
In my original submission, I stated,
“However, the current installation of synchronous condensers in South Australia and other eastern states to increase system strength and stabilise the electricity network will reduce the need for gas-fired generators acting in the role of synchronous generators as more renewables enter the grid.[17] Ancillary services are likely to utilise battery storage and synchronous condensers in the future and no longer require the use of gas-powered generation.”3
Santos stated that, “Additional gas is required in the domestic gas market to meet residential, commercial and industrial gas demand.”
Gas demand has been declining in recent years and predictions are that gas demand will not increase in the future and may decrease, therefore it is unlikely that additional gas will be required in the domestic gas market to meet residential, commercial, and industrial gas demand.
In my original submission, I noted that,
“demand for natural gas in NSW has declined over recent years. From 2014 to 2018, annual consumption of natural gas in NSW fell by 15 per cent, with the major contributor of this fall in consumption being the reduction in the use of gas for power generation.[18] Whereas domestic demand for gas has fallen for use in manufacturing by 14%, it has dropped by a staggering 59% for power generation by since 2014. 9 “
ACCC recently stated that “overall consumption of gas in the east coast was largely unchanged over the first five months of 2020 relative to 2019”[19] and that the COVID-19 pandemic has not had a material effect on the overall level of production or consumption in the East Coast Gas Market. However, they stated that it is unknown whether the contraction in economic activity brought about by the COVID-19 pandemic will result in a decline in domestic and/or international demand for gas in 2021.
Commercial and Industrial (C&I) gas users utilise gas for applications such as a heat source for boilers and furnaces, for producing steam, or for drying processes, and as a feedstock to produce fertilisers, explosives, chemicals, and plastics. ACCC reported that a number of suppliers expected Gas Powered Generation (GPG) and C&I demand to be lower in 2020 and that many C&I users reported that they are slowing production due to the COVID-19 pandemic which raised the potential for significant adverse consequences for these users in having to pay for gas that they cannot use or on-sell (with take or pay contract obligations). ACCC concluded that there is now a considerable degree of uncertainty surrounding the demand for gas by gas users (non GPG) following the COVID-19 pandemic and the impact this has had on economic activity, both domestically and internationally.19
Whereas 2019 was somewhat of an anomalous year with failures in Coal Powered Generation resulting in additional GPG being utilised, the ACCC reported that GPG demand over the first five months of 2020 was 36% lower than over the same period in 2019.
In my original submission I noted that AEMO forecast that, “demand for gas-powered generation is predicted to continue to fall by over 85% from 2019 levels by 2028.[20]” 3
In my original submission I noted that,
“The ACT is planning to go gas free by 2025. This is expected to reduce their overall emissions by 22%. As part of the ACT Climate Change Strategy 2019-2025, all government and public-school buildings will be completely powered by 100% renewable energy eliminating the need for natural gas. The ACT has also removed the mandatory requirement for new homes built in the ACT to be connected to the mains gas network and will begin to introduce new policies to replace gas appliances with electric alternatives. Some 14% of residents have already converted over to 100% electric. [21]” and that “There are moves in other jurisdictions to remove the mandatory requirement for a gas connection in new developments such as in South Australia.”3
In my original submission I noted that,
“AEMO forecasts further reductions in gas use as consumers fuel-switch away from gas appliances towards electrical devices, in particular for space conditioning. The Commonwealth and NSW Government are exploring options to free-up gas demand through electrification, fuel switching and energy efficiency. [22]
Fuel switching from gas appliances towards electrical devices can often be more economic. A 2018 study of household fuel choice found that 98% of households with new solar financially favoured replacement of gas appliances with electric. With existing/no solar 60-65% of households still favoured replacement of gas appliances with electric. [23]
In the residential sector, for example, reverse-cycle air-conditioning is expected to reduce gas demand that could have arisen due to gas heating.[24]”3
Therefore, it is unlikely that additional gas will be required in the domestic gas market to meet residential, commercial, and industrial gas demand.
Downward pressure on NSW gas prices and more jobs
Santos quoted the ACIL Allen analysis findings that,
“By the later 2020s and beyond, the Project will be among the lower cost resources.”
As lower cost supplies dry up the higher cost supplies will be utilised including NGP. NGP will only be “among the lower cost contingent resources” because lower cost supplies will be less available.
However, in my original submission I noted that,
“according to an AEMO commissioned report, gas extraction costs from this field will be over twice the cost of other existing fields in the eastern gas region.9 According to AEMO, the Narrabri Gas Project is ranked 41 out of 51 actual and undeveloped gas projects and there are 18 developed and 22 undeveloped gas projects with lower estimated production costs than the Narrabri Gas Project. 18
Santos quoted the ACIL Allen analysis findings that,
“The Project can place downward pressure on gas prices in NSW, potentially by between 4 per cent and 12 per cent from 2025 onwards. Even if 40 TJ per day is provided to establish a local fertiliser plant, a 3 per cent to 9 per cent price reduction in Sydney is estimated.”
It should be noted that this analysis is based on the spot market only under pure market conditions and not Gas Supply Agreement (GSA) prices. As noted by ACIL Allen, “Most wholesale gas is sold and transported under bilateral agreements between producers, pipeline owners, retailers and major users.” “the eastern Australian market continues to operate primarily based on long-term bilateral contracts, with the spot markets used largely to manage operational and contract imbalances” and “The spot prices provide an indication of short-term and seasonal variations in the supply demand balance and bear little relationship to long-term contract prices.” And that “Spot prices are a good indication of possible prices in short term contacts of up to 18 months. They are not a good indication of prices in longer term gas sales contracts.“ Information obtained by the ACCC from gas suppliers in the east coast indicated that suppliers were unlikely to use expected future LNG spot prices to assess prices in domestic contracts with a term beyond three years.14
ACIL Allen further noted, “Most of the gas traded in the east Australian gas market is under long term gas sales agreements. It is difficult to model the impact of contracts on average prices of gas at different points in the market as the terms and prices contained in these gas sales agreements are not public.”
ACIL ALLEN noted that future prices in GSAs are likely to be driven primarily by:
— the marginal cost of undeveloped, contingent, and prospective resources after around 2026.
— longer term LNG price movements which in turn will be influenced by movements in oil prices, global economic conditions, and global LNG production capacity
— transmission pipeline capacity and the efficiency of the transmission system and capacity trading
— the level of competition in the eastern Australian gas market.
ACIL Allen also noted that with the commissioning of LNG import terminals “the pricing dynamics in the eastern Australian market will increasingly be influenced by LNG import pricing, and away from export parity pricing.”
In my original submission I noted,
“The marginal source of supply (the final source of gas supply needed to meet demand) is likely to set floor price in negotiations between gas suppliers and buyers in NSW.[25] This cost of production together with transmission costs to Sydney is currently some 20% less than the proposed Narrabri Gas Project. Furthermore, future marginal source of supply may be satisfied by imported LNG (where wholesale gas prices would be set to import parity levels) or through existing or developed lower cost domestic supplies (such as noted by AEMO). 18 Under these circumstances, the Narrabri Gas Project would not provide the marginal source of supply for wholesale gas in NSW, and is thus unlikely to exert any influence over wholesale gas prices in NSW over the near or long term and therefore not contribute to any reduction in domestic gas prices.”3
The ACIL Allen modelling showed an overall increase in gas prices of over 30% in the medium term rising to over 40% in the longer term. The modelling indicated that the NGP would reduce the amount of increase in gas prices somewhat than without it for the spot market.
However, the estimated NGP production costs of $6.40/GJ used in the modelling that are based on ACIL Allen’s internal data are below the AEMO estimates that the NGP will have costs at a minimum $7.28/GJ.9 Using the AEMO estimates may give a different result with a reduced ability to “place downward pressure on gas prices”.
How these modelling results would potentially affect real gas prices over time for such a small potential reduction in gas price increase is drawn into question. Factors such as export parity, import parity, producers’ marginal costs of production are more likely to affect contract prices and thus overall gas prices. Therefore, this analysis may not be able to show whether the “Project can place downward pressure on gas prices in NSW”.
Santos quoted the ACIL Allen analysis findings that,
“Because of Santos’ commitment that all the gas produced from the Project will be available for the domestic market, a new competitive source of supply close to Sydney is expected and this will lead to more competitive prices on long term gas contracts, particularly into the late 2020s and 2030s.”
ACIL Allen’s analysis suggested that delivery of NGP gas delivered to Sydney would be competitive with Queensland supplied gas. However, this assumed NGP production costs of $6.40/GJ. If the AEMO estimate of a minimum production cost of $7.28/GJ is used then NGP is no longer competitive with Queensland supplied gas to Sydney.9
As for any changes to the level of competition, this is not an open market and has little visibility, it has very limited numbers of producers (5) (of which Santos is already one), a limited number of retailers (6), and an even limited number of pipeline owners (2), and GSA contract prices which make up the majority of gas demand are undisclosed.
The ACCC noted that the response of the LNG producers to increased domestic demand in 2019 highlighted their ability to divert gas into the domestic market when required and suggested Queensland gas could meet forecast demand should risks associated with southern states’ production arise. They also noted that, “The capacity of LNG producers to seemingly increase domestic supplies to keep the East Coast Gas Market supplied with just enough gas may also point to broader competition and market power concerns.”14
In my previous submission I noted that,
“Domestic gas prices in Australia have remained at levels far in excess of international parity prices. Whilst prices have fallen somewhat, they have not fallen by nearly as much as those in Asia or Europe. Domestic prices have remained some 30-40% higher than ACCC calculated export parity prices (a.k.a. "netback" prices).[26]”3
Of increasing concern to the ACCC is the widening divergence between domestic prices offers and the LNG netback price. Domestic prices in Queensland now diverge from export parity LNG netback prices by more than $2/GJ. ACCC find this extremely concerning, as it raises serious questions about the level of competition among producers in the East Coast Gas Market.19
Of even further concern to the ACCC is that since September 2019 there have been 18 LNG spot cargoes sold by Queensland LNG producers, with the prices received for these spot cargoes well below the prices being offered to the domestic market.19
The ACCC concluded that the spot cargo sales, together with the divergence that has occurred between LNG netback prices and domestic prices, brings into question what is driving the pricing strategies of LNG producers and other suppliers in the East Coast Gas Market, and the extent to which it reflects a more fundamental lack of competition amongst suppliers.
The problems with competition in the Australian gas market are complex and there is a lack of understanding on how these could be resolved.19 It is unlikely that projected reductions in the increases in gas spot prices by the NGP would have a significant impact on competition in the East Coast Gas Market.
The role of natural gas in a low-carbon economy
Santos stated that “Some submitters suggested that the Project should not be approved as it would contribute to an unacceptable increase in greenhouse gas emissions and that any forecast shortage in energy demand could be met by renewable sources of energy generation.”
As stated in my original submission,
“To address the issue of dangerous climate change, Australia, along 196 other parties, is a signatory to the Paris Agreement, which entered into force on 4 November 2016. The Paris Agreement aims to strengthen the global response to the threat of climate change, by:
Holding the increase in the global average temperature to well below 2°C above pre-industrial levels and pursuing efforts to limit the temperature increase to 1.5°C above pre-industrial levels, recognizing that this would significantly reduce the risks and impacts of climate change.[27]
NSW Climate Change Policy Framework details the NSW Government’s objective to achieve net-zero emissions by 2050.[28] This long-term objective “sets a clear statement of government’s intent, commitment and level of ambition and sets expectations about future emissions constraints that will help the private sector to plan and act.” The Policy Framework states that the NSW Government will investigate how to embed consideration of climate change mitigation and adaptation across government operations including service delivery, infrastructure, purchasing decisions and regulatory frameworks. Furthermore, it states that Agencies will undertake additional policy investigation for sectors with significant opportunities and risks, including primary industries emissions and adaptation (Department of Primary Industries).
The IPCC report provides an estimate for a global remaining carbon budget of 580 GtCO2 (excluding permafrost feedbacks) based on a 50% probability of limiting warming to 1.5 degrees relative to 1850 to 1900 during and beyond this century and a remaining carbon budget of 420 GtCO2 for a 67% chance. [29]
Committed emissions from existing and proposed energy infrastructure represent more than the entire carbon budget that remains if mean warming is to be limited to 1.5 °C and perhaps two-thirds of the remaining carbon budget if mean warming is to be limited to less than 2 °C. Estimates suggest that little or no new CO2-emitting infrastructure can be commissioned, and that existing infrastructure may need to be retired early (or be retrofitted with carbon capture and storage technology) in order to meet the Paris Agreement climate goals.[30]
Australia’s remaining emission budget from Jan 2017 until 2050 for a 50% chance of warming to stay below 1.5C warming relative to pre-industrial levels was estimated to be 5.5 GTCO2e.29 Adding the GHG emissions expended in 2017[31], 2018[32], and 2019[33], this leaves just 3.8 Gt CO2e remaining as at December 2019. This leaves 6-7 years left at present emission rates of the 2013-2050 emission budget to stay below 1.5°C. Therefore, at current emissions rates, Australia will have exceeded its carbon budget for 2050 by 2026.
It therefore follows that no new fossil fuel development in Australia that is not carbon neutral, including the Narrabri Gas Project, that is estimated to result in 94.2 million tonnes of greenhouse gases over the life of the project, can be permitted because its approval would be inconsistent with the remaining carbon budget and the Paris Agreement climate target.”3 It follows that the NGP would contribute to an unacceptable increase in greenhouse gas emissions.
Santos further states “These submissions ignore the critical role of natural gas in the transition to a low-carbon economy, recognised by the International Energy Agency, or the relative contribution of the Project to Australia’s overall greenhouse gas (GHG) emissions, which is not significant.”
In my original submission I noted that,
“Natural gas has often been touted as the “transition fuel” for the electricity sector to replace coal’s greenhouse gas emissions and eventually paving the way for an emissions free future for Australia. This has been used as an argument for the approval of the Narrabri Gas project. This concept is out of date and I believe incorrect. It is simply too expensive and too emissions intensive to be so. Furthermore, the concept is based on the replacement of coal with gas which is effectively for electricity generation only. Gas is also utilised for heat through combustion both industrially and domestically producing greenhouse gases.”
