Australia’s gas-fired recovery: Does it stack up?

Is the Government’s plan for a gas-fired recovery really “essential?” Experts and community leaders weigh in.


Justin Field is an Independent NSW MLC who is opposed to the Narrabri project.

It was “the most hotly contested resource project in the history of the state”.

Santos’ Narrabri Gas Project proposal recorded more than 23,000 submissions, 98 per cent of which objected, according to Bruce Robertson, Energy Finance Analyst at the Institute for Energy Economics and Financial Analysis (IEEFA).

The project was formally approved by the Independent Planning Commission a few weeks ago. It became another piece in the Morrison Government’s plans to pivot from coal to a “gas-fired recovery”, which touts gas as a cleaner, cheaper alternative that will “help fire our economic recovery” from the fiscal downturn caused by the COVID-19 pandemic.

Despite forecasts from energy experts that renewable energy and hydrogen will almost completely replace fossil fuels in the medium term, PM Scott Morrison and Energy Minister Angus Taylor are calling the gas-fired recovery an “essential” nation-building project.

But what if there were more affordable and efficient alternatives to gas? Australia’s decision could be committing a large amount of taxpayer funds not just for major industry infrastructure but also to underwrite the gas itself, possibly for decades, when our major trading partners are moving rapidly away from fossil fuels.

Is it cheaper?

The premise of the Government’s gas-fired recovery plan is that increasing the supply of gas will lower gas prices. Gas use in gas-fired power plants has fallen by 59 per cent since 2014, and gas use on the east coast peaked in 2012, according to a report by Tim Forcey, an engineer and energy adviser with more than 30 years of experience in the oil and gas industry.

“Even Australian industry is finding that gas is too expensive to burn,” Forcey said. “Some industries that used a lot of gas have closed because they weren’t profitable.”

Despite Australia being the world’s largest gas exporter, it is likely that the gas industry is still under pressure to continue to fill export contracts, which have not been able to be completed. Robertson said Santos, for instance, was “not even close” to fulfilling export contracts it signed in 2014.

A result of the rush to export LNG offshore has been the apparent “gas crisis” in Australia, which Mark Ogge of The Australia Institute (TAI) instead described as a “gas price crisis”.

Robertson said these apparent gas shortages “keep the gas market just starved in Australia”. “They make a lot more money selling just a tiny bit less gas than they otherwise would.”

These few players fix the price in the east coast gas market “at levels well above international parity”, Robertson said. “They’ve been doing this for a long time, as the ACCC has repeatedly pointed out.”

Is it cleaner?

“Government and politicians love to say ‘Gas is 50 per cent better than coal’ and to a certain extent, that is like one of those dangerous half-truths,” Robertson said.

“If 2-3 per cent of the dangerous greenhouse gas methane leaks out anywhere along the supply chain right from the mine, right the way through to the LNG facility, what we actually find is that gas is worse than coal.”

Santos used a very low estimate of gas leaks known as an “emissions factor” of only 0.0085 per cent to state the Narrabri Gas Project’s total leakage at 20,000 tons of CO2 equivalent greenhouse gases. Australia uses an emissions factor of 0.5 per cent in official reports. Santos could have used the US Environmental Protection Agency’s still quite conservative 1.4 per cent figure, which would have resulted in a result of 540,000 tons CO2e for the Narrabri Gas Project, a far cry from their stated 20,000 tons.

But really the emissions impact of gas is far worse than the rosy picture of “50 per cent cleaner” that underpins the Government’s push. “BP, the major oil and gas multinational, says that the broader industry leaks at 3.2 per cent,” Robertson said.

Energy adviser and researcher Tim Forcey, a former oil and gas industry engineer, said the gas industry had “really gotten away with a few things here”.

“They’re not required to measure their emissions and then report those measurements, they’re allowed to report estimates that came out of America 30 years ago,” he said.

There are now satellites orbiting the globe and they are identifying just how filthy the oil and gas industry is when it comes to methane. You add up the numbers, it’s just horrendous,” Forcey said, echoing climate scientists Robert Howarth and Anthony Ingraffea’s research.

“A lot of gas fields, it’s not 3 per cent they’re releasing, it might be 5, 7, 10, 15, 30 per cent,” said Forcey. “And it’s helping to destroy our climate pretty quickly.”

Is it needed?

The recent global gas glut has only been exacerbated by the COVID-19 pandemic. Robertson said this has been an issue for much longer, with “far too much capacity being built in recent years for the amount of demand we are seeing”.

The Australian Energy Market Operator says that there is no need for any new gas.

Robertson said Australia was not listening to its customers. “Japan, China, Korea are committing to net zero by 2050,” he said. “Zero by 2050 means burning less of this stuff, not more of this stuff.”

Forcey said that only 17 per cent of gas in eastern Australia is actually used for electricity production, which largely goes to peaking power, while the other 83 per cent is burnt outright for heat in housing and industry.

Bruce Robertson. (Jack Meehan)

“While we need gas peaking capacity to run the intermittent renewables, we don’t need a lot of gas to run those plants,” Robertson said. Gas “will be far more niche as a fuel” in the future due to far fewer applications for industry outside of energy production and the decreasing cost of hydrogen and renewable energy generation, he said.

