The gas war part 2: The Australian gas industry and their anti-electrification campaign
By: Ketan Joshi
Tags: Global Warming, Climate, Gas, Lobbying, Fossil Gas

In part 1 of this series, I explored the smattering of local, city-level battles being fought between those seeking to electrify their homes and the fossil gas industry in America. As the gas industry truly loses the fight to become a ‘transition fuel’, they’re retreating to homes and buildings as a place to make their stand, and in many instances in the US, they’re winning.

In Australia, ‘existential threats’ are already emerging. Recently, Canberra lifted the legislation that made it mandatory to connect new gas to homes. It’s not quite a gas ban, but it’s significant, and signals the start of a bigger shift.

Prior to this, the Australian gas industry has made a pre-emptive strike at the “existential” threat of electrification. It is the heart of the next big fight on climate: a fight that will be more personal, more heated and more diffuse than the policy-and-technology issues of power generation.

Anxiety about electrification is real, and it manifested in Australia in the form of a report released by a conglomerate of Australia’s gas industry entitled ‘Gas Vision 2050’.

It claims to find that “net-zero emissions can be reached with hydrogen at half the cost of electrification”. The acting CEO of Energy Networks Australia, Tamatha Smith, said that “policy settings aimed at reducing emissions should recognise that continuing to use gas infrastructure is the lowest cost option to reach net-zero emissions from the energy sector by 2050”. The report was published by:

Energy Networks Australia (ENA),

Australian Gas Infrastructure Trust (AGIT),

Australian Pipelines and Gas Association (APGA),

Australian Petroleum Production and Exploration Association (APPEA),

Gas Appliance Manufacturers Association of Australia (GAMAA),

Gas Energy Australia

In the 2010s, the fossil fuel industry’s core line of argument against renewable energy was that it was too costly. They intentionally ignored the question of the impact of emissions, and focused aggressively and solely on dollar figures. This report, engaging in precisely the same approach, is an unambiguous warning shot to any city, region, government or community considering enforcing or incentivising electrification.

It is careful in what it omits, and specific in what it includes. It is an important laying down of the gauntlet for the fossil fuel industry’s vision of climate action: slowed down, defused, disconnected and disempowered.

This decade’s modelling wars

The gas industry’s 2050 vision specifically targets “net zero” by 2050, in all of its modelled scenarios. Frontier Economics were engaged to model three different scenarios to hit a 2050 net zero target: electrification, ‘renewable fuels’ (hydrogen made from renewables), and ‘zero carbon fuels’ (hydrogen made from fossil fuels, paired with carbon capture).

As you might expect, the scenario finds that fossil-fuelled hydrogen is cheapest, and that electrification is most expensive. That is music to the ears of people who either own gas pipelines, sell gas, or both:

“The finding that both the blue and green hydrogen scenarios are lower cost than electrification suggests that there is value in continuing to make use of Australia’s gas infrastructure and Australia’s natural gas resources to deliver gaseous fuels to end-use customers”

I read the modelling, and it’s confusing. There is no detail on the mix of technologies used to supply power in their ‘electrification’ model; nor any clear explanation of how grid integration options are chosen. “Many debatable assumptions are made about details of industrial heat demand, efficiencies of gas and electricity use, demand profiles and trends, and other issues. No sensitivity studies are provided, so we don’t know the size of the ‘error bands’”, wrote energy expert Alan Pears, in a review. As Pears points out, the “costs” presented here are relative to a secret, unmentioned ‘baseline’ figure that is never at any point declared. “So the estimated additional $27.3 billion cost of the electrification scenario relative to the baseline scenario, and $14.3 billion relative to the zero carbon fuels scenario, may be very modest in the overall energy investment picture”, he wrote.

The most significant thing about this report is that it doesn’t talk about the emissions footprint of the various plans. As I wrote previously in LobbyWatch, there are many pathways to net zero by 2050. Fast, incremental and slow all result in very different quantities of emissions released between now and 2050. To illustrate:

Here’s the absolute key message that you cannot ever, ever forget: getting to net zero slower and later releases three times the cumulative amount of emissions by 2050 as getting to net zero faster, and sooner.