The response to the role of natural gas in the transition to a low-carbon economy can be found in my response to the following sections “Why the Project is needed”, “Greenhouse gas and climate change - Reservoir CO2 production”, and “Greenhouse gas and climate change – Fugitive emissions”
Greenhouse gas and climate change - Reservoir CO2 production
As noted in my original submission the Narrabri Gas field has high levels of CO2 which will be vented into the atmosphere as part of gas extraction adding to the fugitive emissions from the implementation of this project.[34] Santos disputes Dr Grogan’s findings on the high levels of fugitive CO2 emissions from NGP. I suggest you review Dr Grogan’s work with respect to the NGP; Dr Grogan is an independent expert in the field with specific knowledge on CO2 processes in geological formations.[35]
Santos claims Narrabri gas has a very low CO2 content compared to "some existing sources of natural gas in the east coast gas market" but does not say where. As noted, the predicted fugitive CO2 gas emissions are high (up to 24%). I would like to see what these existing sources are and are they being used?
Santos also claim that they will " beneficially re-use CO2 where relevant in further support of achievement of emissions reduction targets" but appear not to be capturing and reusing any of the significant CO2 fugitive emissions resulting from gas extraction from the Narrabri Gas Project.
Finally, with respect to CO2 fugitive emissions, Santos state that the NGP will be subject to the GHG Safeguard Mechanism to manage their emissions (including CO2 fugitive emissions).[36] However, this is unlikely to have any positive effect on emissions, as less than 9% of companies subject to the Safeguard Mechanism have had to surrender carbon credits in 2018-2019 due to the scheme’s weak rules.[37]
Greenhouse gas and climate change – Fugitive emissions
Santos disputes that the Narrabri Gas Project EIS had underestimated the predicted fugitive methane emissions. Santos uses an “allowed” factor in its EIS of 0.0058% of methane fugitive emissions, according to the Australian Government National Greenhouse and Energy Reporting (Measurement) Determination 2008, clause 3.72.
As noted in my original submission,
“The CSIRO report “Fugitive Greenhouse Gas emissions from Coal Seam Gas Production in Australia” [38] noted that fugitive emissions for Natural Gas in Australia are estimated to be 1.5% of gas extracted. It should be noted that if fugitive emissions exceeded 3.1% then the emissions intensity would match that of coal (due to the fact that methane is 86 times more powerful as a greenhouse gas than CO2 over 20 years and 34 times more powerful over a 100-year time period).[39] They also noted that unconventional gas industry such as Coal Seam Gas would result in greater levels of fugitive emissions than the conventional gas industry.”
Methane leaks from natural gas production can make the process nearly as carbon intensive as coal. Therefore, Santos’s claim that “If the natural gas produced by the Project was simply used to displace coal-fired power generation in the Australian energy market, it would be expected that this would also reduce CO2 emissions.” may not necessarily be true due to fugitive emissions (both methane and CO2).
Santos states that
“demand will remain irrespective of whether the Project is approved and, if the Project is refused, the demand will simply need to be met by other energy sources including but not limited to LNG import into NSW via approved and planned facilities. These alternative sources of gas could be expected to have higher emissions impacts due to transportation requirements including liquefaction, transportation, regasification and other sources of emissions.”
Whereas imported gas via gas import terminals may have reasonably high emissions due to the liquefaction process, my original submission detailed other alternative sources of gas that had significantly lower emissions than the NGP and in the long term could replace the need for new gas such as proposed by the NGP.
It should be noted that these technologies Green Hydrogen and Biogas and Biomethane not only look to transition electricity generation away from natural gas but also for other uses such as combustion for heat.
From my original submission,
“Hydrogen
Hydrogen is a colourless, odourless, non-toxic gas that is an excellent carrier of energy and can be used for a broad range of energy applications including as a transport fuel, a substitute for natural gas and for electricity generation.[40] Hydrogen gas can be produced from water in a process known as electrolysis, and when powered by renewable energy, the hydrogen produced is free from carbon emissions, making it an attractive way to decarbonise transport, heating and electricity generation.40
AEMO stated that, “Hydrogen has the exciting potential to become an alternative energy storage technology and a new export commodity for Australia” which could be used to help decarbonise the domestic heat, transport and the industrial and commercial sectors in Australia and noted that development of the hydrogen industry would potentially impact both natural gas and electric demands.24 12
Several developments involving green / renewable hydrogen are either planned or underway in Australia.
AEMO highlighted the potential for green steel production in Australia due to abundant renewable resources and the increased demand for low emissions industrial commodities worldwide. 24 ‘Green steel’ can be made via a direct reduction process which uses hydrogen (made from renewable energy) as the heat source and reducing agent to produce pig iron. The by-product of the iron reduction process using hydrogen is water, rather than carbon dioxide in conventional steel making. Renewable energy is then used by an electric arc furnace to produce low-emissions green steel.
The Arrowsmith Hydrogen Project, which will be built at a facility in the town of Dongara, located 320km north of Perth, will utilise dedicated onsite renewable energy 85MW of solar power, supplemented by 75MW of wind generation capacity to generate 25 tonnes of green hydrogen a day and will be operational in 2022.[41]
ATCO’s Clean Energy Innovation Hub, located in Jandakot in Western Australia, is being used to trial the production, storage and use of renewable hydrogen to power a commercial-scale microgrid, testing the use of hydrogen in different settings and applications including in household appliances.[42] This includes optimising hydrogen storage solutions, blending hydrogen with natural gas and using hydrogen a direct use fuel. Green hydrogen will be produced from on-site solar using electrolysis, fuelling a range of gas appliances and blending hydrogen into the natural gas pipeline.
The $3.3 million development project will evaluate the potential for renewable hydrogen to be generated, stored, and used at a larger scale. ATCO aims to assess the practicalities of replacing natural gas with hydrogen at a city-wide scale across a municipality.[43]
The new chair of the Australian Energy Regulator, Clare Savage recently stated:
“The national gas industry could also undergo significant change as some jurisdictions move towards a zero carbon emissions policy. This could have significant consequences for the future of gas pipeline networks. In response, the AER recently supported the future recovery of Jemena’s investment in trialling the production of hydrogen from renewable energy for injection into its Sydney network. If hydrogen trials such as Jemena’s prove successful, the natural gas networks could be re-purposed to distribute hydrogen. If not, the economic life of the assets could be limited.” [44]
Biogas and BiomethaneBiogas is a renewable energy source, that is continuous and dispatchable, reliable, and local source of energy. Biogas can be converted into heat and/or electricity using boilers, generators or with Combined Heat and Power units.[45] Biogas also provides an alternative route for waste treatment and, as such, can help divert waste from landfill. Biogas consists primarily of methane and carbon dioxide, with trace amounts of other gases such as hydrogen sulphide, water vapour, oxygen, and ammonia.[46] Biogas can also be upgraded into biomethane: a renewable gas that can replace natural gas with a chemical composition very similar to natural gas. Biomethane is produced from the separation of methane from the other gases. 46
Biogas and its industry offer many benefits:
- Biogas is a renewable energy source that assists the decarbonisation of the economy. A study of the replacement of natural gas by biomethane in France reduced GHG emissions by greater than 85%.
- Biogas is a secure, continuous and dispatchable source of energy that can contribute to national energy supply.
- Biogas also provides an alternative route for waste treatment and, as such, can help divert waste from landfill.
- The biogas industry supports local economies and regional communities, creating jobs, and offering new income sources, particularly for farmers.
- Biogas transformed into biomethane is a renewable gas that can replace natural gas, and can be used in homes for cooking, heating, and hot-water, or as a fuel for gas vehicles. It can be injected into the gas grid or used directly on-site. As biomethane has similar characteristics to natural gas, its injection into the gas grid does not require any adaptation of the existing infrastructure (neither the gas grid nor customer equipment connected to it). This is an opportunity for the gas and transport sectors to further assist the energy transition. 46
Australian business, industry and utilities recently signed an open letter to the Commonwealth Government advocating for biomethane to be injected into the gas distribution networks to enable the lowest cost transition to a decarbonised energy market and address a number of challenges including:
- Provide complementary reliable and flexible renewable resources for variable renewable energy.
- Allow heavy industry dependent on process inputs and high-quality heat to decarbonise using existing gas connections.
- Provide a pathway for Heavy vehicle decarbonisation.
- Allow domestic gas customers to decarbonise their energy supply using existing networks and appliances.[48]
Both Renewable Hydrogen and Biogas/Biomethane can displace or replace natural gas as a fuel significantly reducing GHG emissions. These technologies show promise in Australia with the resources available locally. Once developed these would see assets such as the Narrabri Gas project left stranded.”3
Due to the above reasons I strongly object to the Narrabri Gas Project. Thank you again for the opportunity to comment. I look forward to hearing from you regarding this submission.
Yours sincerely,
Alec Roberts
[1] IPCN (n.d.) Policies - Additional material. Retrieved from https://www.ipcn.nsw.gov.au/policies
[2] Santos (2020, August 10) Narrabri Gas Project (SSD 6456) Submission to IPC following public hearing. Retrieved from https://www.ipcn.nsw.gov.au/resources/pac/media/files/pac/projects/2020/03/narrabri-gas-project/correspondence/santos-submission/200810-santos-_final-submission-incl-attachments.pdf
[3] Roberts, A. (2020, August 3) Submission on Narrabri Gas Project - Alec Roberts. Retrieved from https://www.newcastleclimatechangeresponse.org.au/news/submission-on-narrabri-gas-project-alec-roberts
[4] CSIRO (2018, August) Potential water impacts of coal seam gas in the Pilliga Sandstone. Retrieved from https://gisera.csiro.au/wp-content/uploads/2018/08/18-00384_GISERA_FACTSHEET_SGW-GABFluxFinalReport2pp_WEB_180807.pdf
[5] Sreekanth, J., Cui, T., Pickett, T. & Barrett, D. (2017) Uncertainty analysis of CSG-induced GAB flux and water balance changes in the Narrabri Gas Project area. CSIRO, Australia. Retrieved from https://publications.csiro.au/rpr/download?pid=csiro:EP173269&dsid=DS3
[6] Hannam, P. (2020, July 26). Matt Kean aims to double koala population by 2050. Retrieved from https://www.smh.com.au/environment/conservation/matt-kean-aims-to-double-koala-population-by-2050-20200725-p55fdc.html
[7] NSW Chief Scientist & Engineer (2016, December). Report of the Independent Review into the Decline of Koala Populations in Key Areas of NSW. Retrieved from https://www.chiefscientist.nsw.gov.au/__data/assets/pdf_file/0010/94519/161202-NSWCSE-koala-report.pdf
[8] Lunney, Daniel & Crowther, Mathew & Wallis, Ian & Foley, William & Lemon, John & Wheeler, Rob & Madani, George & Orscheg, C. & Griffith, Joanna & Krockenberger, Mark & Retamales, Melissa & Stalenberg, Eleanor. (2012). Koalas and climate change: a case study on the Liverpool Plains, north-west NSW. 10.7882/FS.2012.022.
