A report from the Australian Bureau of Agricultural and Resource Economics (ABARE) has found that Australia’s electricity generation mix will undergo a shift to lower-emission fuels, which is expected to result in “a significant reduction in coal’s share and increases in gas and renewable energy”.

“Gas has the potential to play a major role as a ‘transitional’ fuel until lower emission technologies become more cost effective,” ABARE Deputy Executive Director Paul Morris said.

This year ABARE and Geoscience Australia also compiled the Australian Energy Resources Assessment report which examines Australia’s identified and potential energy resources.

Commenting on the report, Federal Minister for Resources and Energy Martin Ferguson said “The two big findings are the extraordinary potential of coal seam gas and unconventional gas resources, and for the first time, we can see just how extensive Australia’s renewable energy resources are.”

Australian Petroleum Production & Exploration Association Deputy Chief Executive Mark McCallum points out that power generation is the single largest source of carbon dioxide emissions in Australia.

“With a much lower greenhouse gas emission profile (as well as other pollutants such as sulphur dioxide, nitrogen oxide, particulates and chemicals such as mercury), than coal-fired power generation, natural gas has a critical role to play in Australia’s future energy mix,” Mr McCallum says.

David Knox, Chief Executive of one of Australia’s major gas producers, Santos, has said that the potential partnership with renewables is a key advantage of natural gas.

“The potential synergy is two-fold. First, in smoothing out oscillations in intermittent renewable power generation to ensure an overall stable supply of power to industry and consumers. Second, in acting as a ‘bridging fuel’ to further development of renewable and other low emissions platforms, particularly renewable base load platforms – both in a technological sense and commercial viability.”

A practical partner

Reflecting the need for base load power, many commercial renewable energy sources currently require the support of conventional power generation.

“South Australian modelling shows that every 5,000 megawatts (MW) of wind power generation capacity requires approximately 2,100 MW of gas-fired power generation to ensure that a reliable supply of electricity is always available,” Mr McCallum says.He says that, depending on the technology used, natural gas emits between 50 and 70 per cent less carbon dioxide than is produced by an existing conventional coal-fired power station for the same amount of electricity.

“Gas-fired power generation can be reliably and affordably delivered right now. This could achieve approximately 80 per cent of the carbon emission reductions that would be achieved by retro-fitting an existing coal-fired power plant with carbon capture and storage technology – an option not available in the foreseeable future.

“To go a step further, if energy demand to 2050 was to be met by a combination of 20percent renewable energy (as per the expanded Renewable Energy Target) and natural gas, carbon emissions would drop by around 20 per cent, even while doubling the level of output.”

Mr McCallum also argues that with more than 250 years worth of natural gas, at current rates of production, natural gas is clearly not a short-term transitional fuel for Australia and its Asia Pacific neighbours.

“We have more than enough [natural gas] to meet our own local demands, while assisting the 60–70 per cent of the planet’s population that lives in the Asia Pacific region to continue to develop and evolve their economies for a cleaner and brighter future.”

Government policy

An important part of driving the transition towards more renewable energy generation is support from government policy.

Speaking at the Australian Petroleum Production and Exploration Association Conference held in May, Origin Managing Director Grant King said that the Federal Government’s Renewable Energy Target (RET) requires a very large investment in renewable energy and that this investment is going to have to be “firmed up” with additional investment from other areas – “most likely, open-cycle gas”.

Mr King also stressed the need for an emissions trading scheme (ETS), or alternative policy, to complement the existing RET.

“The hope would be that we would see the cost of renewable technologies comes down and the carbon price would see carbon intensive fuels go up. We would see the sorts of fuel substitution occur that we need to bring about the 5 percent reduction in carbon,” Mr King said.

He added that in recent years there had been bipartisan support for the RET with an accompanying tax on carbon. He has urged the government to replace the shelved ETS, if parties are to retain a commitment to a 5 per cent reduction by 2020.

SA leading the way

Mr Knox has also said that Santos supports a carbon price in the economy that would lead to a lower carbon future.

Mr Knox uses South Australia, where gas already provides 50 per cent of power generation and wind provides 17 per cent, as an example of the possible effects of supporting renewable energy with gas.

“If we were to replace South Australia’s two ageing coal fired power stations in the state’s north with gas, upgrade the existing gas fleet and meet the State Government’s 33 per cent renewable energy target ... South Australia’s emissions intensity from power generation would halve, dropping well below 0.4 tonnes of CO2 per megawatt hour.”

He considers that similar reductions could be achieved across the country if coal-fired power stations were replaced with natural gas plants upon reaching their normal plant life and a greater role was granted for renewables.

“Of course, it is easier for South Australia than the ‘coal states’ in the east to achieve these reductions, but the fact remains that the transition to a lower-carbon Australia can only take place with a greater role for gas in the fuel mix.”

Similarly, Mr McCallum said that “Right now, natural gas represents a compelling opportunity to address climate change, and provide energy security to both Australia and the Asia Pacific.

The question remains, whether Australia’s leading natural gas developers will see a greater role for natural gas to support increasing renewable energy generation.