News from the Front Desk, Issue 497: The release of Australia’s “gas-fired recovery” plans this week – topped off with new rules to allow government clean energy finance to flow towards carbon capture and storage –should hardly come as a surprise.
We’ve known from the start that the prime minister’s special Covid recovery taskforce was stacked full of gas industry heavy weights, including its head honcho Andrew Liveris, former chairman and chief executive officer of the Dow Chemical Company.
So why does this week’s announcement that the government would pour $52.9 million worth of taxpayer dollars into gas projects still feel like whiplash?
Part of the answer could be fatigue, with the sense that another fossil fuel has simply filled a coal-shaped hole in Australia’s energy future that will keep us hurtling towards an unsafe climate.
This is made overwhelmingly more difficult by the muddled response from experts and commentators that suggests that the gas industry’s spin has done major damage.
The cunningly labelled “natural gas” has long been spruiked as a “transition fuel”, with gas said to produce about half the emissions of coal. But this does not take into account the fugitive emissions – the stuff spewing out from leaks all over the pipeline and as its being mined.
All it takes is three per cent leakage of gas from its extraction, transmission and processing and its suddenly as emissions-intensive as coal.
If you’re wondering how common leakage is, just take a look at these maps published in the Sydney Morning Herald based on University of NSW research that show methane oozing out of heaters, pipes, rubbish dumps and hot water systems all over Sydney.
The gas-is-lower-emissions-than-coal routine was touted again on Wednesday by Liveris at the National Press Club on Wednesday, who claimed Australia burns too much coal but substituting it with gas will see us trotting over the line to our Paris commitments.
The reality is that most energy experts, including the International Energy Agency and our own chief scientist and Australian Energy Market Operator, do see gas playing a minor role in the short-to-medium transition to help firm up the grid alongside other cleaner dispatchable power sources, such as batteries and pumped hydro.
But we imagine a new gas-fired power station in the NSW Hunter Valley to replace the Liddell coal-fired power station, five new gas fields and a bunch of additional gas pipelines was a lot more than they had in mind.
Since the government’s announcement on Tuesday, messages of support for the plan have been trickling out.
One such message came from KPMG Australia, which is not quite consistent with the consultancy firm’s recent climate action commitments that include a net zero operational emissions target and a “commitment to invest[ing] in emerging technology and organisations striving for positive climate impact”.
Also interesting has been the resounding silence from free market advocates such as the Australian Taxpayers’ Alliance and free market public policy think tank the Institute of Public Affairs. The conservative media hasn’t been quite sure how to react either.
In the property industry, the major players are racing to get off gas.
The likes of GPT and Mirvac are both working hard to eliminate gas from their portfolios as part of their net zero commitments. This is what we heard at our Flick the Switch event on this very topic last month (keep an eye out for the upcoming eBook – it’s chock-a-block full of ways to remove gas from buildings).
Upcoming tweaks to rating tools such as NABERS could see the bulk of the office building stock follow suit.
While the Feds might not be able to give up their fossil fuel habit, it can get behind energy efficiency as a legitimate emissions reducing tactic.
As part of the $1.9 billion investment package announced on Thursday (the same announcement that will allow ARENA and the CEFC to finance carbon capture and storage), $52.2 million will go towards increasing the energy productivity of homes and businesses, including a sector specific grant program for hotels, supporting equipment and facilities upgrades.
The funding has been welcomed by industry groups such as the Property Council and the Green Building Council of Australia as a step in the right direction, both agree it’s only the beginning.
“While today’s announcements are headed in the right direction and support for more low emissions technology development is important, other policies and measures will be needed to drive the shift to a low emissions economy,” GBCA chief executive officer Davina Rooney said.
“We hope to see the Australian government supporting more of the initiatives that industry has called for, from a uniform energy rating system for homes, to stronger, more robust appliance standards.”
Hydrogen, electric, and bio-fuelled vehicles will also get a boost through a $74.5 million fund for “future fuels”. Another $70.2 million will go towards a hydrogen export hub to scale-up demand.
Another $67 million will go towards new microgrids in regional and remote communities to deliver affordable, reliable power.
The New Zealand government is setting the bar higher
As always, things are looking better across the ditch as activity gears up around New Zealand’s legislated commitment to net zero carbon emissions by 2050.
With an election approaching net month, it looks like climate action is a vote-winning strategy (except in agriculture, which is a bit like our coal industry), with the Ardern government announcing new legislation on Friday that would make it the first country to mandate climate risk disclosure for the financial sector.
Pending parliamentary approval, the new rules will mean large financial organisations with total assets of more than $1 billion will need to disclose their exposure to climate risks in accordance with the International Task Force on Climate-related Financial Disclosures (TCFD) framework.
The new rules are expected to cover around 200 organisations, including banks, credit unions, building societies, investment managers, licensed insurers, and large crown financial institutions such as the national superannuation fund, with compliance mandatory unless financial entities present a viable excuse. All equity and debt issuers on the NZX will also trigger the new scheme.
According to Minister for Climate Change James Shaw, the $1 billion threshold will make sure about 90 per cent of New Zealand’s assets under management are included in the disclosure system.
“Many large businesses in New Zealand do not currently have a good understanding of how climate change will impact on what they do,” the minister announced on Tuesday.
“The changes I am announcing today will bring climate risks and resilience into the heart of financial and business decision making. It will ensure the disclosure of climate risk is clear, comprehensive and mainstream.”
The climate disclosure announcement was followed by strengthened government procurement rules to encourage more sustainable construction practices and better outcomes for M?ori and Pasifika people.
The new rules, which are part of its Covid recovery plans, will see government-constructed buildings required to assess the greenhouse gas footprint of the materials and construction processes used, with agencies required to choose those which have the lowest upfront carbon emissions.
The $42 billion annual spend on goods and services by government departments and agencies will also now need to be funnelled towards jobs for displaced workers and traditionally disadvantaged groups such as M?ori, Pasifika, people with disabilities and women.
The New Zealand Green Building Council welcomed the announcement that government organisations will assess the greenhouse gas emissions of their new building projects, but chief executive Andrew Eagles would also like to see meaningful sustainable targets and timelines.
“While embedding consideration of emissions in government procurement is a welcome and important step, until we provide meaningful benchmarks and targets our efforts to help mitigate climate change will be rudderless and likely ineffective,” Eagles says.
Clearly, climate action still has a way to go on the other side of the Tasman but at least the rudder is steering in the right direction. Here in Australia, we’re steering the ship straight into the iceberg.
Watch out New Zealand – when the borders open, there might be a few Australians looking to get off this sinking ship.