[9] Robertson, B. (2020, July 23). IEEFA update: Australia sponsors a failing gas industry. Retrieved from https://ieefa.org/ieefa-update-australia-sponsors-a-failing-gas-industry/
[10] Morton, A. (2020, March 8). 'Expensive and underperforming': energy audit finds gas power running well below capacity. Retrieved from https://www.theguardian.com/environment/2020/mar/08/expensive-and-underperforming-energy-audit-finds-gas-power-running-well-below-capacity
[11] AEMO (2020, March). Gas Statement of Opportunities, March 2020, For eastern and south-eastern Australia. Retrieved from https://aemo.com.au/en/energy-systems/gas/gas-forecasting-and-planning/gas-statement-of-opportunities-gsoo
[12] AEMO (2019, December 12). Draft 2020 Integrated System Plan - For the National Electricity Market. Retrieved from https://aemo.com.au/-/media/files/electricity/nem/planning_and_forecasting/isp/2019/draft-2020-integrated-system-plan.pdf?la=en
[13] AEMO (2020b, July 30). 2020 Integrated System Plan - For the National Electricity Market. Retrieved from https://aemo.com.au/-/media/files/major-publications/isp/2020/final-2020-integrated-system-plan.pdf?la=en
[14] ACCC (2020, January) Gas inquiry 2017-2025 – Interim Report. Retrieved from https://www.accc.gov.au/system/files/Gas%20inquiry%20-%20January%202020%20interim%20report%20-%20revised.pdf
[15] AEMO (2020c, July 30) 2020 ISP Appendix 2. Cost Benefit Analysis. Retrieved from https://aemo.com.au/-/media/files/major-publications/isp/2020/appendix--2.pdf?la=en
[16] Energy Source & Distribution (2020, July 30). AEMO reveals Integrated System Plan 2020. Retrieved from https://esdnews.com.au/aemo-reveals-integrated-system-plan-2020/
[17] Parkinson, G. (2020, May 25) Big spinning machines arrive in South Australia to hasten demise of gas generation. Retrieved from https://reneweconomy.com.au/big-spinning-machines-arrive-in-south-australia-to-hasten-demise-of-gas-generation-64767/
[18] Pegasus Economics (2019, August) Report on the Narrabri Gas Project. Retrieved from https://8c4b987c-4d72-4044-ac79-99bcaca78791.filesusr.com/ugd/b097cb_c30b7e01a860476bbf6ef34101f4c34c.pdf
[19] ACCC (2020, July) Gas inquiry 2017–2025 Interim report July 2020. Retrieved from https://www.accc.gov.au/system/files/Gas%20inquiry%20July%202020%20interim%20report.pdf
[20] AEMO (2020, March 27) National Electricity & Gas Forecasting 2020 GSOO Publication. Retrieved from http://forecasting.aemo.com.au/Gas/AnnualConsumption/Total
[21] Mazengarb, M. & Parkinson, G. (2019, September 16). ACT to phase out gas as it launches next stage to zero carbon strategy. Retrieved from https://reneweconomy.com.au/act-to-phase-out-gas-as-it-launches-next-stage-to-zero-carbon-strategy-92906/
[22] Energy NSW. (2020, January 31). Memorandum of understanding, Retrieved from https://energy.nsw.gov.au/government-and-regulation/electricity-strategy/memorandum-understanding
[23] Alternative Technology Association (2018, July) Household fuel choice in the National Energy Market. Retrieved from https://renew.org.au/wp-content/uploads/2018/08/Household_fuel_choice_in_the_NEM_Revised_June_2018.pdf
[24] AEMO (2020a, July 30). 2020 ISP Appendix 10. Sector Coupling. Retrieved from https://aemo.com.au/-/media/files/major-publications/isp/2020/appendix--10.pdf?la=en
[25] ACCC (2020, January) Gas inquiry 2017-2025 – Interim Report. Retrieved from https://www.accc.gov.au/system/files/Gas%20inquiry%20-%20January%202020%20interim%20report%20-%20revised.pdf
[26] Long, S. (2020, February 27). Gas giants misled governments and it is costing Australian jobs, ACCC boss says. Retrieved from https://www.abc.net.au/news/2020-02-27/gas-giants-misled-governments-accc-boss-rod-sims-says/12004254
[27] IPCC (2018). Global Warming of 1.5°C: An IPCC Special Report on the impacts of global warming of 1.5°C above pre-industrial levels and related global greenhouse gas emission pathways, in the context of strengthening the global response to the threat of climate change, sustainable development, and efforts to eradicate poverty, Intergovernmental Panel on Climate Change. Retrieved from https://www.ipcc.ch/sr15/
[28] OEH (2018). NSW Climate Change Policy Framework. Retrieved from https://www.environment.nsw.gov.au/-/media/OEH/Corporate-Site/Documents/Climate-change/nsw-climate-change-policy-framework-160618.pdf
[29] Meinshausen, M. (2019, March 19). Deriving a global 2013-2050 emission budget to stay below 1.5°C based on the IPCC Special Report on 1.5°C. Retrieved from https://www.climatechange.vic.gov.au/__data/assets/pdf_file/0018/421704/Deriving-a-1.5C-emissions-budget-for-Victoria.pdf
[30] Tong, D., Zhang, Q., Zheng, Y., Caldeira, K., Shearer, C., Hong, C., Qin, Y., & Davis, S. J. (2019). Committed emissions from existing energy infrastructure jeopardize 1.5 °C climate target. Nature, 572(7769), 373-377. https://doi-org.ezproxy.newcastle.edu.au/10.1038/s41586-019-1364-3
[31] Climate Council (2018) Australia’s Rising Greenhouse Gas Emissions. Retrieved from https://www.climatecouncil.org.au/wp-content/uploads/2018/06/CC_MVSA0143-Briefing-Paper-Australias-Rising-Emissions_V8-FA_Low-Res_Single-Pages3.pdf
[32] Cox, L. (2019, March 14). Australia's annual carbon emissions reach record high. Retrieved from https://www.theguardian.com/environment/2019/mar/14/australias-annual-carbon-emissions-reach-record-high
[33] DISER (2020, May) National Greenhouse Gas Inventory: December 2019. Retrieved from https://www.industry.gov.au/data-and-publications/national-greenhouse-gas-inventory-december-2019
[34] Grogan, A. (2020, April 8). Cherry-Picking: Santos selects convenient data to deflect Narrabri gas challenge. Retrieved from https://www.michaelwest.com.au/cherry-picking-santos-selects-convenient-data-to-deflect-narrabri-gas-challenge/
[35] NWPA (2020, April). Narrabri Gas Project - Greenhouse Gas Claims Refuted. Retrieved from https://nwprotectionadvocacy.com/wp-content/uploads/2020/03/NARRABRI-GAS-PROJECT-GHG-claims-refuted-April-2020_web.pdf
[36] Clean Energy Regulator (2019, October 28). The safeguard mechanism. Retrieved from http://www.cleanenergyregulator.gov.au/NGER/The-safeguard-mechanism
[37] Mazengarb, M. (2020, April 1). Industrial emissions grow as polluters side-step safeguard caps. Retrieved from https://reneweconomy.com.au/industrial-emissions-grow-as-polluters-side-step-safeguard-caps-30115/
[38] CSIRO (2012). Fugitive Greenhouse Gas Emissions from Coal Seam Gas Production in Australia. Retrieved from https://publications.csiro.au/rpr/pub?pid=csiro:EP128173
[39] Robertson, B. (2020, January 30). IEEFA Australia: Gas is not a transition fuel, Prime Minister. Retrieved from https://ieefa.org/ieefa-australia-gas-is-not-a-transition-fuel-prime-minister/
[40] Tasmanian Government. (n.d.). Hydrogen. Retrieved from https://www.stategrowth.tas.gov.au/energy_and_resources/energy/hydrogen
[41] Mazengarb, M. (2020, April 29). Massive hydrogen project gets green light after securing $300m investment. Retrieved from https://reneweconomy.com.au/massive-hydrogen-project-gets-green-light-after-securing-300m-investment-68959/
[42] Energy Source & Distribution (2018, October 4). Nel awarded contract for Australia’s first hydrogen microgrid. Retrieved from https://esdnews.com.au/nel-awarded-contract-for-australias-first-hydrogen-microgrid/
[43] ARENA (2018, July 3). Green hydrogen innovation hub to be built in WA. Retrieved from https://arena.gov.au/news/green-hydrogen-innovation-hub-to-be-built-in-wa/
[44] West, M. (2020, July 3). A Savage Call: energy tsar calls time on Australia’s gas cartel. Retrieved from https://www.michaelwest.com.au/a-savage-call-energy-tsar-calls-time-on-australias-gas-cartel/
[45] Ramos-Suárez, J. L., Ritter, A., Mata González, J., & Camacho Pérez, A. (2019). Biogas from animal manure: A sustainable energy opportunity in the Canary Islands. Renewable and Sustainable Energy Reviews, 104, 137–150. https://doi-org.ezproxy.newcastle.edu.au/10.1016/j.rser.2019.01.025t
[46] Carlu, E. Truong, T. Kundevski, M. (2019, May). Biogas opportunities for Australia. ENEA Consulting – March 2019. Retrieved from: https://www.energynetworks.com.au/resources/reports/biogas-opportunities-for-australia-enea-consulting/
[47] Hughes, J. (2020, July 15). Business, industry and utilities back biogas for net zero Australia. Retrieved from https://www.worldbiogasassociation.org/business-industry-and-utilities-back-biogas-for-net-zero-australia/
[48] Bioenergy Australia (2020, June 9). Joint letter in support of Australian biomethane market development. Retrieved from https://www.bioenergyaustralia.org.au/news/joint-letter-in-support-of-australian-biomethane/
Submission on Narrabri Gas Project by Alec Roberts
3 August 2020
Office of the Independent Planning Commission NSW
Level 3, 201 Elizabeth Street, Sydney, NSW 2000
P: (02) 9383 2100 E: ipcn@ipcn.nsw.gov.au
Dear Independent Planning Commission,
This is a submission objecting to the Narrabri Gas Project.
Thank you for the opportunity to provide a submission into the Narrabri Gas Project and taking the time to consider my submission.
I live in the Lake Macquarie / Newcastle region in NSW. I work for the University of Newcastle, School of Environment and Life Sciences as a Project Officer and previously worked at the Tom Farrell Institute for the Environment. My current role involves conducting an environmental assessment for Norfolk Island. In a volunteer capacity, I am a committee member of several organisations including the Hunter Environmental Institute, Richmond Vale Rail Trail Inc., Newcastle Climate Change Response, Hunter Innovation and Science Hub, and the Clean Energy Association of Newcastle and Surrounds. I am also a member of the Charlestown chapter of The Wilderness Society. I am involved in what could be termed environmental outreach, informing the public on environmental information, news, and activities through newsletters, conducting seminars, events, and conferences. I have helped run the annual Mined Land Rehabilitation Conference and the Hunter Valley Electric Vehicle Festival over the last 4 years. On the ground I am involved with Landcare work for the Richmond Vale Rail Trail.
Growing up in NSW I enjoyed camping holidays with my family in the area visiting the many beautiful places including Warrumbungle National Park, Siding Spring Observatory, Coonabarabran, and further north to Walgett, Lightening Ridge and Grawin. The natural beauty of the area is stunning and as a new immigrant to these shores (at the time) it made a lasting impression on me. Whether it be the beautiful fields of Sunflowers that stretch to the horizon, the emus matching the pace of the car as you drive down the road or the stunning natural architecture of the Warrumbungles.
The Narrabri Gas project will have significant Groundwater impacts, Ecological impacts, Climate Change impacts, and the economics and energy security reasons behind the proposal are flawed, and the project should be refused development consent.
The Narrabri Gas Project, that is estimated to result in 94.2 million tonnes of greenhouse gases over the life of the project, cannot be permitted because its approval would be inconsistent with the remaining carbon budget and the Paris Agreement climate target. This project is not consistent with NSW’s climate change policy, the principle of inter-generational equity nor the public interest, as it clearly assumes failure to meet the Paris Agreement temperature goals and worsening climate change impacts for New South Wales.
Both Renewable Hydrogen and Biogas/Biomethane can displace or replace natural gas as a fuel significantly reducing GHG emissions. No new gas is needed.
Furthermore, the project is not critical for energy security and reliability in NSW as:
This submission is focused on economics, gas supply and demand, climate change impacts, gas as a transition fuel and alternative fuels to natural gas. However, it would be remiss of me if I did not briefly mention some of the other potential impacts of the Narrabri Gas Project.
Groundwater Impacts
The project exposes the following major environmental risks impacting groundwater:
The Pilliga Sandstone Aquifer is a high-quality shallow groundwater that local communities rely on for water for stock, domestic and irrigation purposes and is one of the main aquifers in the southern Great Artesian Basin. The Pilliga Sandstone is also the main outcropping aquifer in the Pilliga forest region within the project area, and this region and along with outcropping along the Warrambungle Range are recharge beds for the Great Artesian Basin in NSW. [2] [3] A near-surface aquifer, the Namoi Alluvium, is also a major water resource for agriculture in the region. Together these form the main source of water these communities rely on for their livelihoods.
The contamination of groundwater is a major environmental risk with Coal Seam Gas, with the major potential contamination from ‘produced water’ which is pumped from the underlying coal seams to depressurize the seams and allow gas to be released and be extracted. CSG produced water is typically of poor quality due to being located within the coal seams. The Narrabri region produced water is high in salinity and contains high levels of heavy metals, boron and fluoride and presents a major risk to groundwater contamination in the area.
Given a number of leaks and/or spills of produced water have already occurred within the 70 appraisal and exploration wells in the area, there is a strong likelihood with 850 wells that significant leaks and/or spills of produced water will occur throughout the life of the project risking contamination of the aquifers / recharge beds for the Great Artesian Basin and affecting the livelihoods of those that depend on this valuable resource.
Furthermore, the project has no approved plan to deal with the 840,000 tonnes of salt waste contaminated with heavy metals than will be produced over the life of the project, as no local landfill can accept this waste.
The potential contamination of the aquifers and lack of waste management of the contaminated salt waste flies in the face with the assessment that the project will “not result in significant impacts on people or the environment”.
Ecological Impacts – Koalas
The Pilliga Forest has been classified as a priority area for koala conservation. Energy and Environment Minister Matt Kean recently set a goal of doubling the number of koalas by 2050 in a bid to defy projections the marsupial could become extinct in the wild in NSW by mid-century.[4] The Narrabri Gas project will result in the fragmention of 85,000 hectares of the Pilliga Forest. Fragmented islands of koala habitat such as will result from this development which will result in unhealthy koala populations. Koalas need wide corridors to spread out to ensure effective breeding. Koala corridors are vital and are recognised generally as such in the new Koala SEPP and acknowledged by the NSW Chief Scientist (2016):
“Koala populations need large areas of connected habitat to maintain their viability. Habitat loss and fragmentation has resulted in population decline and has been identified as a significant threat to the species persistence in NSW.”[5]
Recent studies within the project area suggest a dramatic decline in koala populations. Surveys of the Pilliga forests in the 1990s suggest that the forests were carrying the largest population of koalas west of the Great Dividing Range in NSW, with the population estimated at 15,000. Repeat surveys within the Pilliga forests show a decline of over 80% since the 1990s.5
The impact of extreme weather events such as drought and extreme heatwaves on koalas is expected to increase with climate change and may also exacerbate other threats such as disease.[6] The Pilliga forest koalas are likely to have faced extreme (but less frequent and long) heat events in the past and responded by retreating to creek lines with either available free water or a higher moisture content in the leaves of their food trees. However, land clearing within and on the periphery of the forests and from road construction since the early 1900s has resulted in creeks within the Pilliga forests silting up. Habitats that would have once likely functioned as a refuge during times of drought are now highly disturbed and are unlikely to provide the required level of protection for koalas.5
The planned significant fragmentation of habitat by the Narrabri Gas project will exacerbate the problems caused by earlier land clearance and may lead to the local extinction of the Koala. The potential local extinct of an vulnerable species appears to contradict the assessment that the project will “not result in significant impacts on people or the environment”.
Economics
Gas supply on the east coast of Australia has tripled since 2014. However, domestic gas prices have also tripled in the same period in response to a huge demand for gas for LNG production and export. LNG exporters in Gladstone were unable to supply enough gas from their CSG production wells, with reserves grossly overestimated compared to their supply capacity. This resulted in a hoovering up existing low cost of production gas increasing domestic prices.[7]
Domestic gas prices in Australia have remained at levels far in excess of international parity prices. Whilst prices have fallen somewhat, they have not fallen by nearly as much as those in Asia or Europe. Domestic prices have remained some 30-40% higher than ACCC calculated export parity prices (a.k.a. "netback" prices).[8] This may be explained as there is a lack of competition in the supply and delivery in the domestic gas market with only 5 producers and 2 pipeline owners. This is compounded with a lack of transparency of gas prices (there is no wholesale gas market with most gas traded bilaterally via contracts) that puts domestic and industrial gas buyers at a disadvantage. 1
Consequently, gas has become uncompetitive as a fuel source for power generation in Australia and demand for gas-powered generation has fallen by 59% since 2014.6 Subsequently, gas-powered generation has been running well below capacity.[9] Not surprising that at present there are no committed new investments in gas-fired power generation.[10] Nevertheless, electricity prices for both households and businesses have been driven up by higher gas prices, because gas-fired power stations typically supply the electricity market during times of peak demand.2 Gas is effectively the price setter in the National Electricity Market; for every $1/GJ increase in the price of gas the price of electricity rises by $11/MWh. 6
The CSIRO GenCost report indicated that renewables (wind and solar photovoltaic) with storage (such as pumped hydro) were now cheaper than gas for electricity generation in Australia.[11] As such, it is expected that demand for gas for electricity generation will decline in the future.
