The Future of Australia’s Energy

Australia’s chief scientist, Alan Finkel, has come out in support of the government’s strategy of using gas as a transition fuel to generate electricity while the sector moves away from coal toward clean energy sources. 

“We cannot abruptly cease our use of energy,” he told the National Press Club in mid-February. “Make no mistake, this will be the biggest engineering challenge ever undertaken. The energy system is huge, and even with an internationally committed and focused effort, the transition will take many decades.”

“Ultimately, we will need to complement solar and wind with a range of other technologies such as high levels of storage, long-distance transmission, and much better efficiency in the way we use energy.”

“But while these technologies are being scaled up, we need an energy companion today that can react rapidly to changes in solar and wind output. An energy companion that is itself relatively low in emissions, and that only operates when needed. In the short term, as the prime minister and Minister Angus Taylor have previously stated, natural gas will play that critical role.”

The strategy was first flagged in 2015 by the then-Minister for Environment and Energy Josh Frydenberg but was picked up by Prime Minster Scott Morrison just last month, amid devastating bushfires, which climate scientists and bushfire experts have linked to Australia’s love affair with coal and other fossil fuels. 

Since the Morrison government has shown a renewed interest in gas, some coalition MPs, most notably from the National Party and from areas that have for many years relied on exporting coal, have stepped up their defense of it and have begun petitioning for government subsidies for coal-fired power. 

Australia’s incoming resources minister, Keith Pitt, hasn’t turned away from coal either, telling The Sydney Morning Herald that he will push for more exports. But Pitt also threw his support behind a plan to extract gas from an area in northern New South Wales following a landmark energy deal between the state and federal government, which would see an investment of $2 billion into the east coast market.

Gas is still a fossil fuel, but not all fossil fuels are created equal. Burning natural gas, for example, produces less than half as much carbon dioxide per unit of electricity compared to coal and reduces emissions by 33 percent when producing heat. 

While natural gas produces less carbon dioxide during burning, it is around 30 times better at holding in the atmosphere, meaning that if enough methane leaks during production, it could be as detrimental to the environment as burning coal, if not worse. 

In the northern New South Wales region of Narrabri, the proposed big gas project has been met by both stiff resistance and support from locals. Some argue that the environmental effect will be disastrous for the region’s farmers, while others claim that it is essential to create jobs and boost the economy.

The federal government’s backing revived hopes for the plan, which involves ambitions to extract gas from coal seams lying deep beneath the Pilliga Forest. 

In return, the federal government asks that the state government set a target of delivering 70 petajoules a year of new gas into the market. Coincidentally, that’s precisely the estimated output of the Narrabri project.

The project is yet to secure the final state and environmental approvals, but gas giant Santos has already invested around $1.5 billion into it, and now with federal backing, it’s likely to pass all checks unabated. 

Morrison has ruled out making any similar energy deal with the state of Victoria to help reduce its carbon emissions and lower power costs unless the state government ditches its longstanding ban on onshore gas exploration. 

Siding with the federal government, and also seeing gas as a transition fuel, business groups such as the Victorian Chamber of Commerce and the Energy Users Association have urged the state government to expand conventional onshore gas extraction and lift the ban.

The deal would likely also include guarantees against “premature closures” of coal-powered fire stations in Victoria, which provide around 70 percent of the state’s energy. In return, federal investment would likely include power from the Snowy Hydro 2.0 scheme delivered to Melbourne, Ballarat, Shepparton, and other urban centers across the state. 

Finkel, who helped prepare and release the National Hydrogen Strategy late last year, stressed that coal was not an option and tipped hydrogen as the way forward during his speech at the National Press Club. “Enter the hero, hydrogen,” he said, after discussing the perils of climate change.

Hydrogen carries more energy than natural gas and is carbon-free, so the burning of it does not contribute to climate change. Hydrogen can, however, be produced in two ways, through the process of electrolysis, using solar and wind energy, or through chemical process, using combusting fossil fuels like coal and gas.

For now, the hydrogen strategy has recognized the need to reduce emissions to combat climate change and is only considering options using fossil fuels if they come with carbon capture and storage, which involves pumping carbon emissions into underground cavities. According to the Australian Institute, carbon capture and storage projects have a poor track record of delivering on their promises, and now the industry is using the same “unsuccessful technology” to promote hydrogen.

Fears also remain that hydrogen is being used as a lifeline for coal. Prior to discussing the terms of the strategy with Finkel and state energy ministers, Angus Taylor, the federal minister for energy, suggested that hydrogen production should be “technology neutral,” indicating it could be done using coal. 

The Australian Capital Territory’s energy minister, Shane Rattenbury, tried to secure a commitment from the meeting to produce hydrogen using only renewable energy sources, but it was blocked by Taylor. 

“Green hydrogen produced from renewable electricity, like wind and solar, is the way of the future. Green hydrogen will be in demand as countries seek zero emissions energy solutions,” Rattenbury told Renew Economy. He argued that hydrogen, to be truly sustainable, has to be produced using water and powered by renewable energy sources.

According to a Renewable Energy in Australia report, Australia has the highest concentration of solar radiation per square meter on earth, receiving an average of 58 million picojoules of solar energy per year – 10,000 times more than the country’s total energy consumption. Australia is also home to some of the most favorable conditions for wind energy generation in the world in terms of average wind speed and conducive topography.

In the last decade, the costs of solar and wind energy have dropped massively. The market share of renewable energy now accounts for around 22 percent of Australia’s total electricity generation with almost 90 major renewable energy projects under construction. 

Meanwhile, around one-third of Australia’s coal-fired power stations have closed since 2012 and with those remaining relying on government subsidies, skeptics argue that as a last-ditch attempt, the push for hydrogen may be a push for coal in disguise. But either way, Australia’s future will be hydrogen.