While the prime minister’s newly announced gas funding is politically useful – soothing the Coalition backbench and wedging Labor – it will imperil Australia’s climate targets. By Mike Seccombe.
Gas plan locks in decades of high emissions, experts warn
In his much-hyped national energy address on Tuesday, Scott Morrison studiously avoided mention of the elephant in the room.
In almost 5000 words, the prime minister made 49 references to gas and six to coal. But the words “climate change” never passed his lips. Nor did global warming or greenhouse effect. One reference to the “global environment” related to the strategic and economic environment.
Morrison did make 14 mentions of renewable energy, but only in the context of problems associated with integrating renewables into the electricity grid.
It was, in short, another reality-defying speech from a man who once waved a lump of coal around the house of representatives while bellowing: “This is coal. Don’t be afraid. Don’t be scared.”
Yet even as Morrison spoke on Tuesday, the reasons to be scared were further accumulating. The west coast of the United States was experiencing its worst fires ever – a frightening echo of Australia’s Black Summer. Just as Morrison had, Donald Trump contradicted the experts and blamed the fires on a failure to manage fuel loads.
At the same time, a record five tropical cyclones were churning westwards across the Atlantic Ocean from Africa. The northern hemisphere summer was officially recorded as the hottest ever. Another enormous chunk of Greenland’s ice cap collapsed into the sea.
If any of that day’s climate change-related news – or any of the other harbingers of climate catastrophe – impinged on the prime ministerial consciousness it didn’t show as he laid out the road map for a fossil fuel-powered future, drawn for him by the vested interests he had tasked with planning Australia’s post-Covid-19 economic recovery.
Coal, Morrison said, would not only “continue to play an important role in our economy for decades to come”, but “with new technologies such as carbon capture and storage continuing to improve, it will have an even longer life”.
Mostly, though, the speech was about gas: gas pipelines, new gas mining, gas “hubs” and new gas power generation. He was particularly specific about the last of these, declaring an urgent need for 1000 megawatts of new gas-fired electricity to fill a shortfall in supply caused by the decommissioning of the geriatric coal-fired Liddell Power Station in the New South Wales Hunter Valley, scheduled for April 2023. And if the sector didn’t step in, he said, the government would.
Some might see the shift towards gas as a small step forward, but most experts do not.
Morrison’s announcement had the remarkable effect of forging an alliance of convenience between power companies, environment groups and a wide cross-section of independent experts. And Mike Cannon-Brookes, the billionaire co-founder of Atlassian and champion of renewables, was the most succinct in his opposition to the plan.
“Bullshit,” he called it.
The fundamental problem with the government’s plan is this: it locks the country into further decades of greenhouse emissions from fossil fuel, which will blow any chance of Australia doing its bit to rein in climate change.
Australia signed up almost five years ago to the Paris climate accord, under which the world’s governments resolved to hold the global rise in temperature to below 2 degrees – with the goal being to aim for below 1.5 degrees.
But few countries have since taken the necessary action to reduce their greenhouse gas emissions, and the climate crisis has consequently worsened.
“We’re already sitting at 1.1, and temperature is rising at an accelerating rate,” says Professor Will Steffen, a councillor with the Climate Council of Australia.
Worse, he says, the world is “locked in” to further heating – between 1.3 and 1.4 degrees – as a result of the continuing effects of past emissions. To come in under 1.5, it would be necessary to achieve net zero global emissions in the next 10 years.
“And that’s simply not possible,” he says. “We still have a fighting chance for 1.8, though. But to do that, we’d have to get emissions cut by half or better by 2030, and get them completely out by 2040. That’s net zero across all sectors – not just electricity, but transport, built infrastructure, agriculture, everything.”
Steffen, like most climate experts, acknowledges there will be a need for some gas in the power generation system, but says that role is limited. “And it’s only for one or two decades. And we already have enough existing gas infrastructure and supplies to meet demand.”
And that’s what made Morrison’s tough talk of Tuesday so perplexing. He was bullishly demanding a solution to a non-existent problem. No credible authority foresees the need for a 1000MW gas plant to replace Liddell, let alone a 30 per cent hike in power prices if it doesn’t happen.
Earlier this year, the government’s own expert body, the Australian Energy Market Operator (AEMO), found a need for only a fraction of that amount of dispatchable electricity – 154MW – by 2023. And plans for far more than that have since been announced, including 170MW, using multiple technologies, being underwritten by the NSW government. AGL has promised a 100MW battery development at Liddell as part of a larger 850MW “multi-site integrated battery system”.
Sarah McNamara, chief executive of the Australian Energy Council, was more polite than Cannon-Brookes, but no less damning in her assessment of Morrison’s demand. She said there were “no material reliability concerns that would warrant this kind of interventionist approach…”
She was frankly flummoxed about the basis of Morrison’s claim, knew of no modelling that supported it, and suggested that by threatening to build 1000MW of new gas capacity itself the government might well discourage private sector investment.