One of the key competitive advantages Australian industry has enjoyed has been low energy prices. Energy intensive industries and industries dependent on energy intensive inputs have become less competitive as prices for electricity and gas for combustion have increased. This has forced the closure of some major manufacturing and chemical plants, lead to the offshoring of production and undermined the profitability and viability of other gas users.2 Gas use in manufacturing as a consequence of these prices has fallen by 12% since 2014.[12]
AEMO forecasts further reductions in gas use as consumers fuel-switch away from gas appliances towards electrical devices, in particular for space conditioning. The Commonwealth and NSW Government are exploring options to free-up gas demand through electrification, fuel switching and energy efficiency. [13]
Fuel switching from gas appliances towards electrical devices can often be more economic. A 2018 study of household fuel choice found that 98% of households with new solar financially favoured replacement of gas appliances with electric. With existing/no solar 60-65% of households still favoured replacement of gas appliances with electric. [14]
In the residential sector, for example, reverse-cycle air-conditioning is expected to reduce gas demand that could have arisen due to gas heating.[15] For those residents who cannot afford the capital costs of replacing gas appliances, these increased prices are leading to a worrying growth in energy poverty in the domestic residential sector. [16]
As over 70% of Australian gas is exported as LNG, increases in supply from CSG projects in NSW are unlikely to affect to domestic prices into the near future and any potential flow on effect to the Australian economy. This is supported by the NSW Independent Pricing and Regulatory Tribunal (IPART) which expressed doubt as to whether the development of CSG projects in NSW was likely to have a bearing at all on gas prices in NSW as the development of the three LNG export projects meant the Eastern Gas Region had become linked to global LNG markets.[17] Moreover, Coal seam gas is high-cost gas, being 50% more expensive to produce than conventional gas.[18] The proposed Narrabri Gas project is even more expensive, as according to an AEMO commissioned report, gas extraction costs from this field will be over twice the cost of other existing fields in the eastern gas region.6 According to AEMO, the Narrabri Gas Project is ranked 41 out of 51 actual and undeveloped gas projects and there are 18 developed and 22 undeveloped gas projects with lower estimated production costs than the Narrabri Gas Project.8
The marginal source of supply (the final source of gas supply needed to meet demand) is likely to set floor price in negotiations between gas suppliers and buyers in NSW.[19] This cost of production together with transmission costs to Sydney is currently some 20% less than the proposed Narrabri Gas Project. Furthermore, future marginal source of supply may be satisfied by imported LNG (where wholesale gas prices would be set to import parity levels) or through existing or developed lower cost domestic supplies (such as noted by AEMO).8 Under these circumstances, the Narrabri Gas Project would not provide the marginal source of supply for wholesale gas in NSW, and is thus unlikely to exert any influence over wholesale gas prices in NSW over the near or long term and therefore not contribute to any reduction in domestic gas prices.
Kevin Gallagher, Managing Director and CEO of Santos recently stated, “The notion that any industry can survive selling its product lower than its cost of production is clearly out of step”. [20] This may be the case for the Narrabri Gas project with predicted high production costs precluding LNG export (if allowed) and production costs higher than marginal source of supply for domestic distribution.
The Narrabri Gas Project was declared a Strategic Energy Project because of the crucial role it could play in strengthening energy security and reliability in NSW due in part on being able to address the AEMO predicted future gas supply shortfalls in the Eastern Gas Region in 2024 “if no further sources of gas or alternative infrastructure are developed”.8 Furthermore, the Australian Commonwealth and NSW Government have entered into a Memorandum of Understanding that includes an undertaking that the NSW Government will facilitate investment opportunities for new gas infrastructure that will inject as additional 70 PJ of gas in to the east coast market which happens to be the estimated production of the Narrabri Gas project. 13 However, recent predictions by AEMO are that supply is projected to be sufficient to meet all eastern and south-eastern Australian demand until 2026-2027. [21] In this assessment, AEMO further noted that the annual southern shortfall is estimated to be 51 PJ, lower than the estimated production from Narrabri of 70 PJ.
AEMO in 2018 estimated that in NSW, industry accounts for 42% of domestic gas demand, gas powered generation accounts for 21% of demand and residences accounted for the remaining 37%.[22]
It should be noted that demand for natural gas in NSW has declined over recent years. From 2014 to 2018, annual consumption of natural gas in NSW fell by 15 per cent, with the major contributor of this fall in consumption being the reduction in the use of gas for power generation.8 Whereas domestic demand for gas has fallen for use in manufacturing by 14%, it has dropped by a staggering 59% for power generation by since 2014. 6
The AEMO 2020 Gas Statement of Opportunities stated that their 2020 gas consumption forecast was lower than all previous forecasts for 2023 onwards, largely reflecting a reduced outlook for the LNG sector, along with a muted outlook for gas-powered generation as new utility-scale renewable capacity forecasts were higher than previously forecast.15
Whereas AEMO has predicted no effective change to the level industrial gas use and residential and commercial gas use in NSW, demand for gas-powered generation is predicted to continue to fall by over 85% from 2019 levels by 2028.[23]
International demand for LNG has stagnated and it is likely that Eastern Gas Region reserves will no longer be drawn on by Queensland LNG export projects to satisfy their export orders while demand is flat.[24] Consequently, the supply of natural gas in the Eastern Gas Region is expected to ease.
Several LNG import terminals are planned for the 3 southern states. All the proposed LNG
import terminals intend to utilise Floating Storage Regasification Unit (FSRU) technology. FSRUs require little construction or investment, can provide access to LNG much faster (around 2 years), and cost less than half the cost of an onshore facility and the vessel can be reassigned on project completion. The first NSW LNG import terminal at Port Kembla is expected to commence supply at the start of 2021 with an expected capacity of 100 PJ and could be increased further to 140– 150 PJ per annum in the future.8 17 In April 2020, approval was granted to increase the annual capacity to 115 PJ and to allow up to 500 TJ/day in winter months to account for high domestic demand periods.[25] The second NSW LNG import terminal Newcastle Gas Terminal was declared a NSW Critical State Significant Infrastructure in August 2019, and if approved would have an expected capacity of 110 PJ. The NSW government has committed to fast tracking/streamlining regulatory assessments for the Port Kembla import terminal and, if approved, the Newcastle Gas Terminal.14 The east coast gas import terminals would reduce the need for pipeline development and complement the seasonality of gas production by securing a reliable supply in winter (typically the time of peak domestic gas demand for heating), when the demand in the northern hemisphere is typically low (during the northern hemisphere summer). 7
The planned LNG import terminal at Crib Point, Victoria has the potential to supply up to 160 PJ of natural gas per annum to the gas grid and is expected to be operational by 2022. If approved, the project would meet the shortfall in gas supply predicted by AEMO and would provide gas supply certainty to Victoria, NSW and South Australia. [26] 15
In considering the predicted future gas supply shortfall for NSW in 2024 and whether it will eventuate, one should consider the drop in demand for gas in NSW, the stagnation of international demand and potential freeing up of reserves, and the impact of LNG import terminals coming on line from 2021 onwards. Given these factors, it is unlikely that there will be any shortage of supply in NSW from 2024 onwards.
Economic recovery and jobs?It is dubious that projects such as the Narrabri Gas Project will deliver the goods for an economic recovery. The industry is not a large employer and pays little or no tax.[27] Analysis by The Australia Institute noted that the gas sector was one of the worst options to choose for mass job creation and that investment in other sectors would create many more jobs.[28] This doesn’t include losses in employment in other sectors resulting from the project such as agriculture.
Climate Change Impacts
The impacts of climate change on the environment are significant and severe. The present scientific consensus is that the earth's climate is warming due to human activity (https://climate.nasa.gov/scientific-consensus/), and the negative impacts of increased greenhouse gas emissions are measurable globally and nationally.[29]
The government is responsible for the environment, the health and wellbeing of its citizens, and the financial security of the nation. As we see the impact of increased carbon emissions, we also find evidence of the impact on Australian native wildlife, the Australian people and the wealth of the nation as noted by the recent catastrophic bushfires and devastating drought.
To address the issue of dangerous climate change, Australia, along 196 other parties, is a signatory to the Paris Agreement, which entered into force on 4 November 2016. The Paris Agreement aims to strengthen the global response to the threat of climate change, by:
Holding the increase in the global average temperature to well below 2°C above pre-industrial levels and pursuing efforts to limit the temperature increase to 1.5°C above pre-industrial levels, recognizing that this would significantly reduce the risks and impacts of climate change.[30]
NSW Climate Change Policy Framework details the NSW Government’s objective to achieve net-zero emissions by 2050.[31] This long-term objective “sets a clear statement of government’s intent, commitment and level of ambition and sets expectations about future emissions constraints that will help the private sector to plan and act.” The Policy Framework states that the NSW Government will investigate how to embed consideration of climate change mitigation and adaptation across government operations including service delivery, infrastructure, purchasing decisions and regulatory frameworks. Furthermore, it states that Agencies will undertake additional policy investigation for sectors with significant opportunities and risks, including primary industries emissions and adaptation (Department of Primary Industries).
The IPCC report provides an estimate for a global remaining carbon budget of 580 GtCO2 (excluding permafrost feedbacks) based on a 50% probability of limiting warming to 1.5 degrees relative to 1850 to 1900 during and beyond this century and a remaining carbon budget of 420 GtCO2 for a 67% chance. [32]
Committed emissions from existing and proposed energy infrastructure represent more than the entire carbon budget that remains if mean warming is to be limited to 1.5 °C and perhaps two-thirds of the remaining carbon budget if mean warming is to be limited to less than 2 °C. Estimates suggest that little or no new CO2-emitting infrastructure can be commissioned, and that existing infrastructure may need to be retired early (or be retrofitted with carbon capture and storage technology) in order to meet the Paris Agreement climate goals.[33]
Australia’s remaining emission budget from Jan 2017 until 2050 for a 50% chance of warming to stay below 1.5C warming relative to pre-industrial levels was estimated to be 5.5 GTCO2e.15 Adding the GHG emissions expended in 2017[34], 2018[35], and 2019[36], this leaves just 3.8 Gt CO2e remaining as at December 2019. This leaves 6-7 years left at present emission rates of the 2013-2050 emission budget to stay below 1.5°C. Therefore, at current emissions rates, Australia will have exceeded its carbon budget for 2050 by 2026.
It therefore follows that no new fossil fuel development in Australia that is not carbon neutral, including the Narrabri Gas Project, that is estimated to result in 94.2 million tonnes of greenhouse gases over the life of the project, can be permitted because its approval would be inconsistent with the remaining carbon budget and the Paris Agreement climate target.
This project is not consistent with NSW’s climate change policy, the principle of inter-generational equity nor the public interest, as it clearly assumes failure to meet the Paris Agreement temperature goals and worsening climate change impacts for New South Wales.
Natural gas as a “transition fuel”?
Natural gas has often been touted as the “transition fuel” for the electricity sector to replace coal’s greenhouse gas emissions and eventually paving the way for an emissions free future for Australia. This has been used as an argument for the approval of the Narrabri Gas project. This concept is out of date and I believe incorrect. It is simply too expensive and too emissions intensive to be so. Furthermore, the concept is based on the replacement of coal with gas which is effectively for electricity generation only. Gas is also utilised for heat through combustion both industrially and domestically producing greenhouse gases.
Methane leaks from natural gas production can make the process nearly as carbon intensive as coal. The CSIRO report “Fugitive Greenhouse Gas emissions from Coal Seam Gas Production in Australia”[37] noted that fugitive emissions for Natural Gas in Australia as a whole are estimated to be 1.5% of gas extracted, whereas if fugitive emissions exceeded 3.1% then the emissions intensity would match that of coal (due to the fact that methane is 86 times more powerful as a greenhouse gas than CO2 over 20 years and 34 times more powerful over a 100-year time period).4 They also noted that unconventional gas industry such as Coal Seam Gas would result in greater levels of fugitive emissions than the conventional gas industry. Moreover, the Narrabri Gas field has very high levels of CO2 which will be vented into the atmosphere as part of gas extraction adding to the fugitive emissions from the implementation of this project.[38]
As noted above, the electricity market has already moved away from gas, with a 59% decline in usage in the National Electricity Market since 2014, whilst renewable energy has increased by 25% during the same period.6 Furthermore, flexible gas plants already in the grid are running well below capacity.3 AEMO forecast that increasing renewable generation developments in the NEM are expected to continue to drive down system normal demand for gas-powered generation. 15
The AEMO modelled the future electricity grid in its Integrated Systems Plan.[39] [40] The results showed for all scenarios that the transition from coal to renewable energy would not be via gas.3 The role of gas would be reduced with a decline in gas generation through to 2040.6 The report notes that to firm up the inherently variable distributed and large-scale renewable generation, there will be needed new flexible, dispatchable resources such as: utility-scale pumped hydro and large-scale battery energy storage systems, distributed batteries participating as virtual power plants, and demand side management.13 26 It also noted that new, flexible gas generators such as gas peaking plants could play a greater role if gas prices materially reduced, with gas prices remaining low at $4 to 6 per GJ.26 However this is unlikely as gas prices have tripled over the past decade and expected NSW gas prices are over 60% more than this price.3 10 AEMO noted that the investment case for new gas-powered generation will critically depend on future gas prices, as gas-powered generation and batteries can both serve the daily peaking role that will be needed as variable renewable energy replaces coal-fired generation. In their 2020 Gas Statement of Opportunities report, AEMO predicted that as more coal-fired generation retired in the long term, gas consumption for gas-powered generation in the National Electricity Market was forecast to grow again in the early 2030s, recovering to levels similar to those forecast for 2020. 15 However, in a later report, AEMO determined that by the 2030s, when significant investment in new dispatchable capacity is needed, new batteries will be more cost-effective than gas-powered generation. 33 Furthermore, the commissioning of the Snowy 2.0 pumped hydro project in 2026 will result in less reliance on gas-powered generation as a source of firm supply.15
AEMO noted that stronger interconnection between regions reduces the reliance on gas-powered generation, as alternative resources can be shared more effectively. 26 The expansion network interconnection enables the growth of variable renewable energy without a significant reliance on local gas generation.[41] Supporting this assertion, the AEMO announced a series of actionable transmission projects including interconnector upgrades and expansions and network augmentations supporting recently announced renewable energy zones.[42] 26 AEMO noted that as each of these new transmission projects is commissioned, the ability for national electricity market regions to share resources (particularly geographically diverse variable renewable energy) is increased, and therefore demand for gas-powered generation is forecast to decrease.15 The Marinus Link is forecast to be commissioned in 2036, with surplus renewable generation from Tasmania then being available to the mainland National Electricity Market, which would see further declines in gas-fired generation, despite continuing coal-fired generation retirements.15
Therefore, it is unlikely that further gas peaking plants would be developed to play a significant role in providing dispatchable energy to the grid as the grid transitions to greater levels of variable renewable energy.
