News Analysts warn PM’s landmark energy deal ‘will not solve gas price problem’

Analysts warn PM’s landmark energy deal ‘will not solve gas price problem’

scott morrison
Scott Morrison looks longingly at a lump of coal in Parliament in February, 2017. Photo: AAP
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A “landmark” agreement between the Morrison and Berejiklian governments to reduce greenhouse gas emissions and soaring electric prices has been slammed by energy analysts as ineffective.

On Friday, Prime Minister Scott Morrison announced the cornerstone agreement with the New South Wales government, which aims to reduce the state’s emissions through a “critical” supply of an additional 70 petajoules of gas.

Mr Morrison said the deal would also lower Australia’s power bills.

“There is no credible plan to lower emissions and keep electricity prices down that does not involve the greater use of gas as an important transition fuel,” Mr Morrison said.

“This plan is about getting greater access to that gas, as a vital accompaniment to our record investment in renewables.”

But Bruce Robertson, gas/LNG analyst with the Institute for Energy Economics and Financial Analysis, said Australians should not expect to see a dip in electricity prices any time soon.

“The deal is a deliberate strategy to lock Australians into another fossil fuel – this time gas,” Mr Robertson said.

“And despite what the Prime Minister asserts, more gas production will not solve the gas price problem.”

The only proposed gas field in NSW at present, the Santos Narrabri gas project, has cost well above the average field in Australia and well above the current price for LNG in Asia, Mr Robertson said.

“The PM must be oblivious to the fact that gas supply on the east coast of Australia has tripled since 2014 – primarily for export – and domestic gas prices have also tripled,” he said.

Wind turbines on a wind farm, Albany, Western Australia, Australia - stock photo
There is growing pressure to invest more in renewables.

“Producing yet more high-cost gas is no panacea to Australia’s problem of high domestic prices in a low-priced gas world currently suffering a supply glut.”

In 2018 a joint report from CSIRO and the energy market operator revealed that existing coal plants were currently the cheapest form of electricity, but wind and solar farms would soon take over.

“Our data confirms that while existing fossil-fuel power plants are competitive due to their sunk capital costs, solar and wind generation technologies are currently the lowest-cost ways to generate electricity for Australia, compared to any other new-build technology,” CSIRO chief energy economist Paul Graham said when the report was released. 

“This also holds when the cost of fossil generation technology is adjusted for climate policy risk or not.”

The new policy was met with uncertainty by climate scientists, with Climate Councillor Professor Will Steffen arguing that fracking will only produce more emissions. 

“The only way gas would reduce emissions is if it would be replacing something that emits more, like an inefficient coal,” Professor Steffen said.

One reason the policy falls flat is during the fracking process methane leaks into the atmosphere and warms the planet at a faster rate, he said.

“One of the gases that leaks out is methane and that’s a much stronger gas than carbon. It escapes during mining,” Professor Steffen said.

“There needs to be a lot more detail on where the gas is coming from, how it will be mined, what’s the estimate.”

“The second point I would make is that gas is no longer a transition fuel. This is fundamental. Twenty years ago gas was promoted as a transition fuel, but it’s too late. The best option is to go to renewables.

“Staying below two degrees warming is still within our reach, but to do that we simply cannot keep opening up new fossil fuels.”

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