Climate change is not a problematic phrase in the gas industry but a problem for which the industry holds a ready solution – natural gas. Generating power from natural gas produces only 30-50 per cent of the carbon dioxide emissions produced by current coal power generation technologies, as well as using up to 40 per cent less water and Australia has it in abundance.
The place of natural gas in a carbon constrained world has been trumpeted loud and clear. Federal Minister for Resources and Energy Martin Ferguson has committed to supporting the industry. Mr Ferguson said recently that while Australia is oil challenged, it is a world-class gas province and that the gas sector is a key part of the nation’s future. Moreover, the industry’s peak bodies, the Australian Petroleum & Production Association (APPEA) and the Australian Pipeline Industry Association (APIA), have committed to working with governments to address the issue of climate change and ensure the industry’s consultation and involvement.
Garnaut’s Interim Report
Since February this year, the Garnaut Climate Change Review has released the Interim Report on Climate Change and an Emissions Trading Scheme discussion paper, with the Review’s draft report is due to be released at the end of June. Professor Garnaut has sent a stern warning to Australian Federal, State and Territory Governments about the need to commit to ambitious targets and mitigation efforts and take bold action, beginning now.
According to the interim report Australia’s interest in adopting “a strong and effective position on climate change mitigation” lies in its position as a nation that can do exceptionally well in a world of comprehensive global mitigation efforts whilst being extremely sensitive to the effects of unmitigated climate change.
Professor Garnaut urged governments to promote strong global action on climate change, highlighting that comprehensive global efforts to reduce emissions will play to Australia’s strengths. He said Australia has many resources and skills that will allow it to convert strong global action into an economic opportunity, including Australia’s position among the world’s largest exporters of uranium and natural gas, and its rich renewable energy resources.
An Australian ETS
Certainty is a key issue for the energy industry and with the turn to gas as a ready interim solution, gas industry’s stakeholders have every reason to want answers to lingering questions. High on the list is the national emissions trading scheme (ETS), which the Federal Government has said will be in place by 2010.
Professor Ross Garnaut has said the introduction of an Australian ETS signals the opportunity for profound, long-term structural change for Australia. In the ETS discussion paper, released in late March, Professor Garnaut said an ETS will be the centre piece of Australia’s climate change policy and can help build a more resilient economy for the long term.
The paper argues for the need to design the scheme on the basis that it will ultimately be part of a global agreement on greenhouse gas mitigation. It supports the auctioning of all permits, arguing that any increase in the price of goods or services, such as energy, will not be prevented through the free allocation of permits.
The industry’s response
APIA has responded to Garnaut’s interim report stating that earlier greenhouse gas emissions reduction targets can be addressed if increased use of natural gas is introduced into the energy mix sooner rather than later.
APIA Chief Executive Cheryl Cartwright has called for the introduction of a cleaner energy target as part of the Government’s proposed mandatory renewable energy target (MRET), allowing energy producers to use natural gas as part of their range of clean energy options. She said that an MRET that includes a clean energy target would still encourage development and use of renewable energy, but would also allow for the increased use of natural gas.
APIA Policy Adviser Danielle Kellahan has said that it is clear that further investment in gas transmission and carbon dioxide pipelines will be important to the efficient achievement of any government emissions target. APIA has recommended that the Government ensure that there are appropriate policies in place in order to encourage private sector investment in natural gas transmission, including reduced regulatory risk to major investments.
Climate change is also high on APPEA’s agenda. The peak body has committed to reducing the upstream industry’s environmental footprint, and is developing a new code of environmental practice by October this year.
APPEA Chief Executive Belinda Robinson has said that the Australian natural gas industry could help avoid 180 million tonnes of global greenhouse gas emissions per year by 2017 if it meets its aspirational production targets for LNG and domestic gas. These targets include tripling LNG capacity to the Asia-Pacific region and having 70 per cent of all new power stations gas-fired by 2017.
Ms Robinson said that the industry needs to think about more than climate change policy. She said questions about the future should address future opportunities and where the Australian oil and gas sector is placed in a post-emissions trading world.