It is the cumulative amount drives climate harm, not the amount in a single year, thirty years in the future. Those tri-coloured columns above reveal exactly why Australia’s gas lobby leaves emissions out of their modelling.

The report’s gas-fuelled scenarios lean heavily on technologies that won’t be operational at scale for decades (particularly carbon capture for gas), so it’s safe to assume that this is why emissions were left out of the report and price was the only information provided for the scenarios.

There are a range of oddities in this report. In another instance, they insist that “Gas clearly plays a diverse and important role in Australia’s energy mix”, and illustrate it with the following graphic:

Wow, gas has climbed to the top! Pretty great, hey? Actually, there are some chart crimes going on here: coal has been given its own axis on the left, and renewables and gas are on the right. There is absolutely no reason to do this other than to make gas look like it’s leading the pack, and the 2020 update has been left out. This is what it actually looks like:

Yep, that’s right: in the financial year 2018–19, renewable energy came only a few mere gigajoules short of overtaking gas power generation in the grid. That’s all but certain to happen in the next report, and by a decent margin too. To visualise it a different way: gas’s growing days are done. Since 2008, every renewable technology has grown by a larger percentage (compared to the previous year) than gas has:

Renewables have grown consistently for the past four years, increasing by between 3,000 to 8,000 new gigawatt hours each year. Gas decreased for three of those four years.

Though this refers to the ‘old’ argument of whether gas belongs as a ‘bridge fuel’ in the power sector (it doesn’t), it becomes directly relevant when you discover the other key argument for preserving gas infrastructure instead of electrification, as used frequently by Australia’s gas industry in a range of reports, websites and social media posts: The claim is that heating or cooking in your home using gas is cleaner than using grid electricity.

“In your home, using natural gas appliances for your heating, hot water and cooking are even more efficient, with emissions 83% lower than brown coal”

It is sort of correct. Australia’s grids remain incredibly emissions intensive, because the fossil fuel lobby was partially successful in slowing down the growth of renewables, in the 2010s. But if you glance at the Australian grid operator’s various scenarios, a high-decarbonisation future actually results in grid emissions lower than those from household fossil gas within thirteen years:

In fact, a few months prior, a billboard for Australian Gas Networks was removed after the ad industry’s regulatory body, ‘Ad Standards’, pinged them for misleading claims about the emissions footprint of household gas. “The Panel considered that this claim is misleading as there are other energy sources which would be considered cleaner and greener than gas”, the standards body said.

It is extremely likely that renewable growth will exceed even the best-case scenario. Recent announcements in NSW and Victoria make this very likely. But ignoring that, the lifespan of gas infrastructure of all kinds — including pipelines, household gas stoves and heating and gas mining projects — all exceed the point at which it will be far cleaner to run your home on the grid, rather than gas supply. So the lobbying by gas networks to lock in new gas infrastructure actively sets Australia on a course to blow past climate goals:

The carbon decarbonisation promise is distant

It has become very clear that the gas industry understands that attacking electrification alone is insufficient: it needs to present an alternative pathway. In their new vision, that alternative is ‘renewable gas’ — a vague term used interchangeably for a wide range of gas fuels with differing emissions and differing risks.

The plan here is that these alternative “decarbonised” gas fuels will be pumped through existing gas pipelines, purportedly reducing emissions while avoiding the major losses the gas industry would face is electric alternatives were used.

Each of these alternatives can, to differing degrees, be blended with fossil fuels. The temptation is incredible: this creates a very murky grey area in which an only partially decarbonised fuel can be presented as ‘progress’, while the overall rate of emissions reductions is pushed into the ‘too slow, too late’ category I explained above.

Of the options they present, hydrogen and “renewable methane” are the least-bad. Hydrogen can be produced using sources like wind and solar, and then used in industrial processes, transport and other sectors that are tricky to electrify (“indirect electrification”). This is close to full decarbonisation. But the existing gas pipelines can’t handle more than 10 % hydrogen without costly upgrades, and the report admits as much, and downplays it accordingly.

