Gas will power us to net-zero future

Resources Minister Madeleine King’s recent release of 10 new gas acreage areas is important for Australia’s energy security and our contribution to global emissions reductions. Picture: NCA NewsWire / Gary Ramage

Australia needs more natural gas or we will risk our energy security and emissions targets.

From the Ukraine war to the recent winter energy system pressures on the Australian east coast, the consistent message for us has been to boost gas exploration and production.

Russia’s move to suspend gas flows through the Nord Stream 1 pipeline will have far-reaching consequences for European energy security, where gas and electricity are already rationed as electricity prices skyrocket.

But the implications go well beyond Europe. Constraints on gas supply will be a brake on global efforts to meet net zero and result in higher emissions that will quickly eclipse any cuts achieved here in Australia.

Countries in Europe are firing up older coal-fired power generators and some of our Asian neighbours face immense competition to secure liquefied natural gas as they shift away from coal.

The International Energy Agency has already warned that coal use will hit an all-time high in 2022. This is not a short-term challenge. Russia accounted for more than 40 per cent of gas to Europe before its Ukraine invasion; higher in countries such as Germany where almost 60 per cent of its gas was Russian.

We need to plug this gap in a global gas market already characterised by under-investment in new supply.

Contrary to some perceptions, further restrictions and moratoriums on new gas supply are not good news for the climate. In fact, it will help drive emissions to record levels. In 2021, before the war, the IEA found global CO2 emissions increased by 250 million tonnes as countries switched from gas to coal: that’s about half of Australia’s annual emissions.

If we want to accelerate the global transition to net zero, Australia should invest in more gas supply to fuel the energy transition. Gas is a reliable alternative to coal-fired power generation and is critical to firming renewable energy – endorsed by the Australian Energy Market Operator in its Integrated System Plan. While recent energy events have pressured energy markets, they have at least highlighted the balancing act in reaching net zero.

All of this underscores why Resources Minister Madeleine King’s recent release of 10 new gas acreage areas – in Victoria, Western Australia, the Northern Territory and Ashmore and Cartier Islands – is important for Australia’s energy security and our contribution to global emissions reductions. New supply also drives economic activity. The industry already contributes up to $500bn in economic activity each year, boosting public services and infrastructure such as roads, schools and hospitals.

We have announced more than $20bn of new supply investment in Australia in the past two years, injecting stimulus into local and regional economies and supply chain businesses.

We’re exploring in the Northern Territory’s Beetaloo Basin; the Cooper, Surat, Bowen and Galilee basins in Queensland and South Australia; and the Perth, Carnarvon, Browse and Canning basins, as well as in commonwealth waters offshore in WA.

But bans and uncertainty in some jurisdictions have hampered investment. More investment can be brought forward, but only if the policy settings are right, and initiatives like the commonwealth’s acreage releases provide the foundation. The role of our industry in net zero was also shown in the other part of Minister King’s acreage announcement: the new offshore areas in WA and the NT to explore for potential greenhouse gas storage. This is important because of the role carbon capture utilisation and storage – a proven, viable technology that is recognised by authorities such as the IEA as crucial to net zero – will play to get to net zero.

Without CCUS, we have limited or no solutions for tackling emissions from heavy industry sectors. CCUS will also support a faster and cheaper scale-up of clean hydrogen produced from natural gas and will underpin technology to remove carbon from the atmosphere. A recent study by the University of Melbourne, University of Queensland, Princeton University and Nous identified CCUS as a key pillar to Australia’s net zero goals.

The good news is that we have the advantage of excellent geological resources for CO2 storage – including the depleted oil and gas fields that formed part of Minister King’s acreage release – and the skills and expertise to develop and operate these storage resources. The world is pushing ahead with a number of CCUS projects, and Australia must not miss this opportunity.

CCUS is a subject I am very familiar with, having recently concluded a role in Paris as head of the IEA’s CCUS team.

It’s the same body that declared in a report last year that the world does not need new supplies of oil and gas – the very thing I am calling for now.

In every scenario outlined by the IEA, natural gas has a critical role to play – in Asia through coal-to-gas switching, CCUS, hydrogen production, supporting renewables, and the rise of low-carbon gases.

The IEA says each country will chart its own path to net zero and Australia’s role in a cleaner-energy future is global, as shown through the importance of our LNG exports to shift Asian nations off dirtier fuels.

This again shows that, unless you want more coal and more emissions, new gas supply is crucial.

Samantha McCulloch is chief executive of the Australian Petroleum Production & Exploration Association.