News from the Front Desk Issue No 520: If a hospital in Canberra can go fully electric, property owners are doing their best to get out of gas, and gas is increasingly expensive, what on earth is the federal government on about?
This week’s Four Corners report into the future of gas in Australia slammed this controversial resource right to front of mind for the people in the business of decarbonising the planet.
Bigget concern is the Fed’s apparent determination to stack the National COVID-19 Commission with gas industry executives and trying to force a gas-powered manufacturing boom.
PM Scott Morrison appears hell bent on finding short term solutions to long term problems and he’s not taking “no gas” for an answer.
His Press Club address from January 2020 showed his determination to pursue gas as the country’s saving grace, long before the impacts of COVID-19 were even imaginable.
“We need to get the gas from under our feet,” Morrison emphasised, likely frustrated he couldn’t carry a piece of gas into the Press Club as he did with a chunk of coal in the nation’s Parliament.
For his part, energy minister Angus Taylor shows he’s willing to ignore the economic evidence as much as the scientific.
Multiple authoritative voices, including from the gas industry, stressed that the days of cheap gas are over. Australia won’t be able to compete with a US gas price of below $4 dollars, at which point the competitive element for Australia’s manufacturing disappears.
Taylor’s response to these inconvenient facts is muffled by the sand his head is buried in. “I’m not in the business of forecasting prices,” he told the Four Corners program “What I am in the business of saying is… Australian businesses shouldn’t pay more than their competitors.”
It’s clear some politicians are in the business of saying whatever is necessary to achieve their ends, regardless of the facts staring them in the face.
So what’s the other side saying? The one that doesn’t have vested interests in gas?
We’ve covered the issue at length before, but it seemed time to march boldly once more into the fold and discover what the thinking is.
Gas on the grid
Featured in the Four Corners report was Grattan Institute Energy Program director Tony Wood, who this week released his own extensive modelling on transitioning the National Electricity Market (NEM) to renewables.
Along with co author James Ha, Wood proposed using a small amount of gas power as a way of firming the electricity grid until better technologies become available.
Wood described the role of gas-generated energy as a “backstop” to a primarily renewable based energy grid, which he said could be offset to achieve net-zero emissions.
Shadow minister for climate change and energy, Chris Bowen also subscribes to this approach.
“Gas will continue to play a role in firming and peaking our grid as we transition to renewable energy,” Bowen told an Australia Institute online seminar.
“We need to massively increase the storage in our grid through batteries, pumped hydro and hydrogen which are at various levels of development, but that’s going to take time.”
Director of energy transformation at the Clean Energy Council, Lillian Patterson gave us an alternative perspective on the back of her recently published study into how well large-scale batteries can cope with peak demand periods.
“We should absolutely be aiming for 100 per cent (renewable) if not more because there is obviously the potential for the export industry as well,” she said.
“It’s all about diversity in the system. We need (storage options) that are shorter duration such as batteries and we need those that are longer – pumped hydro for example.”
Beyond Zero Emissions (BZE) chief executive Heidi Lee agreed that focusing on less than 100 per cent renewables was missing the point, as well as and the opportunity to turn Australia into a major exporter of renewable energy.
“That means massively growing our electricity pie and exporting renewable energy and zero-emissions products to the world, creating thousands of Australian jobs and giving our economy a massive boost in the process,” Lee said in a media statement.
BZE’s Million Jobs Plan showed that we don’t need gas to create jobs and drive manufacturing in Australia.
“Right now, Australia has an opportunity to meet growing global demand for zero-emissions products as countries and companies commit to eliminating greenhouse gas emissions,” Lee said.
“Together we can give Australian manufacturers a global edge in these growing zero-emissions markets by providing them access to this low-cost, reliable energy.”
Is it worth the cost?
To corroborate what was said around the traps on this, we did a little digging of our own.
At the Energy Efficiency Council head of policy Rob Murray-Leach explained why cheap gas in Australia is a thing of the past.
Essentially, Australia has already used up all of its gas that was cheap to access, and we’re left with a bunch of gas that’s expensive to reach, needing extensive drilling into coal seams or deep-sea extraction.
“More exploration for gas is very unlikely to reduce prices further because basically the cost of new extraction is high,” Murray-Leach said. “People aren’t going to pull stuff out of the ground and sell it for less money than it cost [to do so]”
Another reason is that most of the gas Australia extracts is shipped overseas, a practice that when it started made domestic prices skyrocket.
Even if we were to tap more gas resources in Australia, most of it would end up overseas, according to Murray-Leach, leaving no tangible avenues for reducing the price of gas.