Gas-powered generation can provide the synchronous generation needed to balance variable renewable supply, and so is a potential complement to storage.13 However, the current installation of synchronous condensers in South Australia and other eastern states to increase system strength and stabilise the electricity network will reduce the need for gas-fired generators acting in the role of synchronous generators as more renewables enter the grid.[43] Ancillary services are likely to utilise battery storage and synchronous condensers in the future and no longer require the use of gas-powered generation.
Transitioning away from Gas
The ACT is planning to go gas free by 2025. This is expected to reduce their overall emissions by 22%. As part of the ACT Climate Change Strategy 2019-2025, all government and public-school buildings will be completely powered by 100% renewable energy eliminating the need for natural gas. The ACT has also removed the mandatory requirement for new homes built in the ACT to be connected to the mains gas network and will begin to introduce new policies to replace gas appliances with electric alternatives. Some 14% of residents have already converted over to 100% electric. [44]
There are moves in other jurisdictions to remove the mandatory requirement for a gas connection in new developments such as in South Australia.
Several technologies new or new to Australia are expected to reduce the use of natural gas as the Australian economy transitions to a net zero emissions economy and would replace the need for new gas such as proposed by the Narrabri Gas project. Please note that these technologies not only look to transition electricity generation away from natural gas but also for gas combustion for heat. These technologies could also address any gas supply shortfalls.
Hydrogen
Hydrogen is a colourless, odourless, non-toxic gas that is an excellent carrier of energy and can be used for a broad range of energy applications including as a transport fuel, a substitute for natural gas and for electricity generation.[45] Hydrogen gas can be produced from water in a process known as electrolysis, and when powered by renewable energy, the hydrogen produced is free from carbon emissions, making it an attractive way to decarbonise transport, heating and electricity generation.26
AEMO stated that, “Hydrogen has the exciting potential to become an alternative energy storage technology and a new export commodity for Australia” which could be used to help decarbonise the domestic heat, transport and the industrial and commercial sectors in Australia and noted that development of the hydrogen industry would potentially impact both natural gas and electric demands.7 26
Several developments involving green / renewable hydrogen are either planned or underway in Australia.
AEMO highlighted the potential for green steel production in Australia due to abundant renewable resources and the increased demand for low emissions industrial commodities worldwide.7 ‘Green steel’ can be made via a direct reduction process which uses hydrogen (made from renewable energy) as the heat source and reducing agent to produce pig iron. The by-product of the iron reduction process using hydrogen is water, rather than carbon dioxide in conventional steel making. Renewable energy is then used by an electric arc furnace to produce low-emissions green steel.
The Arrowsmith Hydrogen Project, which will be built at a facility in the town of Dongara, located 320km north of Perth, will utilise dedicated onsite renewable energy 85MW of solar power, supplemented by 75MW of wind generation capacity to generate 25 tonnes of green hydrogen a day and will be operational in 2022.[46]
ATCO’s Clean Energy Innovation Hub, located in Jandakot in Western Australia, is being used to trial the production, storage and use of renewable hydrogen to power a commercial-scale microgrid, testing the use of hydrogen in different settings and applications including in household appliances.[47] This includes optimising hydrogen storage solutions, blending hydrogen with natural gas and using hydrogen a direct use fuel. Green hydrogen will be produced from on-site solar using electrolysis, fuelling a range of gas appliances and blending hydrogen into the natural gas pipeline.
The $3.3 million development project will evaluate the potential for renewable hydrogen to be generated, stored, and used at a larger scale. ATCO aims to assess the practicalities of replacing natural gas with hydrogen at a city-wide scale across a municipality.[48]
The new chair of the Australian Energy Regulator, Clare Savage recently stated:
“The national gas industry could also undergo significant change as some jurisdictions move towards a zero carbon emissions policy. This could have significant consequences for the future of gas pipeline networks. In response, the AER recently supported the future recovery of Jemena’s investment in trialling the production of hydrogen from renewable energy for injection into its Sydney network. If hydrogen trials such as Jemena’s prove successful, the natural gas networks could be re-purposed to distribute hydrogen. If not, the economic life of the assets could be limited.” 11
Biogas and Biomethane
Biogas is a renewable energy source, that is continuous and dispatchable, reliable, and local source of energy. Biogas can be converted into heat and/or electricity using boilers, generators or with Combined Heat and Power units.[49] Biogas also provides an alternative route for waste treatment and, as such, can help divert waste from landfill. Biogas consists primarily of methane and carbon dioxide, with trace amounts of other gases such as hydrogen sulphide, water vapour, oxygen, and ammonia.[50] Biogas can also be upgraded into biomethane: a renewable gas that can replace natural gas with a chemical composition very similar to natural gas. Biomethane is produced from the separation of methane from the other gases.31
Biogas and its industry offer many benefits:
A landmark report commissioned by Bioenergy Australia last year identified the total estimated biogas potential to be 371PJ (103TWh) of available energy, which is enough to decarbonise industrial, commercial, and residential gas users currently supplied by distributed gas networks across Australia.[51]
Australian business, industry and utilities recently signed an open letter to the Commonwealth Government advocating for biomethane to be injected into the gas distribution networks to enable the lowest cost transition to a decarbonised energy market and address a number of challenges including:
Both Renewable Hydrogen and Biogas/Biomethane can displace or replace natural gas as a fuel significantly reducing GHG emissions. These technologies show promise in Australia with the resources available locally. Once developed these would see assets such as the Narrabri Gas project left stranded.
Summary
In summary, the Narrabri Gas project should not be approved.
The Narrabri Gas Project, that is estimated to result in 94.2 million tonnes of greenhouse gases over the life of the project, cannot be permitted because its approval would be inconsistent with the remaining carbon budget and the Paris Agreement climate target. This project is not consistent with NSW’s climate change policy, the principle of inter-generational equity nor the public interest, as it clearly assumes failure to meet the Paris Agreement temperature goals and worsening climate change impacts for New South Wales.
Natural gas is not a “transition fuel” for the electricity sector to replace coal’s greenhouse gas emissions and eventually paving the way for an emissions free future for Australia. It is simply too emissions intensive to be so.
Both Renewable Hydrogen and Biogas/Biomethane can displace or replace natural gas as a fuel significantly reducing GHG emissions. No new gas is needed.
Furthermore, it is not critical for energy security and reliability in NSW as:
Due to the above reasons I strongly object to the Narrabri Gas Project. Thank you again for the opportunity to comment. I look forward to hearing from you regarding this submission.
Yours sincerely,
Alec Roberts
[1] EDO (2020, July 22) CSG: The public hearing into the Narrabri Gas Project. Retrieved from https://www.edo.org.au/2020/07/22/csg-public-hearing-narrabri-gas-project/
[2] CSIRO (2018, August) Potential water impacts of coal seam gas in the Pilliga Sandstone. Retrieved from https://gisera.csiro.au/wp-content/uploads/2018/08/18-00384_GISERA_FACTSHEET_SGW-GABFluxFinalReport2pp_WEB_180807.pdf
[3] Sreekanth, J., Cui, T., Pickett, T. & Barrett, D. (2017) Uncertainty analysis of CSG-induced GAB flux and water balance changes in the Narrabri Gas Project area. CSIRO, Australia. Retrieved from https://publications.csiro.au/rpr/download?pid=csiro:EP173269&dsid=DS3
[4] Hannam, P. (2020, July 26). Matt Kean aims to double koala population by 2050. Retrieved from https://www.smh.com.au/environment/conservation/matt-kean-aims-to-double-koala-population-by-2050-20200725-p55fdc.html
[5] NSW Chief Scientist & Engineer (2016, December). Report of the Independent Review into the Decline of Koala Populations in Key Areas of NSW. Retrieved from https://www.chiefscientist.nsw.gov.au/__data/assets/pdf_file/0010/94519/161202-NSWCSE-koala-report.pdf
[6] Lunney, Daniel & Crowther, Mathew & Wallis, Ian & Foley, William & Lemon, John & Wheeler, Rob & Madani, George & Orscheg, C. & Griffith, Joanna & Krockenberger, Mark & Retamales, Melissa & Stalenberg, Eleanor. (2012). Koalas and climate change: a case study on the Liverpool Plains, north-west NSW. 10.7882/FS.2012.022.
[7] Rios, J. (2019, September 13). What’s next for Australia’s natural gas market? Retrieved from https://www.eecc.eu/blog/whats-next-for-australias-natural-gas-market
[8] Long, S. (2020, February 27). Gas giants misled governments and it is costing Australian jobs, ACCC boss says. Retrieved from https://www.abc.net.au/news/2020-02-27/gas-giants-misled-governments-accc-boss-rod-sims-says/12004254
[9] Morton, A. (2020, March 8). 'Expensive and underperforming': energy audit finds gas power running well below capacity. Retrieved from https://www.theguardian.com/environment/2020/mar/08/expensive-and-underperforming-energy-audit-finds-gas-power-running-well-below-capacity
[10] Robertson, B. (2020, January 30). IEEFA Australia: Gas is not a transition fuel, Prime Minister. Retrieved from https://ieefa.org/ieefa-australia-gas-is-not-a-transition-fuel-prime-minister/
[11] CSIRO (2019, December) GenCost 2019-20: preliminary results for stakeholder review. Retrieved from https://www.aemo.com.au/-/media/Files/Electricity/NEM/Planning_and_Forecasting/Inputs-Assumptions-Methodologies/2019/CSIRO-GenCost2019-20_DraftforReview.pdf
[12] Robertson, B. (2020, July 23). IEEFA update: Australia sponsors a failing gas industry. Retrieved from https://ieefa.org/ieefa-update-australia-sponsors-a-failing-gas-industry/
[13] Energy NSW. (2020, January 31). Memorandum of understanding, Retrieved from https://energy.nsw.gov.au/government-and-regulation/electricity-strategy/memorandum-understanding
[14] Alternative Technology Association (2018, July) Household fuel choice in the National Energy Market. Retrieved from https://renew.org.au/wp-content/uploads/2018/08/Household_fuel_choice_in_the_NEM_Revised_June_2018.pdf
[15] AEMO (2020a, July 30). 2020 ISP Appendix 10. Sector Coupling. Retrieved from https://aemo.com.au/-/media/files/major-publications/isp/2020/appendix--10.pdf?la=en
[16] Snow, J. (2014, February). Energy Policy Institute of Australia - Public Policy Paper
Paper 2/2014 The economic impact of high energy prices in Australia, Retrieved from http://oakleygreenwood.com.au/wp-content/uploads/2017/10/6_Snow_Jim_Public_Policy_Paper-6Feb2014.pdf
[17] Pegasus Economics (2019, August) Report on the Narrabri Gas Project. Retrieved from https://8c4b987c-4d72-4044-ac79-99bcaca78791.filesusr.com/ugd/b097cb_c30b7e01a860476bbf6ef34101f4c34c.pdf
[18] West, M. (2020, January 2). Smithereens: Australia’s climate commitments blown if giant fossil fuel projects proceed. Retrieved from https://www.michaelwest.com.au/smithereens-australias-climate-commitments-blown-if-giant-fossil-fuel-projects-proceed/
[19] ACCC (2020, January) Gas inquiry 2017-2025 – Interim Report. Retrieved from https://www.accc.gov.au/system/files/Gas%20inquiry%20-%20January%202020%20interim%20report%20-%20revised.pdf
[20] West, M. (2020, July 3). A Savage Call: energy tsar calls time on Australia’s gas cartel. Retrieved from https://www.michaelwest.com.au/a-savage-call-energy-tsar-calls-time-on-australias-gas-cartel/
[21] AEMO (2020, March). Gas Statement of Opportunities, March 2020, For eastern and south-eastern Australia. Retrieved from https://aemo.com.au/en/energy-systems/gas/gas-forecasting-and-planning/gas-statement-of-opportunities-gsoo
[22] AEMO (2018, June). 2018 Gas Statement of Opportunities, June 2018, For eastern and south-eastern Australia. Retrieved from https://aemo.com.au/en/energy-systems/gas/gas-forecasting-and-planning/gas-statement-of-opportunities-gsoo
[23] AEMO (2020, March 27) National Electricity & Gas Forecasting 2020 GSOO Publication. Retrieved from http://forecasting.aemo.com.au/Gas/AnnualConsumption/Total
[24] McCarthy, J. (2020, July 20) Our $70 billion gas industry sinking as export ships 'steaming around in circles'. Retrieved from https://inqld.com.au/business/2020/07/20/our-70-billion-gas-industry-collapsing-as-export-ships-steaming-around-in-circles/
[25] GHD (2019, November) Port Kembla Gas Terminal Proposed Modification Environmental Assessment November 2019. Report for AIE. Retrieved from https://www.planningportal.nsw.gov.au/major-projects/project/25811
[26] Gas Import Jetty and Pipeline Project (2020, July). Gas Import Jetty and Pipeline Project Summary Document Environmental Effects Statement, July 2020. Retrieved from https://www.gasimportprojectvictoria.com.au/environment-effects-statement#view-the-ees
[27] IEEFA (2019, November 25). IEEFA Australia: Oil and gas industry paying less tax than Telstra [PRESS RELEASE]. Retrieved from https://ieefa.org/ieefa-australia-oil-and-gas-industry-paying-less-tax-than-telstra/
[28] The Australian Institute (2020, July). Gas Fired Backfire Why a “gas fired recovery” would increase emissions and energy costs and squander our recovery spending. Retrieved from https://www.tai.org.au/sites/default/files/P908%20Gas-fired%20backfire%20%5Bweb%5D_0.pdf