Things become even more complicated for “biogas” or “biomethane”, in which waste methane from processes like dairy farms is captured and used, instead of being released into the atmosphere. The details are buried in the fine print, but ENA’s modelling actually excludes this: “Including these other gases in the scenarios would increase the complexity of the modelling task as the cost and availability of those fuels would differ significantly by region”. The cost of interconnection and energy storage also varies wildly by region, but they decided to include those costs in their ‘electrification’ scenarios. So why did they leave these gases out?

Including biogas in their scenarios would have very significantly increased the costs of their ‘gas network’ scenarios. We know this because America’s gas industry is presenting precisely the same alternative as a decarbonisation pathway:

“In the next five years, California is on track to have 120–140 dairy farm methane digesters capturing and harnessing fugitive, climate-warming methane — with the help of significant state grant funding. “Dairy biogas is way too expensive” to use in homes or businesses, said Boccadoro — five to 10 times more expensive than fossil gas.”

California’s government modelling agency looked at this precise question, and found that ‘decarbonised gas’ is wildly expensive, compared to using heat pumps (ASHP):

This modelling found precisely the opposite results of Australia’s gas industry modelling, in that electrification creates significant savings

The other problem? Cows just don’t fart out enough methane to meet the needs of the existing network of fossil fuel pipelines and high-emissions homes. California again serves as a perfect example of this:

If they had includes watse biogas in their scenarios, they would have had to admit the dual problems of high costs and low supply. Of course, America’s gas industry has a solution:

“In an interview, however, Switalski called Boccadoro’s conclusions “just one individual’s opinion”. Switalski suggested that renewable gas could be subsidized like solar energy”

Turns out Australia’s industry is thinking the same thing.

A push for subsidies (after years of opposing subsidies for renewables)

Subsidies for fossil gas have been on the cards for quite some time, but it’s clear in this document that a big, expensive new subsidy scheme will be a major priority. It directly contradicts the core message — that a fossil-heavy system is the most inexpensive way forward — but it’s suggested, regardless, in a report for the group on how to move ‘gas blending’ forward:

“A certificate scheme for renewable gas blending mimics the existing Renewable Energy Target (RET) scheme, hence the existing suite of governance and institutional arrangements should be able to be utilised (or require minimal change to be used)”

This is progressing as desired. The gas industry lobby group APPEA submitted to the Finkel Review in 2017 that the Clean Energy Finance Corporation ought to be changed to allowed the government body to fund fossil fuels. “Such investments may act as a catalyst to expedite gas industry investments and address access to capital and financing challenges facing the industry”, they wrote. They got their wish. In 2020, the Australian government has moved to change the CEFC’s mandate so it can fund fossil fuel projects. The gas industry likely has no real chance without significant subsidies and government intervention.

Reading that brought up plenty of memories. It really wasn’t all that long ago that Australia’s gas industry was passionately and aggressively opposed to the Renewable Energy Target:

The Australian peak oil and gas lobby claimed the RET “inhibits the natural gas industry’s capacity to reduce greenhouse gas emissions” (true; renewables do it better), and that “ the RET substantially increases the cost of abatement” (renewables are now the main driver of downward pressure on prices). In every breathless press release, APPEA pleaded with the government to scrap the entire thing: “The APPEA submission finds the RET is an economically inefficient policy operation that should be discontinued”.

Of course, in addition to bringing bills down, the RET has become the sole engine of emissions reductions in the country. Since 2011, the RET has abated a total of 233 megatonnes of CO2-e. In a few years, the annual emissions saved by the RET will be equivalent to taking all of Australia’s cars off the road.

LRET = ‘large scale renewable energy target’ (big wind and solar) and SRES= “small scale renewable energy scheme” (mostly small-scale solar), the two sub-components of the RET.

If the gas lobby had been successful in their efforts in 2013 and 2014, cumulative emissions would be around 186 MTCO2-e higher. It is a very simple and telling illustration of the priorities here. Attempts to muddle branding and terminology (like ‘renewable gas’), alongside a very telling revisionism about the industry’s attitudes towards renewable energy, reveals the goal.