Climate and Energy – The Great Debate on Impact
The Australia Institute’s (TAI) Climate & Energy Program report, Weapons of gas destruction, claims to be a study that takes into account Australia’s gas project pipeline and its potential climate impact. However, in reality, it is simply spin wrapped in exaggerated and distorted talking points.
An objective and fact-based analysis of the information presented in the report highlights TAI’s hyperbole and over-reach.
For example, recent comments by the International Energy Agency and the Australian Chief Scientist also reinforce the importance of natural gas in a low emission future:
“When I’ve talked about gas as being important to the transition, I’m talking about gas as being important to transition us into an electricity system where we have more solar and more wind, and we can bring it on faster by using gas to be a backstop to firm up the supply.” Dr Finkel, Chief Scientist, Senate Estimates, 28 October 2020
“Overall gas demand is expected to recover quickly, reaching 4 600 bcm by the end of the decade, meaning that it is nearly 15% higher in 2030 than in 2019. Emerging market and developing economies lead the growth…” World Energy Outlook 2020, p. 189.
Economics
TAI’s report largely centres its argument around emissions, with an economic narrative weaved throughout. Unsurprisingly, TAI has scrutinised the Australian Government’s proposed plan for a ‘gas fired’ COVID-19 recovery. We’ve outlined some facts about the considerable economic benefit of Australia’s oil and gas industry.
The report outlines a wide range of statistics but fails to acknowledge the importance of Australia’s oil and gas industry as a key driver of Australia’s economy and our modern way of life. It ignores that natural gas is a major energy source to nearly 70 percent of Australian homes through either a network connection providing natural gas or a bottled gas alternative.
It also ignores the fact that more than five million Australian homes are connected to a gas distribution network. Natural gas provides almost 24 percent of Australia’s primary energy and almost one third of all gas consumed in Australia is used by manufacturers which supports hundreds of thousands of jobs.
And it ignores that since 2010 the industry has invested more than $473 billion into the Australian economy.
TAI Argument |
Fact |
The rise of an east coast gas export industry roughly tripled the price of gas for local consumers and businesses.
“…large increases in gas exports resulted in large increases in gas prices.” (p. 14) |
The most recent Gas Market Inquiry 2017-2025 August report by the Australian Competition & Consumer Commission confirmed for the eighth consecutive time there is no shortfall in the domestic gas market. The report also confirmed gas prices have continued to fall. The LNG industry has also created thousands of jobs and pumped billions of dollars of investment into the economy. LNG investment in Australia saw more than $200 billion invested in seven new LNG projects, which all began operating between 2014 and 2019. The investment in these projects saw Australia’s annual LNG nameplate capacity reach 88 million tonnes[1] and beyond this impact, an ecosystem of companies dedicated to serving the industry has grown in Perth, Brisbane and regional centres. In addition, the use of LNG to displace more emissions intensive fuel sources remains an important tactic to reduce emissions around the world. Beyond 2020, China is expected to continue to be a key driver of global LNG demand growth. Chinese gas demand is expected to be supported by a policy-driven expansion of gas-fired power generation, aimed at reducing air pollution[2].
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“Despite its large scale and emissions, Australia’s gas industry employs a very small proportion of the workforce, around one in 500 jobs.” (p. 1) |
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“The fossil gas industry in Australia tripled production from 1990 to 2010 and then from 2010 to 2019 production tripled again. Nearly all of the new production was exported. Australia has become the world’s largest exporter of liquified natural gas (LNG) and one of the world’s biggest gas producers.” (summary). | The oil gas industry has invested more than $450bn over last decade in oil and gas projects supporting jobs, businesses and communities in regional Australia. In 2018-19 it supported up to 80,000 jobs directly and indirectly and for every job in oil and gas, another 10 jobs were supported in Australia. The industry provided 4% of GDP in 2019-20, up from 3% in 2018-19 and paid $77bn in tax to build roads, hospitals and schools. While LNG export volumes and earnings are forecast to decline in 2020-21 due to the impacts of COVID-19, recovery is predicted from 2021-22 to around 80 million tonnes at $37 billion (Department of Industry, Science, Energy and Resources, September 2020).
In 2017-18, the industry paid over $5.8b in total tax payments, which could build around five large hospitals, 30 schools or several hundred kilometres of regional roads. The Australian oil and gas industry contributed 4% of GDP in 2019-2020. Ernst & Young, 2020 p. 22. |
Emissions
In the report, TAI reason that a discussion on a gas-led recovery requires pitting gas development against any hope of a low emissions future. TAI’s data is exaggerated, distorted and discounts the vital and varied role that natural gas can play as part of a transition to Australia and Asia’s lower emissions future. As we have outlined on our website, it does not have to be one or the other.
TAI/ ACF Argument |
Fact |
“The gas industry and its supporters often argue that gas reduces emissions by displacing coal. Remarkably, these claims are made presented without any evidence.” (p. 48) | This claim by TAI is wrong and scientifically untrue.
To put this in context, this is almost equal to Australia’s total annual emissions.
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“Unleashing the pollution from Australia’s full gas reserves would make it almost impossible for the world to meet Paris agreement goals.” Australian Conservation Foundation chief executive, Kelly O’Shanassy. |
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“Many studies have shown rates of methane emissions far higher than set out in official national emission inventories. This is a problem because a relatively small increase in methane emissions can dramatically increase the emissions footprint of fossil gas.” (p. 6) |
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“There is clearly little need for increased gas extraction to ‘transition’ Australia’s electricity system.” (p. 53) |
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[1] https://www.offshore-energy.biz/australia-lng-exports-to-drop-by-17-billion-for-2020-21/#:~:text=The%20wave%20of%20LNG%20investment,capacity%20reach%2088%20million%20tonnes.
[2] https://publications.industry.gov.au/publications/resourcesandenergyquarterlyseptember2020/documents/Resources-and-Energy-Quarterly-Sept-2020-Gas.pdf