Natural gas, global warming and the NT

gas pipelinesI’ve written a few Northern Territory posts recently.  This is another one, but it has some significant national implications (I think). Tuesday’s announcement of Asian conglomerate Jemena as the preferred bidder to construct a gas pipeline connecting the Northern Territory to Queensland is a significant one for both the Territory and Australia.

Much of the talk since Tuesday’s announcement has emanated from opponents of shale gas fracking proposals in the Northern Territory.  However, although it’s fairly prospective, it isn’t even known at this stage how much if any shale gas is actually present or commercially recoverable.  Opponents paint the pipeline as an horrific prospect, providing the dastardly frackers a pathway to sell their evil products.  Clearly dangers exist, and I’m anything but an expert, but it appears that shale fracking is a lot less risky than coal seam gas.   Moreover, foreshadowed restrictions on areas for fracking appear reasonable and should reduce concerns except among hardline opponents:

Under measures announced by NT Chief Minister Adam Giles in Darwin on Wednesday, the government ruled out granting titles for oil and gas activities in residential areas and said it wouldn’t grant exploration permits or acreage in areas of intensive agriculture, or areas of high ecological or cultural significance.

In any event, you can see why the announcement has national implications from the above map.

The North East Gas Interconnector (NEGI), will link the NT’s Amadeus pipeline to Queensland’s Carpentaria pipeline between Tennant Creek and Mt Isa.  Accordingly, as well as providing more and cheaper gas for the Mt Isa industrial and mining hub, the NEGI will allow supply of huge North Australia onshore and offshore natural gas reserves directly into the south eastern gas pipeline grid.  Moreover, the offshore gas reserves are almost certainly far more significant than onshore shale gas.   Offshore resources include several proven but undeveloped offshore gas fields in the Bonaparte Gulf to the west of Darwin; possible expanded future production from the $54 billion Inpex/Icthys project currently under construction; not to mention the huge Sunrise gas field between Australia and East Timor (if current disputes about it with our nearest neighbour can be resolved).

The really interesting thing about linking Australia’s huge northern natural gas reserves into the south-eastern network to create a truly national gas grid is its potential to provide a practical pathway towards achieving major reductions in the nation’s carbon emissions in the short to medium term.  Conversion of existing coal-burning power stations to natural gas will reduce carbon emissions from that source by up to 50%, especially for Victoria’s dirty brown coal-burning power stations (the worst of which is Hazlewood). Most of them are currently planned to be phased out by 2050 anyway, but abundant and affordable gas would allow an interim conversion step that would achieve significant carbon emission reductions while maintaining  adequate baseload electricity capability.

Even on optimistic assumptions about future developments in renewable energy technologies, it is almost certain that Australia will have significant continued reliance on fossil fuel energy sources through until at least 2050.  Converting existing power stations from coal to gas can provide major carbon emission reductions in the meantime.  Moreover, government interventions even on the Coalition’s dodgy Direct Action scheme can help to make it more viable for power utilities to tackle those conversions.

Added incentives could be built in through adoption of tighter regulation of toxic particulate emissions, like the US Mercury and Air Toxics Standards (MATS) introduced earlier this year.  They are already leading to large scale carbon emissions reductions by power utilities who have decided to convert existing power stations immediately from coal to gas fuel.   The NT government especially would be wise to start lobbying Prime Minister Turnbull to examine carefully the option of adopting an Australian version of MATS to create a more convincing set of policies aimed at achieving our ostensible carbon emissions reductions targets.

About Ken Parish

Ken Parish is a legal academic at Charles Darwin University, with research areas in public law (constitutional and administrative law) and teaching & learning theory and practice. He has been a legal academic for almost 12 years. Before that he ran a legal practice in Darwin for 15 years and was a Member of the NT Legislative Assembly for almost 4 years in he early 1990s.
This entry was posted in Environment, Politics - Northern Territory. Bookmark the permalink.

