This article was written by Steph Gordon on behalf of the MLC Green Team.
There’s no doubt that COVID-19 has made its mark in 2020. Now, more than ever, our response is crucial. Not only for the future of the economy, but for the future of our rapidly changing climate.
In August 2020, Scott Morrison announced that Australia’s approach to an economic recovery will be through a $6 billion dollar gas-led investment, and this has raised some questions. Whilst the gas industry and the government argue that gas reduces carbon emissions when compared to coal, climate scientists say that “new developments of either are inconsistent with the Paris agreement and limiting global heating to 1.5C above pre-industrial levels.”[1] Gas produces emissions at every stage of production, resulting in mostly methane. Whilst methane is not as persistent in the atmosphere as carbon dioxide, its ability to capture heat makes it about 28 times more powerful at warming the earth. [2] This suggests that its effect on the environment is highly detrimental, and will not get us any closer to achieving these climate goals.
The focus of the government’s plan is centred around providing affordable gas, stating that it “will play a central role in re-establishing the strong economy we need for jobs growth, funding government services and opportunities for all”.[3] It seems that in the short-term, economic recovery is the focus until we are at a stage where we can prioritise a greener transition. But even considering economic factors, some argue that gas is not the most financially viable solution. According to Australian Energy Market Operator (AEMO), dispatchable power such as batteries, pumped hydro and virtual power plants are more affordable than gas-fired power. By 2035, 90% of electricity is predicted to be provided by renewable energy at specific times of the day, and therefore the amount of gas-fired power will decline.[4] Domestic gas is also extremely expensive, with prices rising over the last decade. Whilst the international price of gas has plummeted 40% over the course of the pandemic, Australia’s gas price has tripled in the last 10 years leading many manufacturers to close.[5] This may only lead to an increase in the price of electricity for Australians who are trying to get back on their feet. If we are to move forward with a new sort of energy, it would make sense to invest in a long-term, sustainable option. Whilst the government supports both blue and green hydrogen gas use, there has been little to directly address a transition plan into cleaner alternatives. “Blue hydrogen” uses carbon capture and therefore has been criticised by the Greens for its use of fossil fuels, however “green hydrogen” does not use carbon emissions and creates energy through splitting hydrogen from water. Hydrogen carries more energy than natural gas and is also carbon-free, which means that its burning releases water instead of carbon. [6]Therefore, the use of hydrogen provides an obvious advantage in curbing climate change. The absence of a clear plan to change to renewable energy may in fact suggest that natural gas is targeted as a long-term solution. Perhaps, this approach may only end up adding more fuel to the fire.
The gas-fired recovery is also promoted by the prospect of further fuel exportation to other countries. In the last 5 years, Australia has come from almost no gas exportation, to become one of the biggest world influencers. Australia exports 75% of our gas on the east coast to north Asian countries, in the form of Liquefied Natural Gas (LNG), and in 2019, was the largest exporter of LNG globally.[1] It is also important to note that natural gas is relied on from Australia, in many countries such as Japan, China, South Korea, Taiwan, Malaysia and India, some of which are developing countries. Whilst renewable energy is becoming much more feasible, exportation is not yet as efficient. Australia’s supply of gas would be highly important in the development of the economy in some of these countries, and therefore these benefits are farther reaching than our own increased export profits.
On the positive side, a renewable energy exportation future is not too far away. A study by Beyond Zero Emissions estimated that Australia’s solar and wind energy resources have an energy potential that is 75 percent greater than Australia’s coal, gas, oil and uranium resources combined. There are some challenges exporting renewable energy in the form of hydrogen gas, due to its high density and need to be stored at very high pressures, however the CSIRO have made significant advances in making it feasible. [6]
In September 2020, Australia signed an export deal with Germany to help phase out coal through the supply of hydrogen. In Germany, the government’s national hydrogen strategy will only accept green hydrogen from its providers, including Australia. The question then arises, why would we not be putting more resources into the production of green hydrogen rather than blue hydrogen? Not only will this agreement see billions of export earnings for Australia, but it will also support thousands of jobs and potentially get the world a little closer to achieving the Paris climate accord and net zero emissions by 2050. The International Energy Agency ran an analysis last year that found, “Australian hydrogen imports into Japan could be cheaper than domestic production by 2030, even when substantial transport costs are included.”[7] This indicates that Australia’s efficiency makes hydrogen gas a much more viable option, and therefore may also challenge Australia’s desire to pursue natural gas in the “short-term” when other countries recognise this potential. We have so much to look forward to if we make the right decisions now.
As we strive towards a recovery from COVID-19, it is important to consider the future of our economy and the environment. Instead of getting lost in the desperation to rebuild the economy, perhaps we should focus on creating something that will stand for the generations to come.
[1] Adam Morton. 2020. ‘Scott Morrison’s “Gas-Led Recovery”: What Is It and Will It Really Make Energy Cheaper?’ The Guardian, 16 September 2020, sec. Environment. https://www.theguardian.com/environment/2020/sep/17/scott-morrisons-gas-led-recovery-what-is-it-and-will-it-really-make-energy-cheaper.
[2] ‘Methane Facts and Information’. n.d. Accessed 5 October 2020. https://www.nationalgeographic.com/environment/global-warming/methane/.
[3] ‘Gas-Fired Recovery | Prime Minister of Australia’. 2020. 15 September 2020. https://www.pm.gov.au/media/gas-fired-recovery.
[4] Adam Morton. 2020. ‘New Gas-Fired Power Not Needed as Renewable Energy Expands, Grid Operator Says’. The Guardian, 29 July 2020, sec. Australia news. https://www.theguardian.com/australia-news/2020/jul/30/gas-prices-will-need-to-stay-low-to-compete-with-alternatives-on-renewable-grid-operator-says.
[5] Hepburn, Samantha. n.d. ‘4 Reasons Why a Gas-Led Economic Recovery Is a Terrible, Naïve Idea’. The Conversation. Accessed 30 September 2020. http://theconversation.com/4-reasons-why-a-gas-led-economic-recovery-is-a-terrible-na-ve-idea-145009.
[6] ‘Can We Export Renewable Energy? – ARENAWIRE’. n.d. Australian Renewable Energy Agency. Accessed 11 September 2020. https://arena.gov.au/blog/can-we-export-renewable-energy/.
[7] Shields, Bevan. 2020. ‘Germany Names Hydrogen the Hero of Its Post-Coal Future’. The Sydney Morning Herald. 27 September 2020. https://www.smh.com.au/world/europe/germany-names-hydrogen-the-hero-of-its-post-coal-future-20200923-p55y7y.html.