“Your opportunities for reducing the cost per unit of gas are quite low, so your best opportunity is helping people to reduce their gas use, either through efficiency or switching to other fuels.”
Demand and supply
With such a focus on the supply side of the gas game, it’s easy to forget there is another crucial element to the equation — demand.
In Australia gas is largely used as a feedstock in manufacturing chemicals, plastics and other products.
Increasing efficiency in how the gas is used and reducing waste can help cut down on emissions, or alternatively switching fuels, which is achievable to varying degrees depending on the industry.
“In some product processes that’s really very doable, if it’s a low temperature process, in other processes it’s a bit more complicated and more technological development is required to make that happen,” Murray-Leach said.
Let’s have less gas-guzzling homes
Executive director at the Australian Sustainable Built Environment Council (ASBEC), Suzanne Toumbourou pointed out that creating more energy efficient buildings would reduce demand on the main power grid.
“A lot of analysis has focused on the supply side…how energy is created and delivered. There’s not enough insight from the demand side,” Toumbourou said.
“We need to look at how we create much higher levels of energy efficiency. We shouldn’t be building poorly constructed homes that feel freezing in temperate climates. We should be constructing them with good thermal performance and therefore not needing as much plant to heat and cool.”
For a net zero pathway for buildings, ASBEC’s Low Carbon, High Performance report has outlined three key steps: energy efficiency, fuel switching and using zero emissions electricity. The report shows that buildings contribute to almost a quarter of Australia’s emissions, in operation alone.
“Those emissions come from powering our buildings with fossil fuels and so the first step we’ve identified in addressing emission reductions through building operations is energy efficiency because the first thing we need to do is just reduce the amount of energy that we use,” she said.
“That is the first and most cost effective way to reduce the significant proportion of emissions that are generated from building operations.
ASBEC also calls for fuel-switching away from fossil fuels onsite, which would mean finding an alternative to the old gas-burning stove.
“For new buildings – especially homes – it is likely that the most rapid and cost effective path to net zero is to switch to electrification powered by renewables.
Do buildings need gas at all?
In buildings gas is primarily used for space heating, hot water and cooking, for which in a residential capacity at least there are now affordable and practical substitutes.
Induction stoves, reverse cycle airconditioners and electric hot water heaters have all improved in leaps and bounds in recent years, so there’s no reason why new buildings shouldn’t be entirely electric.
When it comes to existing homes with gas appliances it’s less straightforward. For those who are only using gas for one thing such as cooking, it can make sense financially to transition to electric, which might be a tad harder with multiple gas appliances.
Property Council of Australia policy manager for sustainability and regulatory affairs, Francesca Muskovic said many of the council’s members have made ambitious commitments to achieve net zero emissions, implicit in which was a transition away from use of fossil fuels within buildings which includes natural gas.
“This transition is likely to happen faster or slower depending on whether we are looking at new or existing buildings, and there are specific asset classes that will be easier to transition,” Muskovic said.
According to Muscovic, The Property Council is interested in ensuring there were no regulatory barriers to those industry leaders looking to transition faster and that “building certifications like Green Star and NABERS support and incentivise the transition away from fossil fuels.”
What that transition will look like is not clear and for instance, could involve hydrogen or bio-fuels taking the place of natural gas in the existing network.
For this reason Muskovic said that policymakers should remain “technology neutral” and support the lowest cost transition pathways to decarbonise building operations, not just in terms of technology within buildings, but also investment in network infrastructure that supports building operations.
Canberra leading the way
Proving that good news can still come out of Canberra, in September last year the ACT government announced that a new $500 million hospital being built in the city’s south would be all-electric.
“Buildings like these will last for decades to come, and would otherwise be gas-powered at significant health and financial cost to our community,” ACT climate change and sustainability minister Shane Rattenbury said at the time.
“Gas is a polluting fossil fuel, and the ACT government has committed to transitioning away from climate-warming energy sources.”
“At a time of climate emergency, every decision made by governments must consider climate impacts. Across all sectors and across government, we must act now to put our climate first.”
Such is the uncertain future of gas that last year ACT gas and electricity provider Evoenergy, revealed it would not connect new suburbs being built to the gas network, “assuming lower numbers of new connections and declining gas use of gas in response to policy.”
“They’re basically saying we could get hydrogen and bio in the future but there’s a real risk that if we build assets on the bet that’s going to happen that they’re going to be stranded assets,” Energy Efficiency Council’s Rob Murray-Leach said.
“So, the most responsible thing to do is to continue the gas network now but not extend it to new suburbs.”
So, the march to a gasless building environment is already well underway, and where else but in our nation’s capital. Our leaders need just to take a look out the window and find all the inspiration they need.