12 Responses to Natural gas, global warming and the NT

  1. conrad says:

    The obvious reason why the phase-out of Hazelwood won’t occur earlier is that brown cola is ultra cheap — cheaper than more or less anything else. This means that unless you add some sort of carbon tax, which seems very unlikely now, the only thing likely to compete with it are individuals sticking up solar panels and using batteries that don’t care if it is actually more expensive (for now) or are happy to fork out 10K when it becomes cheaper (in some years time). If the latter of these comes quickly, I assume building expensive pipes around the place is actually less worthwhile, because demand for power from power plants will decrease markedly. This means it may be more sensible to export the gas to places most people don’t live in houses where you can use solar, which I think is probably the majority of the world.

    • Ken Parish says:

      That’s why I suggest MAT. Its economic effect is not unlike a carbon tax because it focuses on other dirty emissions by industries emitting carbon and requires major reduction in those other emissions. There are technologies that can extract mercury, arsenic etc from the smoke but they’re pricey. At least for old generation power plants, especially those burning brown coal, it appears that conversion to gas may be the cheaper option.

      • derrida derider says:

        Yes, its a nice reminder to people too that coal really is a very toxic industry. It is cheap only if we ignore its local health and environment effects – and that’s without even thinking about AGW.

        My favourite factoid about coal is that it is the largest source by far of man-made non-medical radioactive exposure (mostly in the form of radon gas) that the population faces – always a good point to make to those terrified of nuclear power.

  2. Nicholas Gruen says:

    Conrad I’d be happy to lay a large bet that Australia will have a carbon tax within ten years. In fact I’d be surprised if the decision isn’t made in the next parliament, though it will take another to be implemented.

    Turnbull has undertaken not to reintroduce carbon pricing on taking over the reins. But a lot of pressure will come on Australia at Paris and subsequent COPs. Meanwhile Direct Action is dysfunctional – a policy made to get through a media interview – not one to become policy. It was already dragging Abbott down by the time he dragged himself down further.

    Even if Turnbull wasn’t strongly minded to introduce carbon pricing, any sane successor to Abbott (and quite probably Abbott himself if he was just a tad less like he was) would arrange for Direct Action to morph into a carbon pricing regime, and once that happens, in every budget Treasury would be there saying how much revenue the Commonwealth could make by selling carbon permits.

    Even if Turnbull has the kind of epiphany that Howard had with Medicare and seeks not to turn his head towards his former ways, Howard made a pact with himself to do that because he feared the political consequences of mucking about with Medicare. That is the obstacles to reverting to the Old John Howard were outside the party. He knew reverting to type would harm his electoral prospects – though for most of his rein he was safe in the job as PM and so the party had to suck it up.

    We’ve already seen that on taking the top job Turnbull was quite vigorous in setting a new course (not in terms of headline policies, but in terms of rhetoric, personnel and the way the government operates). When he gets a thumping majority in the next parliament, if he’s smart he won’t behave too arrogantly, but he’ll at the least start changing course on this I think.

    • Ken Parish says:

      It’s not widely known that there IS effectively a carbon tax (or rather emissions trading) element to Direct Action as it stands. It’s loosely called the safeguarding carbon abatement element and, although it is fairly lax, it WILL create a carbon credits market and could be tightened over time. ‘Designated large facilities’ (the 140 largest emitters covering around half Australia’s emissions) will have baseline emission levels assigned to them, calculated on the highest level of reported emissions for a facility over the historical period 2009–10 to 2013–14 (that’s why I say it’s fairly lax). Existing facilities wishing to exceed that baseline level will have to purchase Australian Carbon Credit Units (ACCUs). New facilities built from 2020 will have tighter “best practice” baselines applied to them, although I have no idea how they would be calculated or how tough they are currently envisaged as being. There is obvious potential to impose tougher baseline levels for both existing and new facilities as time passes, meaning we would end up with a scheme bearing more than a passing resemblance to full emissions trading (although of course it is imposing a carbon price but no cap – on the scheme as it stands facilities could increase their carbon emissions without limit as long as it made commercial sense to pay the price).

