Natural Gas: Not just good for the economy, good for the environment

One of the most popular myths about oil and gas production is that it cannot simultaneously benefit the environment and the economy. This is not true; Australia’s own natural gas industry – including its liquefied natural gas (LNG) export industry – demonstrates how smart production can benefit the region’s environment and our economy.

It’s reasonable to ask – how can a fossil fuel benefit the environment? Isn’t our best bet to switch to 100% renewables? Well, there are a few key things to understand here:

1. Natural gas emits less carbon than coal and has been more effective than renewables in decreasing greenhouse gas emissions

Researchers’ estimates on how much better natural gas is for the environment vary but their conclusion does not: Burning natural gas is significantly less carbon intensive than burning coal. In fact, most experts – including the climate advocacy group The Union of Concerned Scientists – figure that natural gas emits 50-60% less carbon dioxide (CO2) in a new, efficient, natural gas plant when compared to CO2 emissions from a new coal plant. Similarly, the Independent Review into the Future Security of the National Electricity Market explicitly highlighted the emissions benefit of natural gas generation over coal generation:

Emissions intensity table

The Australian activist community routinely claims that the climate benefit of natural gas compared to coal is eroded because of methane emissions. This is also untrue. In fact, a 2017 study from the Commonwealth Scientific and Industrial Research Organisation (CSIRO) confirmed that fugitive methane emissions from Australian coal seam gas well completions are “low” (ranging from virtually zero to 373 kg), well below the threshold that would counteract the advantage of less carbon dioxide emissions.

This conclusion was reiterated a few months later in the International Energy Agency’s Commentary: The Environmental Case for Natural Gas, which noted:

“Taking into account our estimates of methane emissions from both gas and coal, on average, gas generates far fewer greenhouse-gas emissions than coal when generating heat or electricity, regardless of the timeframe considered.”

Furthermore, the Energy Information Administration, also found that the climate benefit of switching from coal generation to natural gas generation has been so significant for American electricity generation that it has had a consistently greater impact on decreasing the country’s carbon emissions than increased use of renewables.

electric generation CO2 savings

That is precisely why Australia’s leading scientists – including our own Chief Scientist, Dr Alan Finkel, – recommend the increased use of natural gas as a means of decreasing Australia’s carbon emissions. From the Independent Review into the Future Security of the National Electricity Market:

“Gas-fired generation can provide a low emissions substitute for coal and can also complement variable renewable electricity production.”

This latter assertion is the second environmental benefit of utilising natural gas for energy production.

2. Natural gas and variable energy sources, like solar and wind, are highly complementary

What if I told you that increasing natural gas production is an effective way to make renewables more feasible? It may seem counter-intuitive, but it’s true. This is because natural gas power plants – unlike coal power plants – can be efficiently started and stopped, which means gas generation units can fire up quickly, and serve to balance generation fluctuations from variable sources like wind and solar.

The correlation between plentiful natural gas and increased use of renewables is strong – in fact, a 2016 study published by the National Bureau of Economic Research, which analysed 26 OECD countries including Australia, found that a 1% rise in fast-reacting natural gas generators was associated with a 0.88% rise in renewable generation. Upon analysing this data, the authors concluded:

“Renewables and fast-reacting fossil technologies appear as highly complementary and they should be jointly installed to meet the goals of cutting emissions and ensuring a stable supply.”

With this in mind, one must question why renewables enthusiasts campaign so strongly against the use of natural gas.

3. Liquefied Natural Gas (LNG) export is an easy way for Australia to make a global environmental impact

As China’s top LNG supplier, Australia is in a unique position to help China – the world’s largest greenhouse gas emitter – reduce its carbon footprint. In fact, utilising imported LNG from Australia in lieu of coal is a critical component of China’s plan to reduce its emissions intensity by 60 to 65 percent as stipulated in the Paris Agreement.

But lower greenhouse gas emissions are not the only reason China is eyeing Australian LNG as a substitute for coal. It’s also a way to improve their, notoriously poor, air quality. In fact, according to The Western Australian Energy Research Alliance’s life cycle assessment of Western Australian LNG production and export to the Chinese market:

“Natural gas has been considered as one of the safest and cleanest fossil fuels, when compared to other fossil fuels like coal, in terms of nitrous oxides (NOx), sulphur dioxides (SO2) and Carbon Dioxide emissions (CO2).”

Because of this benefit, Chinese policy now actively encourages the use of natural gas instead of coal under its blue skies initiative, a policy that is expected to drive global gas demand for a decade.

global gas economy

This is good news for Australia, as its economy has already benefitted significantly, and will continue to, from its natural resources and proximity to energy-hungry Asian markets.

Bottom line: Australia’s clean energy future will happen because of natural gas, not in spite of it.