[29] NASA (n.d.) Scientific Consensus: Earth's Climate is Warming. Retrieved from https://climate.nasa.gov/scientific-consensus/
[30] IPCC (2018). Global Warming of 1.5°C: An IPCC Special Report on the impacts of global warming of 1.5°C above pre-industrial levels and related global greenhouse gas emission pathways, in the context of strengthening the global response to the threat of climate change, sustainable development, and efforts to eradicate poverty, Intergovernmental Panel on Climate Change. Retrieved from https://www.ipcc.ch/sr15/
[31] OEH (2018). NSW Climate Change Policy Framework. Retrieved from https://www.environment.nsw.gov.au/-/media/OEH/Corporate-Site/Documents/Climate-change/nsw-climate-change-policy-framework-160618.pdf
[32] Meinshausen, M. (2019, March 19). Deriving a global 2013-2050 emission budget to stay below 1.5°C based on the IPCC Special Report on 1.5°C. Retrieved from https://www.climatechange.vic.gov.au/__data/assets/pdf_file/0018/421704/Deriving-a-1.5C-emissions-budget-for-Victoria.pdf
[33] Tong, D., Zhang, Q., Zheng, Y., Caldeira, K., Shearer, C., Hong, C., Qin, Y., & Davis, S. J. (2019). Committed emissions from existing energy infrastructure jeopardize 1.5 °C climate target. Nature, 572(7769), 373-377. https://doi-org.ezproxy.newcastle.edu.au/10.1038/s41586-019-1364-3
[34] Climate Council (2018) Australia’s Rising Greenhouse Gas Emissions. Retrieved from https://www.climatecouncil.org.au/wp-content/uploads/2018/06/CC_MVSA0143-Briefing-Paper-Australias-Rising-Emissions_V8-FA_Low-Res_Single-Pages3.pdf
[35] Cox, L. (2019, March 14). Australia's annual carbon emissions reach record high. Retrieved from https://www.theguardian.com/environment/2019/mar/14/australias-annual-carbon-emissions-reach-record-high
[36] DISER (2020, May) National Greenhouse Gas Inventory: December 2019. Retrieved from https://www.industry.gov.au/data-and-publications/national-greenhouse-gas-inventory-december-2019
[37] CSIRO (2012). Fugitive Greenhouse Gas Emissions from Coal Seam Gas Production in Australia. Retrieved from https://publications.csiro.au/rpr/pub?pid=csiro:EP128173
[38] Grogan, A. (2020, April 8). Cherry-Picking: Santos selects convenient data to deflect Narrabri gas challenge. Retrieved from https://www.michaelwest.com.au/cherry-picking-santos-selects-convenient-data-to-deflect-narrabri-gas-challenge/
[39] AEMO (2019, December 12). Draft 2020 Integrated System Plan - For the National Electricity Market. Retrieved from https://aemo.com.au/-/media/files/electricity/nem/planning_and_forecasting/isp/2019/draft-2020-integrated-system-plan.pdf?la=en
[40] AEMO (2020b, July 30). 2020 Integrated System Plan - For the National Electricity Market. Retrieved from https://aemo.com.au/-/media/files/major-publications/isp/2020/final-2020-integrated-system-plan.pdf?la=en
[41] AEMO (2020c, July 30) 2020 ISP Appendix 2. Cost Benefit Analysis. Retrieved from https://aemo.com.au/-/media/files/major-publications/isp/2020/appendix--2.pdf?la=en
[42] Energy Source & Distribution (2020, July 30). AEMO reveals Integrated System Plan 2020. Retrieved from https://esdnews.com.au/aemo-reveals-integrated-system-plan-2020/
[43] Parkinson, G. (2020, May 25) Big spinning machines arrive in South Australia to hasten demise of gas generation. Retrieved from https://reneweconomy.com.au/big-spinning-machines-arrive-in-south-australia-to-hasten-demise-of-gas-generation-64767/
[44] Mazengarb, M. & Parkinson, G. (2019, September 16). ACT to phase out gas as it launches next stage to zero carbon strategy. Retrieved from https://reneweconomy.com.au/act-to-phase-out-gas-as-it-launches-next-stage-to-zero-carbon-strategy-92906/
[45] Tasmanian Government. (n.d.). Hydrogen. Retrieved from https://www.stategrowth.tas.gov.au/energy_and_resources/energy/hydrogen
[46] Mazengarb, M. (2020, April 29). Massive hydrogen project gets green light after securing $300m investment. Retrieved from https://reneweconomy.com.au/massive-hydrogen-project-gets-green-light-after-securing-300m-investment-68959/
[47] Energy Source & Distribution (2018, October 4). Nel awarded contract for Australia’s first hydrogen microgrid. Retrieved from https://esdnews.com.au/nel-awarded-contract-for-australias-first-hydrogen-microgrid/
[48] ARENA (2018, July 3). Green hydrogen innovation hub to be built in WA. Retrieved from https://arena.gov.au/news/green-hydrogen-innovation-hub-to-be-built-in-wa/
[49] Ramos-Suárez, J. L., Ritter, A., Mata González, J., & Camacho Pérez, A. (2019). Biogas from animal manure: A sustainable energy opportunity in the Canary Islands. Renewable and Sustainable Energy Reviews, 104, 137–150. https://doi-org.ezproxy.newcastle.edu.au/10.1016/j.rser.2019.01.025t
[50] Carlu, E. Truong, T. Kundevski, M. (2019, May). Biogas opportunities for Australia. ENEA Consulting – March 2019. Retrieved from: https://www.energynetworks.com.au/resources/reports/biogas-opportunities-for-australia-enea-consulting/
[51] Hughes, J. (2020, July 15). Business, industry and utilities back biogas for net zero Australia. Retrieved from https://www.worldbiogasassociation.org/business-industry-and-utilities-back-biogas-for-net-zero-australia/
[52] Bioenergy Australia (2020, June 9). Joint letter in support of Australian biomethane market development. Retrieved from https://www.bioenergyaustralia.org.au/news/joint-letter-in-support-of-australian-biomethane/
Office of the Independent Planning Commission NSW
Level 3, 201 Elizabeth Street, Sydney, NSW 2000
P: (02) 9383 2100 E: ipcn@ipcn.nsw.gov.au
Dear Independent Planning Commission,
This is a submission objecting to the Narrabri Gas Project.
Thank you for the opportunity to provide a submission into the Narrabri Gas Project and taking the time to consider my submission.
I live in the Lake Macquarie / Newcastle region in NSW. I work for the University of Newcastle, School of Environment and Life Sciences as a Project Officer and previously worked at the Tom Farrell Institute for the Environment. My current role involves conducting an environmental assessment for Norfolk Island. In a volunteer capacity, I am a committee member of several organisations including the Hunter Environmental Institute, Richmond Vale Rail Trail Inc., Newcastle Climate Change Response, Hunter Innovation and Science Hub, and the Clean Energy Association of Newcastle and Surrounds. I am also a member of the Charlestown chapter of The Wilderness Society. I am involved in what could be termed environmental outreach, informing the public on environmental information, news, and activities through newsletters, conducting seminars, events, and conferences. I have helped run the annual Mined Land Rehabilitation Conference and the Hunter Valley Electric Vehicle Festival over the last 4 years. On the ground I am involved with Landcare work for the Richmond Vale Rail Trail.
Growing up in NSW I enjoyed camping holidays with my family in the area visiting the many beautiful places including Warrumbungle National Park, Siding Spring Observatory, Coonabarabran, and further north to Walgett, Lightening Ridge and Grawin. The natural beauty of the area is stunning and as a new immigrant to these shores (at the time) it made a lasting impression on me. Whether it be the beautiful fields of Sunflowers that stretch to the horizon, the emus matching the pace of the car as you drive down the road or the stunning natural architecture of the Warrumbungles.
The Narrabri Gas project will have significant Groundwater impacts, Ecological impacts, Climate Change impacts, and the economics and energy security reasons behind the proposal are flawed, and the project should be refused development consent.
The Narrabri Gas Project, that is estimated to result in 94.2 million tonnes of greenhouse gases over the life of the project, cannot be permitted because its approval would be inconsistent with the remaining carbon budget and the Paris Agreement climate target. This project is not consistent with NSW’s climate change policy, the principle of inter-generational equity nor the public interest, as it clearly assumes failure to meet the Paris Agreement temperature goals and worsening climate change impacts for New South Wales.
Both Renewable Hydrogen and Biogas/Biomethane can displace or replace natural gas as a fuel significantly reducing GHG emissions. No new gas is needed.
Furthermore, the project is not critical for energy security and reliability in NSW as:
- Narrabri Gas project high production costs and resulting high gas prices will not put downward pressure on gas prices.
- Domestic market forecast shortfalls by 2024 are unlikely due to a drop in domestic demand, a flattening on international demand freeing up supply, and LNG import terminals coming on-line prior to 2024.
- Transition of the National Electricity Market away from a long-term reliance on coalfired power stations to a greater reliance on renewable energy will not be dependent on gas-fired power stations.
This submission is focused on economics, gas supply and demand, climate change impacts, gas as a transition fuel and alternative fuels to natural gas. However, it would be remiss of me if I did not briefly mention some of the other potential impacts of the Narrabri Gas Project.
Groundwater Impacts
The project exposes the following major environmental risks impacting groundwater:
- Long term risk of depressurisation and leakage from key water supply aquifers.
- Groundwater and surface water contamination, particularly with CSG produced wastewater from the Project.
- Fugitive gas migration into aquifers overlying the target coal seams (a groundwater contamination and safety hazard).[1]
The Pilliga Sandstone Aquifer is a high-quality shallow groundwater that local communities rely on for water for stock, domestic and irrigation purposes and is one of the main aquifers in the southern Great Artesian Basin. The Pilliga Sandstone is also the main outcropping aquifer in the Pilliga forest region within the project area, and this region and along with outcropping along the Warrambungle Range are recharge beds for the Great Artesian Basin in NSW. [2] [3] A near-surface aquifer, the Namoi Alluvium, is also a major water resource for agriculture in the region. Together these form the main source of water these communities rely on for their livelihoods.
The contamination of groundwater is a major environmental risk with Coal Seam Gas, with the major potential contamination from ‘produced water’ which is pumped from the underlying coal seams to depressurize the seams and allow gas to be released and be extracted. CSG produced water is typically of poor quality due to being located within the coal seams. The Narrabri region produced water is high in salinity and contains high levels of heavy metals, boron and fluoride and presents a major risk to groundwater contamination in the area.
Given a number of leaks and/or spills of produced water have already occurred within the 70 appraisal and exploration wells in the area, there is a strong likelihood with 850 wells that significant leaks and/or spills of produced water will occur throughout the life of the project risking contamination of the aquifers / recharge beds for the Great Artesian Basin and affecting the livelihoods of those that depend on this valuable resource.
Furthermore, the project has no approved plan to deal with the 840,000 tonnes of salt waste contaminated with heavy metals than will be produced over the life of the project, as no local landfill can accept this waste.
The potential contamination of the aquifers and lack of waste management of the contaminated salt waste flies in the face with the assessment that the project will “not result in significant impacts on people or the environment”.
Ecological Impacts – Koalas
The Pilliga Forest has been classified as a priority area for koala conservation. Energy and Environment Minister Matt Kean recently set a goal of doubling the number of koalas by 2050 in a bid to defy projections the marsupial could become extinct in the wild in NSW by mid-century.[4] The Narrabri Gas project will result in the fragmention of 85,000 hectares of the Pilliga Forest. Fragmented islands of koala habitat such as will result from this development which will result in unhealthy koala populations. Koalas need wide corridors to spread out to ensure effective breeding. Koala corridors are vital and are recognised generally as such in the new Koala SEPP and acknowledged by the NSW Chief Scientist (2016):
“Koala populations need large areas of connected habitat to maintain their viability. Habitat loss and fragmentation has resulted in population decline and has been identified as a significant threat to the species persistence in NSW.”[5]
Recent studies within the project area suggest a dramatic decline in koala populations. Surveys of the Pilliga forests in the 1990s suggest that the forests were carrying the largest population of koalas west of the Great Dividing Range in NSW, with the population estimated at 15,000. Repeat surveys within the Pilliga forests show a decline of over 80% since the 1990s.5
The impact of extreme weather events such as drought and extreme heatwaves on koalas is expected to increase with climate change and may also exacerbate other threats such as disease.[6] The Pilliga forest koalas are likely to have faced extreme (but less frequent and long) heat events in the past and responded by retreating to creek lines with either available free water or a higher moisture content in the leaves of their food trees. However, land clearing within and on the periphery of the forests and from road construction since the early 1900s has resulted in creeks within the Pilliga forests silting up. Habitats that would have once likely functioned as a refuge during times of drought are now highly disturbed and are unlikely to provide the required level of protection for koalas.5
The planned significant fragmentation of habitat by the Narrabri Gas project will exacerbate the problems caused by earlier land clearance and may lead to the local extinction of the Koala. The potential local extinct of an vulnerable species appears to contradict the assessment that the project will “not result in significant impacts on people or the environment”.