      I suspect Turnbull has that in mind, along with some version of MAT.

  3. conrad says:

    You are obviously far more optimistic than me! However, I do have one optimistic reason to think you will be wrong, which is that I think Australia will reduce it’s per capita emissions no matter what, which will relieve the pressure on politicians to do anything.

    The reason is fairly obvious — in many places in Australia, it’s quite easy to spend 5K a year on electricity (try having a large house in Adelaide or Brisbane without gas) — high SES households on average spend more. Even low income households apparently spent 3K+ a year according to the ABS. If you can save 70% of this bill with a battery and solar system, it means you are up 3.5K a year. Even now, for a 20K investment, that’s a pretty reasonably pay-off especially if you can stick the cost onto a low interest home loan which means it would only cost you 1K interest a year (this is thus clearly a no brainer for many people). I can’t help but think that a bit further into the future batteries will become even cheaper so you could have a few as backup and get entirely off the grid and save the reaming 1.5K (petrol stations could do business by offering recharging for the few days a year you would have otherwise have needed to be on the grid). This will massively reduce household energy consumption. Energy consumption will be further reduced when electric cars become big, since people will use their solar/battery systems to recharge them too, and hence no more carbon costs from petrol.

    • Ken Parish says:

      People living in apartment blocks, CBD and other multi-storey office blocks etc do not have the option of rooftop solar because they don’t have the roof area to generate useful amounts of power, so advances in battery technology don’t help them much. For that and other reasons baseload power will remain essential (although the proportion of it needed will progressively reduce), and there currently aren’t many options for generating it. Hence the desirability of coal-gas conversion as a significant part of the pathway to lower emissions.

      • conrad says:

        Sure — but at least a quick search of the internet gives me the figures of 76.6% in separate houses and 9.9% in detached houses. This means most people will save money getting solar/battery systems and demand for energy will fall, doubly so if electric cars become common. Thus I don’t think there will be strong political pressure to get rid of Hazelwood (which will have to operate at a lower capacity anyway) when demand is decreasing, apart from international pressure that Nicholas is more confident about. This is especially so because as more people get off or mainly off the grid, the cost for those still on will go up, and your suggestion will raise the price further for them which is politically unpalatable, as would be excessively charging those who are off the grid for the grid.

  4. paul frijters says:

    Hmm. You seem to think that it is a good thing for global cooling if the world first goes through its harder-to-get sequestered carbon (fracked gas and oil) before it most likely returns to its easier-to-get sequestered carbon (coal). From the perspective of the environment the timing hardly matters and the world has just discovered another generation’s worth of sequestered carbon to unsequester and add to Global Warming.

    I see the emission trading fantasy is still alive and kicking. Amazing how popular an unworkable Carbon Prohibition can be.

    Btw, we are following my November 2013 script almost to the letter (http://economics.com.au/?p=9853). To regurgitate my predictions then as to the two policies available:

    One is to cheat and to pretend to reduce the emissions of other countries and then count them as part of the Australian tally. That is what the whole deal with the emission trading scheme in the EU was about: we’d pay Greece (and other EU countries) for the emission permits it wasn’t using anyway because its economy has collapsed, which we would then have trumpeted as doing our bit for the planet. It was of course never likely to fly politically that we would truly send countries like Greece hundreds of millions of dollars, but that was essentially Labor’s plan. Cheered on by many commentators who clearly couldn’t be bothered to investigate properly as to what would really happen, it has to be said.

    Though you, the minister, have just walked away from this scam, you can always go back to it by buying ‘Kyoto permits’ from developing countries. They come at a couple of bucks per tonne, so it’s even cheaper than the EU route. Maybe you can even get it to count as development aid, you wonder?