The rapidly increasing use of battery storage for renewable energy is even putting gas’s seat in the peaking power generation market into further jeopardy by “eating into gas’s market share”, he said.

“We are likely to see the taxpayer be committed to gas assets for the long term, at the very time we are transitioning away from gas,” Robertson said. “There is this startling air of unreality in Australia where we believe we can still open up new coal and new gas fields right around the country”, despite gas’s likely decline in Australia.

What about the financial risks?

Despite a global supply glut of LNG “that will continue until late this decade” according to a report by Robertson, falling international spot prices and our Paris Agreement climate commitments, the Australian Government appears to be set on the expansion of Australian gas extraction.

This ostensible pivot away from new coal may serve “the Government’s political need to simultaneously signal that it is moving away from coal but not moving away from the extractive industries more generally”, according to Climate Home, quoting Richard Denniss, chief economist at The Australia Institute.

Robertson worries about the financial risks to the taxpayer in the long term, if the Government accepts the recommendations of Morrison’s “handpicked” National COVID-19 Commission that “the Commonwealth underwrite gas demand so new projects have a guaranteed buyer”. The Government has indicated that it will “step in” if “the private sector doesn’t invest”.

“We are likely to see the taxpayer be committed to gas assets for the long term, at the very time we are transitioning away from gas,” Robertson said, noting the history of EMI’s Black Tip field. “They had to pay for the gas and not take it, a terrible situation. It cost the Northern Territory taxpayer millions of dollars.”

What about the health and environmental impacts?

There are geological, environmental and health risks associated with unconventional gas extraction.

Because gas wells can reach 4km deep, with even the shallowest often punching through underground rock layers that underlie aquifers, there is a high risk of irreversible agricultural bore water depressurisation and groundwater contamination.

Veteran community organiser Melinda Wilson said residents of Coonabarabran, a small town about half an hour’s drive from the proposed Narrabri gas field, “live on ground water and so do their cattle”.

If the groundwater is contaminated “there’s gonna be no source of water for them and there’s going to be no more industry out there”, she said.

“Just ridiculous that they’re even considering it. It’s supposed to be our foodbowl where we grow our food for New South Wales. You can’t un-contaminate the water, once it’s gone, it’s gone for good.”

Wilson, who’s worked with the gas-affected community in Camden, NSW, and organised a four-year community protest that saw AGL withdraw from their Gloucester, NSW unconventional gas project, is well aware of the impacts of coal seam gas extraction on local people.

Wilson said coal seam gas “means water contamination, contamination in your air, it means children that are sick”. She said children in Camden, who lived within 50 metres of a coal seam gas well “lose their hair, they get nosebleeds”.

Danielle Hodges, who lives within 5km of 19 gas wells in Camden, said the nearby gas wells were causing her and her family severe nosebleeds, “headaches that continue for months on end … and heightened asthma”.

“Everybody in the family has started to lose their hair.”

The Australian Financial Review reported that Santos chief executive Kevin Gallagher said the positive planning outcome “ ‘confirms that we have relied upon the best science’ to ensure the gas can be developed safely and sustainably”.

A Human Health Risk Assessment of air emissions around CSG activities, reported in ScienceDirect, found residents closest to coal seam gas pads, living within half a mile, “have higher risks for respiratory and neurological effects based on their exposure to air pollutants; and a higher excess lifetime risk for cancer”.

What are the alternatives?

Despite the Federal Government and gas industry’s best efforts, methane gas, as a fuel, especially for electricity generation, appears to be in decline.

Robertson said we “will see an increasing penetration of wind and solar in the National Energy Market … because even the most conservative of sources, like the International Energy Agency, are now saying that they are the cheapest sources of new power to build.”

Large scale battery storage has addressed one of renewable energy’s largest challenges, the supply of 24-hour dispatchable power. Recently, the South Australian grid achieved one working day where they relied 100 per cent on renewable energy. Now, Robertson said, renewable energy company Neoen is “proposing to build a storage battery 10 times the size of the Tesla big battery in South Australia, that, at the time, was the biggest battery in the world”.

“A lot of money is being poured into hydrogen, and when you pour a lot of money into something, any technology, you get results,” Robertson said. “By about 2030 we will start to see some commercial-scale hydrogen being produced.”

Forcey stresses that gas is no longer necessary to heat your home and water or to cook food, as the cost of heat pumps and induction cooktops comes down. “Australians are wasting billions of dollars every year burning gas in their homes. Now there are cheaper options,” he said.

Forcey has garnered over 20,000 members in his Facebook group My Efficient Electric Home“which is a way for people to collaborate on getting their homes off gas”.

The first step towards decarbonising and electrifying homes “is just informing people about what’s possible”, he said. It could be something as simple as telling them “where the heat button on their reverse cycle air conditioner remote is”.

Forcey said that in order to reach Victoria’s net zero goal by 2050 “we have to get gas out of 350 Victorian homes every single working day from now to 2050.”

“That all sounds pretty scary, but we’ve actually put solar panels on … 800 homes a day in Australia” over the past 10 years.

“This is the future,” Forcey said. “This is what we need to be doing as soon as possible given the climate crisis.”


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