The global move towards LNG as a replacement for coal has led to record high prices and a stumble in world economic growth. Has the cleantech future already hit the gas industry as countries and companies are reluctant to invest in new supply in light of climate change fears? It appears so. This has led to a price surge of 1000%.
“The lack of capital investments in future natural gas projects does not lead us to an energy transition, but instead leads us down an inevitable path toward an energy crisis,” said deputy chief executive officer of Russian LNG exporter Novatek PJSC, Mark Gyetvay.
There is therefore a great need for an increase in the ramping up of renewable sources of energy.
Australia’s federal government was counting on gas exports to offset the economic losses caused by the global Covid-19 lockdown. International tourism is down, thousands of students have not returned to Australian universities. It’s okay, says the prime minister, gas will save us. Reality is dissolving Morrison’s myth of a gas-led economic recovery from Covid.
Japan, one of Australia’s major trading partners, is accelerating its pivot to solar, wind, and hydrogen. And it wants that hydrogen to be green — not grey or blue, but green. Japan plans to halve its gas usage in power generation by 50% by 2030. The Japanese government has committed to net zero by 2050. The Australian government has not.
Japan is putting investment dollars where its consumer mouth is, committing to building green hydrogen plants and solar farms to run them in Australia.
On the domestic front, gas was responsible for 6% of electricity generation whilst renewables provided almost 30% in the past 12 months. These figures vary from state to state, but make the point that gas is playing a smaller and smaller role in Australia’s home use. Coupled with medium term reductions in export quantities, the future doesn’t look so good for the gas industry.
Stumbling blindly through a fog of their own making, the federal government is pushing to build new gas-fired power stations in places where they are not now needed, to run on ever more expensive gas (or perhaps to lie idle). Evidence of this is the proposed Kurri Kurri gas-powered generator. What a coincidence that it was announced just before a bye election.
Not just a power station, but a gas pipeline, and onsite gas and diesel storage. The plant is expected to run on diesel for the first six months and then only be operation for 1 hour per month. That’s expensive electricity. Some might say, it is a white elephant.
As gas prices rise and renewable prices drop, some countries may find that they have invested in a whole herd of white elephants. Australia will not be the only country caught in this trap.
Photo by Loïc Manegarium from Pexels
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