    The other option you have is to bribe big businesses and power stations to switch towards a slightly less carbon-emission intensive form of fossil fuel. From coal to shale gas, for instance, could save around 40% of the emissions used (IEA derived calculations), which could mean a difference of perhaps as much as 50 million tonnes or so per year on electricity generation in Australia (which currently belches out around 100 million tonnes in black coal and another 50 million in brown coal). That sounds good, you might think!

    Politically speaking, the second route looks more likely, though not at first glance: the ‘Kyoto permit’ route is cheaper, whilst switching fossil energy sources takes a couple of years and often would happen naturally anyway, so that might at first glance make the first route seem attractive. However, being able to spend lots of public money on particular domestic industries clearly has its political advantages! So from a political point of view, the second one looks like the winner, even though on its own it looks unlikely to hit the promised target either. Hence, one should either expect that promise to disappear off the table in the coming years or for some lucky developing country to be able to sell some permits after all!

    Neither option, of course, will do diddly-squat about the greenhouse gas emissions issue. Buying up the left-over permits of others is just a form of pretense: the world as a whole has increased its emissions by 100% in the last 30 years, and again increased its emissions last year according to the International Energy Agency! Buying ‘off-sets’ from countries whose emissions are sky-rocketing, under the pretense that they would otherwise rise even more, is a smoke-and-mirrors trick from start to finish! Maybe they could pay us for not back-burning and hence ‘prevent’ some of our emissions?

    The problem with the shale gas/oil option is that one is effectively exchanging coal burning in Australia now with coal burning elsewhere on the planet (we’ll keep digging it up!), as well as coal burning in the future once the shale oil/gas is burnt up. So it is really just another smoke-and-mirror trick: you are still waiting for a competitive ‘low emission’ technology to come round to truly challenge fossil fuels as the source of our bulk energy. And even then, energy uses that really only work on combustion, such as air travel, will most likely ensure the planet will still burn through its fossil fuel reserves.

    • Ken Parish says:

      Hi Paul

      I understand what you’re saying because you’ve been saying it for a long time. Nevertheless, although there is no doubt something in it, I don’t accept your premise in a general sense.

      The world has in the fairly recent past shown itself quite capable of co-operating to restrain the use of CFCs; DDT; nuclear, chemical and biological weapons; reducing particulate smog (at least in the western world) and so on. Not perfectly but very effectively. I see no reason why the same messy but effective outcomes should not ultimately be achieved in relation to atmospheric carbon emissions.

      Solar, wind and other renewable technologies teamed with greatly improved battery storage will radically reduce but not eliminate the need for baseload power within the next 20-30 years and probably much less (it’s already happening). If we can significantly reduce the emissions from coal baseload power stations over that time by legislating and providing incentives for operators to convert to natural gas then the world’s overall situation will be looking OK.

      I don’t think it’s too optimistic to expect that by that time we will have commercialised much cheaper renewable baseload technologies (or combinations of technologies) to take the place of fossil fuels. The sort of Heath Robinson-ish ideas you have canvassed in the past (giant mirrors in space etc) might be a part of that mix of solutions, but I suspect not a very large part. Nevertheless, your fearless contrarianism is a valuable antidote to some of the more Pollyanna-ish pundits on global warming (of whom I don’t think I’m one).

    • peter says:

      I share your scepticism. The NSW Government recently sold an ageing but functioning coal burning power station at Vales Point, adjacent to Lake Macquarie for the princely sum of $1 million. It was sold to two private investors who have expressed some hope in continuing coal based power generation. From the NT gas pipeline story it would seem they might have a lifeline there but my guess is that the buyers are taking a punt longer term on rising base load power demand from the cheapest possible feed source. Facing such consumer demand, it will be a tough call of government to deny these ‘canny’ investors. After all, they only paid the price of a suburban Sydney house.

  5. John walker says:

    Am told that a significant advantage of gas is that the plants can be placed very close to cities, or in the case of ‘mini’ plants they can be actually placed in the basements of CBD tower blocks, and that really cuts the transmission losses by a large amount.

Comments are closed.