The Morrison Government’s latest plan to launch a “gas-driven recovery” from the Covid pandemic and strengthen gas supplies has been assessed as out of step with market trends and in conflict with a net zero 2050 target.
The National Gas Infrastructure Plan, released on Friday, calls for the development of at least one large new gas basin by 2030 to meet expected domestic and export needs. However, opening new gas fields will also require additional pipelines.
“Unlocking pools and getting gas to where it’s needed will support our job-creating industries,” said Angus Taylor, the federal secretary of energy.
“The Morrison Government is serious about gas and recognizes the important role it plays in supporting jobs, food production, manufacturing, industry, exports and energy supply.”
Taylor said the industry would be asked to participate in a new expression of interest process to identify “critical projects that require support to accelerate delivery”. The government committed 38.7 million. USD in the budget for 2021-2022 to accelerate such ventures.
New sources of supply that may require such support include NSW’s Narrabri coal-fired gas project, possibly in operation in 2026, the Northern Territory’s Beetaloo Basin in 2025 and Queensland’s Galilee and North Bowen basins in 2028 or earlier.
The report assumes that demand for gas in the East Coast gas market until the mid-2030s will be “relatively stable across all demand scenarios”. It includes exports, which now account for about 70% of the East Coast’s supply.
Kevin Gallagher, CEO of Santos, which owns the Narrabri project and has an interest in Beetaloo, welcomed the plan.
“The lack of new developments on the east coast is frightening,” he said. “If Australia does not continue to develop its oil and gas resources, then the supply will simply come from places like Russia and the Middle East, and Australian workers and Australian living standards will be worse for it.”
He said the Narrabri plan of plus 3 billion. USD offered “the lowest price for gas to New South Wales customers” and would be 100% committed to the local market.
‘Throw money away’
But critics said the plan was out of step with market sentiment toward new fossil fuel projects, noting that it avoided any mention of climate change. They pointed to the declining share of gas in the national electricity market, although renewable energy supplies increased, as a key trend.
“Gas in electricity generation is old history. It’s really throwing money away [to support new gas infrastructure], ”Said Bruce Mountain, director of the Victoria Energy Policy Center.
“It reaches back to the horse and cart.”
Suzanne Harter, a climate advocate at the Australian Conservation Foundation, said the 34-page plan directly contradicted commitments to keep global warming below 1.5 C, which the Morrison government signed in Glasgow on Cop26 earlier this month.
Harter noted that “the government is ready” to fill gaps, “where private investment is not available in time to secure priority infrastructure projects,” according to the report.
“It’s completely out of sync with global market trends that need to come out of fossil fuels,” she said, adding that Beetaloo and Narrabri were “climate bombs” in terms of their potential emissions.
Federal Green leader Adam Bandt said the plan was proof that “Australia has no way to net zero, even too late in 2050”. The Greens want net zero emissions to be reached by 2035.
“If Labor is serious about climate action, they will join the Greens next week in the Senate to block the fracking of the NT by Beetaloo and Santos’ roaring of carbon capture and storage,” Bandt said.
Guardian Australia approached Labor for comment.
While the report stressed that states and territories had a role to play in “encouraging timely development of gas reserves” to avert shortages, coordination appears to be limited.
NSW government officials, for example, say they have not been contacted for help in developing the Narrabri gas field.
Predicting gas demand is also challenging. The explosives producer Orica accounts for as much as 15% of state demand, and whether it reduced consumption or switched to hydrogen in the future could play a fluctuating role in the future gas market.