By Cyril Toman
The Morrison Government’s spruiking of a ‘gas-led recovery’ and gas as the ‘transition fuel’ is – as we suspected – a load of hot air. So say two independent, authoritative, reports issued recently by the Grattan Institute and the Australia Institute.
Promoting his “gas-led recovery”, the PM announced $52.9m for planning to increase gas supply and transportation infrastructure. He claimed that 225,000 manufacturing jobs were heavily reliant on gas as an energy source. [Quoted in The Guardian]
But Morrison’s data were provided by a gas industry source. The Grattan Institute found that only about 10,000 people were employed in gas-intensive manufacturing, accounting for only 0.1 per cent of Australian GDP. And most of these were in Western Australia, which already has low gas prices.
Tony Wood, the Grattan Institute’s energy program director, said, “Rather than indulging in wishful thinking or living in denial, the federal government and the gas industry – and its customers – should start planning now for a future without natural gas, or at least a dramatically reduced role for natural gas.”
Wood called for a moratorium on new gas connections at houses in New South Wales, Queensland and South Australia, saying they would save money if they used electricity instead of gas. The new Labor-Greens government in the Australian Capital Territory has announced it will legislate next year to ban gas connections in greenfield developments and develop a program to phase out gas in existing areas.
Morrison’s claims about the importance of gas for industry also look overblown. A report by the Australia Institute found that less than 1% of Australian gas is used as a manufacturing feedstock.
Expanding gas extraction is not about supporting Australian manufacturing but about lining the pockets of gas exporters. The gas (LNG) export industry uses more gas in processing LNG for export than the entire manufacturing sector.The overwhelming amount of gas – 82% – is either exported or used to process gas (LNG) for export.
Richie Merzian, the director of the Australia Institute’s climate and energy program, said it showed the idea that the country needed to extract more gas to support manufacturing was a “complete furphy”.
“If the government was serious about increasing manufacturing jobs they would fund measures to help manufacturers reduce their dependence on expensive gas rather than handing money over to the gas industry.” [Quoted in The Guardian.]
The Morrison government also claims that gas has an important role to play in stabilising the energy grid when the sun doesn’t shine and the wind doesn’t blow. However, the Australian Energy Market Operator (AEMO) in its Integrated Systems Plan, released July 2020, considers that while gas could perform this ‘firming’ role at a lower cost than batteries today, it will struggle to do so in 10 years’ time.
“In the 2030s when significant investment in new dispatchable capacity is needed, this advantage could shift to batteries, especially to provide dispatchable supply during two- and four-hour periods,” the AEMO report found.
However, for gas-powered generation to remain a competitive investment as battery costs reduce, gas prices need to be as low as $4/GJ in the long run, while battery charging costs would need to remain relatively high at $30/MWh, the report found. “Even in 2019-20, four-hour batteries would have been able to charge at an average price below $30/MWh in all regions except NSW.” [Quoted in The New Daily]