Australian oil and gas producers have warned against the Morrison government that it guarantees a massive expansion of the domestic industry, saying the country does not have a shortage of gas and that intervention could reduce supply and raise prices.
The Australian Petroleum Production and Exploration Association said it welcomed several recommendations about gas in Australia draft leaked report by a manufacturing task force that advises the Covid-19 National Coordination Commission, but also includes “ideas that will not work”.
The report suggests that taxpayers must bear the increased supply of national gas from new fields and help build multimillion-dollar interstate gas pipelines, and countries should introduce a “reverse auction” subsidy scheme for gas-fired power.
Andrew McConville, APPEA’s chief executive, did not say which recommendations he thought made sense and which he rejected, but said the country must “let the gas market work”. “Intervention is not necessary and can be potentially counter-productive by inhibiting investment, reducing supply and raising prices,” he said. “There are also questions about what problems we are trying to solve?”
McConville said Australian Energy Market operators have found no gas shortages, and the task force’s recommendations will not keep prices to the historic low of $ 4 per gigajoule as expected. He said Asian countries had succeeded in having a strong manufacturing industry – the report point of the task force – at a much higher price.
A report to the NCCC was leaked when the government began the process of developing a technology investment roadmap that was much heralded with release discussion paper mark the taxpayer’s support for innovation.
Australia Energy The council, which represents Australia’s main electricity and downstream natural gas business, echoes warnings from APPEA about the dangers of arbitrary government intervention. It welcomes discussion papers, but warns the government must provide taxpayer support for clean technology at an early stage, not seen to subsidize mature or commercial energy sources.
Sarah McNamara, the council’s chief executive, said many of the directives set forth in the discussion paper made sense, including focusing potential support for carbon capture and storage (CCS) on hydrogen and gas production rather than repairing coal-fired power plants, which have not been commercially successful.
“But as a warning, funding must be provided for original innovations and to help build clean technologies at an early stage,” McNamara said. “It should not subsidize technology that is commercial or mature. The latter will only damage the confidence of private investors and hamper market efficiency. “
He said it was “a concern” that the Clean Energy Finance Corporation funded by the taxpayer and the Australian Renewable Energy Agency would be used to support mature technology. “Customers must be sure that taxpayer funds are spent on technologies that need support, not those that are self-sufficient,” he said.
Facing ongoing pressure to adopt the 2050 net zero emission target, the pressure continued to resist, instead the Morrison government plans to develop a road map as the cornerstone of the Coalition’s medieval emissions reduction strategy. Discussion papers show the role of gas, hydrogen, renewable energy and, potentially, nuclear power.
Angus Taylor, minister of energy and emissions reduction, and NCCC also focused on gas as central to the economic recovery plan from the pandemic. The report that leaked to the NCCC did not consider cleaner alternatives to fossil fuels, or mention climate change or the country’s commitment to the Paris climate agreement, raising the ire of the renewable energy industry and climate activists.
The Australian resource industry welcomes positive signals from the government about CCS and about nuclear. The Australian Mineral Council – which has historically been one of the main opponents of carbon pricing to drive the transition to low emissions – said they supported “a technology-neutral approach to reducing emissions that includes global best practices and the adoption of CCS and advanced nuclear technology and renewable energy, gas, coal with CCS and hydro pumps “.
But the Investors for Climate Change Group, which represents institutional investors managing $ 2tn assets, said it would be important for the government to set clear goals through a national climate policy that emphasized that Australia is heading for zero net emissions by 2050, consistent with its international obligations. It said private investors would be reluctant to invest in the transition if not.
Its policy director, Erwin Jackson, questioned whether new gas investment was consistent with that goal. “Private investors have already made climate risk assessments in their portfolios of carbon-intensive fuels such as gas compared to zero-carbon alternatives such as renewable energy and storage technology,” he said.
“The government also needs to assess whether further support and investment in gas projects are resistant to sustainable cost reductions in clean energy options and accelerated changes to energy options that are truly zero-emission”.
Prof. John Quiggin, an economist at the University of Queensland, said the government’s thinking was “five to 10 years behind the times”.
“Although the idea of a new coal-fired power plant seems to have finally been abandoned, this report focuses heavily on technological options that have seemed promising in the past, but have now been abandoned everywhere in developed countries, such as nuclear power and carbon capture and sequestration, “He said.
But he said the most significant failure of the roadmap was not realizing that gas-fired power plants were increasingly being replaced by renewable energy supported by battery storage. “The policy remains fixed on extractable resources such as coal and gas, ignoring our huge endowments of solar and wind resources,” he said.
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