Economics
Gas supply on the east coast of Australia has tripled since 2014. However, domestic gas prices have also tripled in the same period in response to a huge demand for gas for LNG production and export. LNG exporters in Gladstone were unable to supply enough gas from their CSG production wells, with reserves grossly overestimated compared to their supply capacity. This resulted in a hoovering up existing low cost of production gas increasing domestic prices.[7]
Domestic gas prices in Australia have remained at levels far in excess of international parity prices. Whilst prices have fallen somewhat, they have not fallen by nearly as much as those in Asia or Europe. Domestic prices have remained some 30-40% higher than ACCC calculated export parity prices (a.k.a. "netback" prices).[8] This may be explained as there is a lack of competition in the supply and delivery in the domestic gas market with only 5 producers and 2 pipeline owners. This is compounded with a lack of transparency of gas prices (there is no wholesale gas market with most gas traded bilaterally via contracts) that puts domestic and industrial gas buyers at a disadvantage. 1
Consequently, gas has become uncompetitive as a fuel source for power generation in Australia and demand for gas-powered generation has fallen by 59% since 2014.6 Subsequently, gas-powered generation has been running well below capacity.[9] Not surprising that at present there are no committed new investments in gas-fired power generation.[10] Nevertheless, electricity prices for both households and businesses have been driven up by higher gas prices, because gas-fired power stations typically supply the electricity market during times of peak demand.2 Gas is effectively the price setter in the National Electricity Market; for every $1/GJ increase in the price of gas the price of electricity rises by $11/MWh. 6
The CSIRO GenCost report indicated that renewables (wind and solar photovoltaic) with storage (such as pumped hydro) were now cheaper than gas for electricity generation in Australia.[11] As such, it is expected that demand for gas for electricity generation will decline in the future.
One of the key competitive advantages Australian industry has enjoyed has been low energy prices. Energy intensive industries and industries dependent on energy intensive inputs have become less competitive as prices for electricity and gas for combustion have increased. This has forced the closure of some major manufacturing and chemical plants, lead to the offshoring of production and undermined the profitability and viability of other gas users.2 Gas use in manufacturing as a consequence of these prices has fallen by 12% since 2014.[12]
AEMO forecasts further reductions in gas use as consumers fuel-switch away from gas appliances towards electrical devices, in particular for space conditioning. The Commonwealth and NSW Government are exploring options to free-up gas demand through electrification, fuel switching and energy efficiency. [13]
Fuel switching from gas appliances towards electrical devices can often be more economic. A 2018 study of household fuel choice found that 98% of households with new solar financially favoured replacement of gas appliances with electric. With existing/no solar 60-65% of households still favoured replacement of gas appliances with electric. [14]
In the residential sector, for example, reverse-cycle air-conditioning is expected to reduce gas demand that could have arisen due to gas heating.[15] For those residents who cannot afford the capital costs of replacing gas appliances, these increased prices are leading to a worrying growth in energy poverty in the domestic residential sector. [16]
As over 70% of Australian gas is exported as LNG, increases in supply from CSG projects in NSW are unlikely to affect to domestic prices into the near future and any potential flow on effect to the Australian economy. This is supported by the NSW Independent Pricing and Regulatory Tribunal (IPART) which expressed doubt as to whether the development of CSG projects in NSW was likely to have a bearing at all on gas prices in NSW as the development of the three LNG export projects meant the Eastern Gas Region had become linked to global LNG markets.[17] Moreover, Coal seam gas is high-cost gas, being 50% more expensive to produce than conventional gas.[18] The proposed Narrabri Gas project is even more expensive, as according to an AEMO commissioned report, gas extraction costs from this field will be over twice the cost of other existing fields in the eastern gas region.6 According to AEMO, the Narrabri Gas Project is ranked 41 out of 51 actual and undeveloped gas projects and there are 18 developed and 22 undeveloped gas projects with lower estimated production costs than the Narrabri Gas Project.8
The marginal source of supply (the final source of gas supply needed to meet demand) is likely to set floor price in negotiations between gas suppliers and buyers in NSW.[19] This cost of production together with transmission costs to Sydney is currently some 20% less than the proposed Narrabri Gas Project. Furthermore, future marginal source of supply may be satisfied by imported LNG (where wholesale gas prices would be set to import parity levels) or through existing or developed lower cost domestic supplies (such as noted by AEMO).8 Under these circumstances, the Narrabri Gas Project would not provide the marginal source of supply for wholesale gas in NSW, and is thus unlikely to exert any influence over wholesale gas prices in NSW over the near or long term and therefore not contribute to any reduction in domestic gas prices.
Kevin Gallagher, Managing Director and CEO of Santos recently stated, “The notion that any industry can survive selling its product lower than its cost of production is clearly out of step”. [20] This may be the case for the Narrabri Gas project with predicted high production costs precluding LNG export (if allowed) and production costs higher than marginal source of supply for domestic distribution.
The Narrabri Gas Project was declared a Strategic Energy Project because of the crucial role it could play in strengthening energy security and reliability in NSW due in part on being able to address the AEMO predicted future gas supply shortfalls in the Eastern Gas Region in 2024 “if no further sources of gas or alternative infrastructure are developed”.8 Furthermore, the Australian Commonwealth and NSW Government have entered into a Memorandum of Understanding that includes an undertaking that the NSW Government will facilitate investment opportunities for new gas infrastructure that will inject as additional 70 PJ of gas in to the east coast market which happens to be the estimated production of the Narrabri Gas project. 13 However, recent predictions by AEMO are that supply is projected to be sufficient to meet all eastern and south-eastern Australian demand until 2026-2027. [21] In this assessment, AEMO further noted that the annual southern shortfall is estimated to be 51 PJ, lower than the estimated production from Narrabri of 70 PJ.
AEMO in 2018 estimated that in NSW, industry accounts for 42% of domestic gas demand, gas powered generation accounts for 21% of demand and residences accounted for the remaining 37%.[22]
It should be noted that demand for natural gas in NSW has declined over recent years. From 2014 to 2018, annual consumption of natural gas in NSW fell by 15 per cent, with the major contributor of this fall in consumption being the reduction in the use of gas for power generation.8 Whereas domestic demand for gas has fallen for use in manufacturing by 14%, it has dropped by a staggering 59% for power generation by since 2014. 6
The AEMO 2020 Gas Statement of Opportunities stated that their 2020 gas consumption forecast was lower than all previous forecasts for 2023 onwards, largely reflecting a reduced outlook for the LNG sector, along with a muted outlook for gas-powered generation as new utility-scale renewable capacity forecasts were higher than previously forecast.15
Whereas AEMO has predicted no effective change to the level industrial gas use and residential and commercial gas use in NSW, demand for gas-powered generation is predicted to continue to fall by over 85% from 2019 levels by 2028.[23]
International demand for LNG has stagnated and it is likely that Eastern Gas Region reserves will no longer be drawn on by Queensland LNG export projects to satisfy their export orders while demand is flat.[24] Consequently, the supply of natural gas in the Eastern Gas Region is expected to ease.
Several LNG import terminals are planned for the 3 southern states. All the proposed LNG
import terminals intend to utilise Floating Storage Regasification Unit (FSRU) technology. FSRUs require little construction or investment, can provide access to LNG much faster (around 2 years), and cost less than half the cost of an onshore facility and the vessel can be reassigned on project completion. The first NSW LNG import terminal at Port Kembla is expected to commence supply at the start of 2021 with an expected capacity of 100 PJ and could be increased further to 140– 150 PJ per annum in the future.8 17 In April 2020, approval was granted to increase the annual capacity to 115 PJ and to allow up to 500 TJ/day in winter months to account for high domestic demand periods.[25] The second NSW LNG import terminal Newcastle Gas Terminal was declared a NSW Critical State Significant Infrastructure in August 2019, and if approved would have an expected capacity of 110 PJ. The NSW government has committed to fast tracking/streamlining regulatory assessments for the Port Kembla import terminal and, if approved, the Newcastle Gas Terminal.14 The east coast gas import terminals would reduce the need for pipeline development and complement the seasonality of gas production by securing a reliable supply in winter (typically the time of peak domestic gas demand for heating), when the demand in the northern hemisphere is typically low (during the northern hemisphere summer). 7
The planned LNG import terminal at Crib Point, Victoria has the potential to supply up to 160 PJ of natural gas per annum to the gas grid and is expected to be operational by 2022. If approved, the project would meet the shortfall in gas supply predicted by AEMO and would provide gas supply certainty to Victoria, NSW and South Australia. [26] 15
In considering the predicted future gas supply shortfall for NSW in 2024 and whether it will eventuate, one should consider the drop in demand for gas in NSW, the stagnation of international demand and potential freeing up of reserves, and the impact of LNG import terminals coming on line from 2021 onwards. Given these factors, it is unlikely that there will be any shortage of supply in NSW from 2024 onwards.
Economic recovery and jobs?It is dubious that projects such as the Narrabri Gas Project will deliver the goods for an economic recovery. The industry is not a large employer and pays little or no tax.[27] Analysis by The Australia Institute noted that the gas sector was one of the worst options to choose for mass job creation and that investment in other sectors would create many more jobs.[28] This doesn’t include losses in employment in other sectors resulting from the project such as agriculture.
Climate Change Impacts
The impacts of climate change on the environment are significant and severe. The present scientific consensus is that the earth's climate is warming due to human activity (https://climate.nasa.gov/scientific-consensus/), and the negative impacts of increased greenhouse gas emissions are measurable globally and nationally.[29]
The government is responsible for the environment, the health and wellbeing of its citizens, and the financial security of the nation. As we see the impact of increased carbon emissions, we also find evidence of the impact on Australian native wildlife, the Australian people and the wealth of the nation as noted by the recent catastrophic bushfires and devastating drought.
To address the issue of dangerous climate change, Australia, along 196 other parties, is a signatory to the Paris Agreement, which entered into force on 4 November 2016. The Paris Agreement aims to strengthen the global response to the threat of climate change, by:
Holding the increase in the global average temperature to well below 2°C above pre-industrial levels and pursuing efforts to limit the temperature increase to 1.5°C above pre-industrial levels, recognizing that this would significantly reduce the risks and impacts of climate change.[30]
NSW Climate Change Policy Framework details the NSW Government’s objective to achieve net-zero emissions by 2050.[31] This long-term objective “sets a clear statement of government’s intent, commitment and level of ambition and sets expectations about future emissions constraints that will help the private sector to plan and act.” The Policy Framework states that the NSW Government will investigate how to embed consideration of climate change mitigation and adaptation across government operations including service delivery, infrastructure, purchasing decisions and regulatory frameworks. Furthermore, it states that Agencies will undertake additional policy investigation for sectors with significant opportunities and risks, including primary industries emissions and adaptation (Department of Primary Industries).
The IPCC report provides an estimate for a global remaining carbon budget of 580 GtCO2 (excluding permafrost feedbacks) based on a 50% probability of limiting warming to 1.5 degrees relative to 1850 to 1900 during and beyond this century and a remaining carbon budget of 420 GtCO2 for a 67% chance. [32]
Committed emissions from existing and proposed energy infrastructure represent more than the entire carbon budget that remains if mean warming is to be limited to 1.5 °C and perhaps two-thirds of the remaining carbon budget if mean warming is to be limited to less than 2 °C. Estimates suggest that little or no new CO2-emitting infrastructure can be commissioned, and that existing infrastructure may need to be retired early (or be retrofitted with carbon capture and storage technology) in order to meet the Paris Agreement climate goals.[33]
Australia’s remaining emission budget from Jan 2017 until 2050 for a 50% chance of warming to stay below 1.5C warming relative to pre-industrial levels was estimated to be 5.5 GTCO2e.15 Adding the GHG emissions expended in 2017[34], 2018[35], and 2019[36], this leaves just 3.8 Gt CO2e remaining as at December 2019. This leaves 6-7 years left at present emission rates of the 2013-2050 emission budget to stay below 1.5°C. Therefore, at current emissions rates, Australia will have exceeded its carbon budget for 2050 by 2026.
It therefore follows that no new fossil fuel development in Australia that is not carbon neutral, including the Narrabri Gas Project, that is estimated to result in 94.2 million tonnes of greenhouse gases over the life of the project, can be permitted because its approval would be inconsistent with the remaining carbon budget and the Paris Agreement climate target.
This project is not consistent with NSW’s climate change policy, the principle of inter-generational equity nor the public interest, as it clearly assumes failure to meet the Paris Agreement temperature goals and worsening climate change impacts for New South Wales.
Natural gas as a “transition fuel”?
Natural gas has often been touted as the “transition fuel” for the electricity sector to replace coal’s greenhouse gas emissions and eventually paving the way for an emissions free future for Australia. This has been used as an argument for the approval of the Narrabri Gas project. This concept is out of date and I believe incorrect. It is simply too expensive and too emissions intensive to be so. Furthermore, the concept is based on the replacement of coal with gas which is effectively for electricity generation only. Gas is also utilised for heat through combustion both industrially and domestically producing greenhouse gases.
