Natural gas – An Australian solution to a global challenge

  • Sep 09, 2019
  • APPEA

The important role Australia’s natural gas industry plays in reducing global greenhouse gas emissions is too often overlooked or downplayed in debating issues on principle rather than embracing reality.

While Australians are rightly concerned about how we reduce emissions at home, we overlook the fact that liquefied natural gas (LNG) exports from Australia have the potential to save global emissions equal to over a quarter of the country’s total annual domestic greenhouse gas emissions.

Clearly there are emissions associated with producing natural gas, but there are real emissions reductions is using natural gas.

Australia’s latest National Greenhouse Gas Inventory underpins recent comments from Minister for Energy and Emissions Reduction Angus Taylor that this equates to lowering emissions in importing countries by around 152 million tonnes (Mt) of carbon dioxide principally by the actual and potential displacement of coal consumption in those countries.

This is a substantial global contribution which Australia should be proud of.  The figure represents around 27 per cent of Australia’s total annual emissions – more than the combined emissions from the Australian transport and waste sectors.

Another new study by the CSIRO’s Gas Industry Social and Environmental Research Alliance has highlighted that considerable climate benefits are possible where natural gas is used for electricity generation; particularly in developing countries.

So, it’s important for the oil and gas industry – especially Australia’s growing LNG sector – to be recognised for the positive role it is and can play in the broader energy and generation debate.  In short, natural gas is enabling the shift to renewables and will continue to do so for decades come.

As the global appetite for energy continues to grow, the process of substituting gas for more emissions-intensive fuels allows importing countries to satisfy growing demand and reduce emissions.

When replacing other fuels, LNG can cut help to emissions by around 50 per cent.

LNG also helps developing countries, including across Asia, to reduce air pollution, which is a major cause of millions of premature deaths each year.

China provides an excellent case study of the role natural gas, including from Australian LNG, can play in reducing greenhouse emissions and air pollution.

Work by the Oxford Institute for Energy Studies found since 2017, natural gas consumption in China has risen sharply as a result of strengthened action against air pollution.  China has an array of coal-to-gas switching policies and projects underway at a national and regional level.  Australia – as China’s largest LNG supplier – is playing a key role in these developments.

It also underscores that reducing emissions is a global challenge that requires a global solution, best delivered through a commitment to meaningful action rather than esoteric discussion.  Our gas sector is delivering such meaningful action.

In the long-term, Australia’s LNG projects will deliver decades of economic growth, jobs and exports as well as strong regional and global environmental benefits.

The Australian oil and gas industry has invested more than $350 billion in the economy over the last decade and this will sustain economic benefits for many years, particularly in regional areas that host our activities.

Australia’s LNG export earnings are expected to increase by 62 per cent to $50.2 billion in 2018‑19 and are forecast to reach $52.6 billion in 2019-20, according to new figures released by the Department of Industry.

According to Australia’s National Accounts, resources and energy exports accounted for more than half of total growth in the June 2019 quarter with GDP growing by 0.5 percentage points.

The value-added by the oil and gas industry to the Australian economy increased to $34.5 billion in 2018-19, a jump of 19% compared with 2017-18, according to the ABS figures.  The main driver of this growth was increased production from new LNG facilities.

At the end of last year, over 80,000 Australians were directly and indirectly employed in the production of oil and gas, according to ABS figures.

This impressive data once again reaffirms the significance of LNG exports for sustaining Australia’s economic growth.

Oil and gas production for export and domestic supply is a vital source of strength for our economy and will provide decades of future growth and prosperity.

If industry can further explore and develop onshore and offshore resources with ongoing and far-sighted support from governments, Australia’s natural gas can continue to underpin a nation building shift to a lower carbon, sustainable energy economy.

Natural gas, as lower-carbon, cleaner energy delivers an array of environmental benefits recognising that natural gas delivers:

reduced emissions of fine particulates

reduced emissions of nitrogen oxides and sulphur dioxide (an important contributor to smog and acid rain)

significantly lower demand for water in power station cooling.

And as we continue to promote and develop renewable energy sources, gas-fired generators are complementary with intermittent renewable energy sources.

With structural changes now underway in the power sector and growth in renewable energy technologies, gas is the perfect partner to intermittent renewable energy that requires on-call electricity generation to manage demand. And of course, as more renewable energy is integrated into the national grid, this balancing role becomes even more critical.

Unfortunately, and too often the debate about energy and emissions in Australia descends into an ideological, binary argument between advocates for fossil fuels and renewables which prevents us moving forward with pragmatic and achievable solutions.

The real solution is to move into emphasise the “and” as much the “or.”

Natural gas and renewables, reducing global emissions and developing an export industry vital to Australia’s economic future, must all be part of the same discussion. Rather than arguing about what we cannot have, it is time to have the right conversations about how we can all work collectively and collaboratively to design and implement solutions that address our challenges and capture our opportunities.

We can only do this if we put aside entrenched, ideological positions and take advantage of the opportunities our abundant gas resources afford us.

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