Nor could Hugh Saddler, honorary associate professor at the ANU’s Crawford School of Public Policy, one of the leading experts in the arcane workings of Australia’s electricity market, see any logic to Morrison’s announcement.
“The modelling that was published in AEMO’s integrated systems plan shows the amount of gas generation that’s going to be required – the amount of gigawatt hours per year – under all their scenarios, dropping quite sharply. That is true through the period that Liddell closes, and beyond,” he tells The Saturday Paper.
“I spent some hours yesterday [Monday] pulling out the numbers on the National Electricity Market, looking at something called the load-duration curve, which records the levels of load at different times.
“And in the 12 months to August, there was only 12 hours where the load was above 90 per cent [of capacity]. That’s incredibly easy to handle, through demand management and batteries and things like that.
“With the existing gas power stations, their use has been going steadily down. Over the last year, the average capacity factor was about 10 per cent. So, only 10 per cent of the capacity being used on average.”
As batteries get cheaper and proliferate, as the costs of solar and wind generation continue to fall, making pumped hydro storage more cost competitive, and as stronger grid connections enable power to be moved from places where the sun is shining and the wind is blowing to places where they are not, the importance of gas in stabilising power supplies will decline, he says.
Cannon-Brookes – who envisions Australia generating many times its domestic power needs through wind and solar, and exporting the excess via power cables to Asia and green hydrogen – made similar points in an interview on RN Breakfast on Wednesday.
“There are lots of ways to balance a renewable grid,” he said.
“We have a very comprehensive plan in the [AEMO] integrated systems plan. It’s very, very clear. It doesn’t need any new gas. We have enough gas in the system already to support three times the renewable load that we currently have.”
Morrison’s threatened intervention in response to Liddell’s closure would create confusion in the market, he said, drive up power prices and “lock in that gas plant for another 40 years”. More than that, Cannon-Brookes said: “The plant itself doesn’t make any sense, let alone the extraction and pipelines and all the other stuff.”
That’s clearly true in terms of addressing climate change or reducing energy costs to Australian consumers, but the plant does make sense in base political terms.
Opening up half-a-dozen new gas basins in regional Australia would no doubt please the climate sceptics in the Coalition ranks. These sceptics will also be pleased by Morrison’s announcement on Thursday that he intends to change the remit of the Australian Renewable Energy Agency, which previously funded only renewable energy, to allow it to fund other, more controversial activities such as carbon capture and storage, which are championed by the fossil-fuel sector.
In relation to Liddell specifically, it’s worth noting that it sits within the federal electorate of Hunter, which is heavily dependent on coalmining and export, and which is held by Labor’s Resources spokesman, Joel Fitzgibbon, on a margin of just 3 per cent.
Labor’s emissions reduction policy was blamed for a 9.5 per cent swing against Fitzgibbon at the last election, and he has since led the charge from Labor’s right wing to weaken its position on climate change. Fitzgibbon launched several strongly worded attacks on people in the party who supported strong action on climate change, and a few weeks ago raised the prospect of a Labor split.
In response to Morrison’s announcement on Liddell, Fitzgibbon was ostentatiously supportive.
“Well, better late than never is what I would say,” he told Sky News.
“I’ve been arguing for three years for this approach … to firm up a system which is increasingly dominated by the renewable sector.”
His leader, Anthony Albanese, was cautious in his criticism of Morrison on Tuesday. “No one is opposed to new gas if the investment is made there,” he said.
The Australian Greens leader, Adam Bandt, takes issue with that. He and his party strongly oppose it.
Says Bandt: “Joel Fitzgibbon is not some rogue backbencher. He is Albanese’s hand-picked Resources spokesman. And he is saying that this [Liddell plan] was in fact Labor’s idea to begin with and Scott Morrison should have got on with it quicker.
“If Anthony Albanese tries to walk both sides of the fence on gas he will potentially suffer the same fate that Bill Shorten did for trying to do the same with Adani.”
He further notes that fossil-fuel interests have given more than $9.3 million to the major parties during the past eight years, and that donations from gas interests were almost evenly split.
“This is an object lesson in the power of big corporations over politicians,” he says.
Bandt’s analysis may be self-serving – the Greens benefit if Labor is riven over climate – but it is also right.
The policy Morrison is selling has been envisaged by agents of the fossil-fuel industry, who at his invitation proposed the “gas-fired recovery” to follow Covid-19. It serves their vested interests, it serves the sceptics in the Coalition and it wedges Labor.
And so you end up with Morrison’s major speech on energy policy promising infrastructure to address a problem that doesn’t exist, while exacerbating the one that actually does. We are in the ludicrous situation of having a gas policy we don’t need, and none of the climate policy that we actually do.
This article was first published in the print edition of The Saturday Paper on September 19, 2020 as "Gas plan locks in decades of high emissions, experts warn".
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