Methane leaks from natural gas production can make the process nearly as carbon intensive as coal. The CSIRO report “Fugitive Greenhouse Gas emissions from Coal Seam Gas Production in Australia”[37] noted that fugitive emissions for Natural Gas in Australia as a whole are estimated to be 1.5% of gas extracted, whereas if fugitive emissions exceeded 3.1% then the emissions intensity would match that of coal (due to the fact that methane is 86 times more powerful as a greenhouse gas than CO2 over 20 years and 34 times more powerful over a 100-year time period).4 They also noted that unconventional gas industry such as Coal Seam Gas would result in greater levels of fugitive emissions than the conventional gas industry. Moreover, the Narrabri Gas field has very high levels of CO2 which will be vented into the atmosphere as part of gas extraction adding to the fugitive emissions from the implementation of this project.[38]
As noted above, the electricity market has already moved away from gas, with a 59% decline in usage in the National Electricity Market since 2014, whilst renewable energy has increased by 25% during the same period.6 Furthermore, flexible gas plants already in the grid are running well below capacity.3 AEMO forecast that increasing renewable generation developments in the NEM are expected to continue to drive down system normal demand for gas-powered generation. 15
The AEMO modelled the future electricity grid in its Integrated Systems Plan.[39] [40] The results showed for all scenarios that the transition from coal to renewable energy would not be via gas.3 The role of gas would be reduced with a decline in gas generation through to 2040.6 The report notes that to firm up the inherently variable distributed and large-scale renewable generation, there will be needed new flexible, dispatchable resources such as: utility-scale pumped hydro and large-scale battery energy storage systems, distributed batteries participating as virtual power plants, and demand side management.13 26 It also noted that new, flexible gas generators such as gas peaking plants could play a greater role if gas prices materially reduced, with gas prices remaining low at $4 to 6 per GJ.26 However this is unlikely as gas prices have tripled over the past decade and expected NSW gas prices are over 60% more than this price.3 10 AEMO noted that the investment case for new gas-powered generation will critically depend on future gas prices, as gas-powered generation and batteries can both serve the daily peaking role that will be needed as variable renewable energy replaces coal-fired generation. In their 2020 Gas Statement of Opportunities report, AEMO predicted that as more coal-fired generation retired in the long term, gas consumption for gas-powered generation in the National Electricity Market was forecast to grow again in the early 2030s, recovering to levels similar to those forecast for 2020. 15 However, in a later report, AEMO determined that by the 2030s, when significant investment in new dispatchable capacity is needed, new batteries will be more cost-effective than gas-powered generation. 33 Furthermore, the commissioning of the Snowy 2.0 pumped hydro project in 2026 will result in less reliance on gas-powered generation as a source of firm supply.15
AEMO noted that stronger interconnection between regions reduces the reliance on gas-powered generation, as alternative resources can be shared more effectively. 26 The expansion network interconnection enables the growth of variable renewable energy without a significant reliance on local gas generation.[41] Supporting this assertion, the AEMO announced a series of actionable transmission projects including interconnector upgrades and expansions and network augmentations supporting recently announced renewable energy zones.[42] 26 AEMO noted that as each of these new transmission projects is commissioned, the ability for national electricity market regions to share resources (particularly geographically diverse variable renewable energy) is increased, and therefore demand for gas-powered generation is forecast to decrease.15 The Marinus Link is forecast to be commissioned in 2036, with surplus renewable generation from Tasmania then being available to the mainland National Electricity Market, which would see further declines in gas-fired generation, despite continuing coal-fired generation retirements.15
Therefore, it is unlikely that further gas peaking plants would be developed to play a significant role in providing dispatchable energy to the grid as the grid transitions to greater levels of variable renewable energy.
Gas-powered generation can provide the synchronous generation needed to balance variable renewable supply, and so is a potential complement to storage.13 However, the current installation of synchronous condensers in South Australia and other eastern states to increase system strength and stabilise the electricity network will reduce the need for gas-fired generators acting in the role of synchronous generators as more renewables enter the grid.[43] Ancillary services are likely to utilise battery storage and synchronous condensers in the future and no longer require the use of gas-powered generation.
Transitioning away from Gas
The ACT is planning to go gas free by 2025. This is expected to reduce their overall emissions by 22%. As part of the ACT Climate Change Strategy 2019-2025, all government and public-school buildings will be completely powered by 100% renewable energy eliminating the need for natural gas. The ACT has also removed the mandatory requirement for new homes built in the ACT to be connected to the mains gas network and will begin to introduce new policies to replace gas appliances with electric alternatives. Some 14% of residents have already converted over to 100% electric. [44]
There are moves in other jurisdictions to remove the mandatory requirement for a gas connection in new developments such as in South Australia.
Several technologies new or new to Australia are expected to reduce the use of natural gas as the Australian economy transitions to a net zero emissions economy and would replace the need for new gas such as proposed by the Narrabri Gas project. Please note that these technologies not only look to transition electricity generation away from natural gas but also for gas combustion for heat. These technologies could also address any gas supply shortfalls.
Hydrogen
Hydrogen is a colourless, odourless, non-toxic gas that is an excellent carrier of energy and can be used for a broad range of energy applications including as a transport fuel, a substitute for natural gas and for electricity generation.[45] Hydrogen gas can be produced from water in a process known as electrolysis, and when powered by renewable energy, the hydrogen produced is free from carbon emissions, making it an attractive way to decarbonise transport, heating and electricity generation.26
AEMO stated that, “Hydrogen has the exciting potential to become an alternative energy storage technology and a new export commodity for Australia” which could be used to help decarbonise the domestic heat, transport and the industrial and commercial sectors in Australia and noted that development of the hydrogen industry would potentially impact both natural gas and electric demands.7 26
Several developments involving green / renewable hydrogen are either planned or underway in Australia.
AEMO highlighted the potential for green steel production in Australia due to abundant renewable resources and the increased demand for low emissions industrial commodities worldwide.7 ‘Green steel’ can be made via a direct reduction process which uses hydrogen (made from renewable energy) as the heat source and reducing agent to produce pig iron. The by-product of the iron reduction process using hydrogen is water, rather than carbon dioxide in conventional steel making. Renewable energy is then used by an electric arc furnace to produce low-emissions green steel.
The Arrowsmith Hydrogen Project, which will be built at a facility in the town of Dongara, located 320km north of Perth, will utilise dedicated onsite renewable energy 85MW of solar power, supplemented by 75MW of wind generation capacity to generate 25 tonnes of green hydrogen a day and will be operational in 2022.[46]
ATCO’s Clean Energy Innovation Hub, located in Jandakot in Western Australia, is being used to trial the production, storage and use of renewable hydrogen to power a commercial-scale microgrid, testing the use of hydrogen in different settings and applications including in household appliances.[47] This includes optimising hydrogen storage solutions, blending hydrogen with natural gas and using hydrogen a direct use fuel. Green hydrogen will be produced from on-site solar using electrolysis, fuelling a range of gas appliances and blending hydrogen into the natural gas pipeline.
The $3.3 million development project will evaluate the potential for renewable hydrogen to be generated, stored, and used at a larger scale. ATCO aims to assess the practicalities of replacing natural gas with hydrogen at a city-wide scale across a municipality.[48]
The new chair of the Australian Energy Regulator, Clare Savage recently stated:
“The national gas industry could also undergo significant change as some jurisdictions move towards a zero carbon emissions policy. This could have significant consequences for the future of gas pipeline networks. In response, the AER recently supported the future recovery of Jemena’s investment in trialling the production of hydrogen from renewable energy for injection into its Sydney network. If hydrogen trials such as Jemena’s prove successful, the natural gas networks could be re-purposed to distribute hydrogen. If not, the economic life of the assets could be limited.” 11
Biogas and Biomethane
Biogas is a renewable energy source, that is continuous and dispatchable, reliable, and local source of energy. Biogas can be converted into heat and/or electricity using boilers, generators or with Combined Heat and Power units.[49] Biogas also provides an alternative route for waste treatment and, as such, can help divert waste from landfill. Biogas consists primarily of methane and carbon dioxide, with trace amounts of other gases such as hydrogen sulphide, water vapour, oxygen, and ammonia.[50] Biogas can also be upgraded into biomethane: a renewable gas that can replace natural gas with a chemical composition very similar to natural gas. Biomethane is produced from the separation of methane from the other gases.31
Biogas and its industry offer many benefits:
- Biogas is a renewable energy source that assists the decarbonisation of the economy. A study of the replacement of natural gas by biomethane in France reduced GHG emissions by greater than 85%.
- Biogas is a secure, continuous and dispatchable source of energy that can contribute to national energy supply.
- Biogas also provides an alternative route for waste treatment and, as such, can help divert waste from landfill.
- The biogas industry supports local economies and regional communities, creating jobs, and offering new income sources, particularly for farmers.
- Biogas transformed into biomethane is a renewable gas that can replace natural gas, and can be used in homes for cooking, heating, and hot-water, or as a fuel for gas vehicles. It can be injected into the gas grid or used directly on-site. As biomethane has similar characteristics to natural gas, its injection into the gas grid does not require any adaptation of the existing infrastructure (neither the gas grid nor customer equipment connected to it). This is an opportunity for the gas and transport sectors to further assist the energy transition. 31
A landmark report commissioned by Bioenergy Australia last year identified the total estimated biogas potential to be 371PJ (103TWh) of available energy, which is enough to decarbonise industrial, commercial, and residential gas users currently supplied by distributed gas networks across Australia.[51]
Australian business, industry and utilities recently signed an open letter to the Commonwealth Government advocating for biomethane to be injected into the gas distribution networks to enable the lowest cost transition to a decarbonised energy market and address a number of challenges including:
- Provide complementary reliable and flexible renewable resources for variable renewable energy.
- Allow heavy industry dependent on process inputs and high-quality heat to decarbonise using existing gas connections.
- Provide a pathway for Heavy vehicle decarbonisation.
- Allow domestic gas customers to decarbonise their energy supply using existing networks and appliances.[52]
Both Renewable Hydrogen and Biogas/Biomethane can displace or replace natural gas as a fuel significantly reducing GHG emissions. These technologies show promise in Australia with the resources available locally. Once developed these would see assets such as the Narrabri Gas project left stranded.
Summary
In summary, the Narrabri Gas project should not be approved.
The Narrabri Gas Project, that is estimated to result in 94.2 million tonnes of greenhouse gases over the life of the project, cannot be permitted because its approval would be inconsistent with the remaining carbon budget and the Paris Agreement climate target. This project is not consistent with NSW’s climate change policy, the principle of inter-generational equity nor the public interest, as it clearly assumes failure to meet the Paris Agreement temperature goals and worsening climate change impacts for New South Wales.
Natural gas is not a “transition fuel” for the electricity sector to replace coal’s greenhouse gas emissions and eventually paving the way for an emissions free future for Australia. It is simply too emissions intensive to be so.
Both Renewable Hydrogen and Biogas/Biomethane can displace or replace natural gas as a fuel significantly reducing GHG emissions. No new gas is needed.
Furthermore, it is not critical for energy security and reliability in NSW as:
- Narrabri Gas project high production costs and resulting high gas prices will not put downward pressure on gas prices.
- Domestic market forecast shortfalls by 2024 are unlikely due to a drop in domestic demand, a flattening on international demand freeing up supply, and LNG import terminals coming on-line prior to 2024.
- Transition of the National Electricity Market away from a long-term reliance on coalfired power stations to a greater reliance on renewable energy will not be dependent on gas-fired power stations.
Due to the above reasons I strongly object to the Narrabri Gas Project. Thank you again for the opportunity to comment. I look forward to hearing from you regarding this submission.
Yours sincerely,
Alec Roberts
[1] EDO (2020, July 22) CSG: The public hearing into the Narrabri Gas Project. Retrieved from https://www.edo.org.au/2020/07/22/csg-public-hearing-narrabri-gas-project/
[2] CSIRO (2018, August) Potential water impacts of coal seam gas in the Pilliga Sandstone. Retrieved from https://gisera.csiro.au/wp-content/uploads/2018/08/18-00384_GISERA_FACTSHEET_SGW-GABFluxFinalReport2pp_WEB_180807.pdf
[3] Sreekanth, J., Cui, T., Pickett, T. & Barrett, D. (2017) Uncertainty analysis of CSG-induced GAB flux and water balance changes in the Narrabri Gas Project area. CSIRO, Australia. Retrieved from https://publications.csiro.au/rpr/download?pid=csiro:EP173269&dsid=DS3
[4] Hannam, P. (2020, July 26). Matt Kean aims to double koala population by 2050. Retrieved from https://www.smh.com.au/environment/conservation/matt-kean-aims-to-double-koala-population-by-2050-20200725-p55fdc.html
[5] NSW Chief Scientist & Engineer (2016, December). Report of the Independent Review into the Decline of Koala Populations in Key Areas of NSW. Retrieved from https://www.chiefscientist.nsw.gov.au/__data/assets/pdf_file/0010/94519/161202-NSWCSE-koala-report.pdf
[6] Lunney, Daniel & Crowther, Mathew & Wallis, Ian & Foley, William & Lemon, John & Wheeler, Rob & Madani, George & Orscheg, C. & Griffith, Joanna & Krockenberger, Mark & Retamales, Melissa & Stalenberg, Eleanor. (2012). Koalas and climate change: a case study on the Liverpool Plains, north-west NSW. 10.7882/FS.2012.022.
[7] Rios, J. (2019, September 13). What’s next for Australia’s natural gas market? Retrieved from https://www.eecc.eu/blog/whats-next-for-australias-natural-gas-market
[8] Long, S. (2020, February 27). Gas giants misled governments and it is costing Australian jobs, ACCC boss says. Retrieved from https://www.abc.net.au/news/2020-02-27/gas-giants-misled-governments-accc-boss-rod-sims-says/12004254
[9] Morton, A. (2020, March 8). 'Expensive and underperforming': energy audit finds gas power running well below capacity. Retrieved from https://www.theguardian.com/environment/2020/mar/08/expensive-and-underperforming-energy-audit-finds-gas-power-running-well-below-capacity
[10] Robertson, B. (2020, January 30). IEEFA Australia: Gas is not a transition fuel, Prime Minister. Retrieved from https://ieefa.org/ieefa-australia-gas-is-not-a-transition-fuel-prime-minister/
[11] CSIRO (2019, December) GenCost 2019-20: preliminary results for stakeholder review. Retrieved from https://www.aemo.com.au/-/media/Files/Electricity/NEM/Planning_and_Forecasting/Inputs-Assumptions-Methodologies/2019/CSIRO-GenCost2019-20_DraftforReview.pdf
[12] Robertson, B. (2020, July 23). IEEFA update: Australia sponsors a failing gas industry. Retrieved from https://ieefa.org/ieefa-update-australia-sponsors-a-failing-gas-industry/
[13] Energy NSW. (2020, January 31). Memorandum of understanding, Retrieved from https://energy.nsw.gov.au/government-and-regulation/electricity-strategy/memorandum-understanding
[14] Alternative Technology Association (2018, July) Household fuel choice in the National Energy Market. Retrieved from https://renew.org.au/wp-content/uploads/2018/08/Household_fuel_choice_in_the_NEM_Revised_June_2018.pdf
[15] AEMO (2020a, July 30). 2020 ISP Appendix 10. Sector Coupling. Retrieved from https://aemo.com.au/-/media/files/major-publications/isp/2020/appendix--10.pdf?la=en
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