Gas is the new coal

Gas looks like becoming the new coal. Recent announcements by the federal government showcasing gas as being the key to maintaining reliable, low cost electricity. Kathyrn Murphy writing for the Guardian (1) captured the mood of those opposing this shift by calling it “mind boggling”.

Is a shift away from coal to gas a pragmatic logical decision either politically or from a climate perspective? Or is it an illogical and disastrous decision that will lock in massive carbon emissions for generations to come?

As the Guardian piece goes on to explain it looks like clever politics – a shift away from coal provides some comfort to urban Liberal voters looking for a new energy narrative while satisfying jobs focussed swing voters motivated by the economic benefits of low cost energy. The coal to gas pivot not only helps unwedge the Liberals it also puts pressure on the ALP, caught between suburbanites worried about the economy and inner city progressives who increasingly reject all forms of fossil fuels. One suspects the Prime Minister likes the way the Liddel power station play is setting up – those in favour of renewables and opposed to government interference will have to show how they will replace Liddels’s 1000 GW. If they do, the PM claims credit for turning rhetoric into action and if they don’t the government gets to talk about nation building infrastructure ahead of the election.

Putting aside the politics, admittedly a tough ask in the current climate debate, what are the arguments for and against increased use of gas?

The main thrust of the opposition is that net zero carbon emissions by 2050 essentially means no more gas. The only areas for wriggle room, while remaining committed to the aspirations of Paris, are either that maybe net zero can be pushed out to say 2070 or that Carbon Capture and Sequestration (CCS) will become cheaper. Fudging on when we get to net zero carbon seems like cheating and CCS is routinely pilloried as a failed technology – too expensive at best and dismissed as unworkable by many. This logic means that not only will any new gas investment be totally redundant in 30 years but the wasted resources should be allocated to the technologies we need to carry us into a carbon free future.

The arguments in favour of gas are based on the potential value of gas – both for electricity generation and in a number of key manufacturing industries – during the transition period as the economy transitions to net zero carbon. In other words gas is important for the next 25 years while new zero emission technologies are being commercialised and fully rolled.

The promotion of gas as a transition fuel is not a new concept – it was a common refrain in the Obama administration, reflecting the potential to reduce emissions from the electricity sector by encouraging coal to gas substitution ahead of a final conversion to renewables. The continued reduction in the cost of both renewables and battery storage has eroded support for this thesis but some, including Australia’s Chief Scientist Alan Finkel, are still believers (2). Finkel recently pushed back on anti-gas academics stating that “the adoption of …renewable electricity will be faster, more economical and more reliable if natural gas fired electricity generation continues to be available in the near to medium term”.

So how could the availability of gas fired generation encourage a faster expansion of renewables? One answer is that gas can provide an emergency backup capability that derisks (both technically and politically) an aggressive renewables program. Put another way, a block of dispatchable gas power reduces the pressure on an as yet unbuilt storage system to cover all supply interruptions from a grid based predominantly on wind and solar.

To put some data around this line of logic we can refer to a recent report by AEMO (the Australian Electricity Market Operator of the National Energy Market). A “Step Change” scenario is considered with 92% of all electricity coming from renewables and hydro plus fossil fuels producing the balance (3). This scenario is obviously not completely zero carbon but depending on the amount of gas vs coal it is 93-96% carbon free relative to current grid emissions.

At 93-96% zero carbon there will be pressure to go further and this will be as much about storage as it is about more investment in wind and solar. This scenario, which has 8 GW of dispatchable power to fall back on, requires over 10% of wind and solar generation to be delivered via storage. The importance of stored power will only grow as the dispatchable sources are removed.

The criticality of a conceptual battery and pumped hydro storage system,which currently only exists on a spreadsheet and in models, becomes even higher when one considers that there will be two or three weeks each year when cloudy, windless days sharply limit wind and solar generation. This is not something that a crazy climate sceptic invented – historic climate records show that there will be renewable “droughts” of variable duration each year. If 10% of renewables need to be delivered via storage on an annual basis then something like 50% will need to come from storage during these cloudy, windless weeks.

The Finkel argument anticipates a political resistance to having the country’s power supply completely reliant on an untested system of batteries and pumped hydro sites. At the first hint of a potential country wide black out all bets will off and renewable installations will be halted while an in depth study is conducted.

It is my belief that Finkel sees the value of a high efficiency gas fleet that is built now – replacing aging coal plants ahead of schedule. This fleet, designed to easily start up and shutdown as required, would produce a declining portion of the nation’s power as more renewables are added until it only operates for the few weeks each year when it is really needed. A hypothetical 8 GW emergency gas fleet running for 2 weeks/year means the grid won’t be 100% carbon free but at more than 99% carbon free some will consider it close enough for a decade or two until the storage infrastructure has been proven fit for purpose.

Climate activists, raised on a belief that fossil fuel interests can bend the will of elected officials, will object on the basis that the gas fleet will be used in preference to renewables or will be a disincentive to more renewable investment. It is not the policy of JTZC to endorse the wisdom or fortitude of elected officials so there is some risk that this will happen. Countering that, there is a much greater risk that a 100% renewables or bust policy will be rejected when bust becomes a possibility.