MYTH BUSTING: IEEFA debunks the basis of the Government's gas strategy

We don't need more gas: we need energy efficiency and electrification to reduce gas demand, and deliver financial benefits.

In its recently released Future Gas Strategy the Australian Government claims that Australia will need to use gas "through to 2050 and beyond."

This means the Federal Labor Government will not only allow all of the methane gas that is currently available to be burnt, but will also allow new reserves to be found and exploited.

This is something the International Energy Agency called for an end to back in 2021. Achieving the objectives of the Paris Climate Agreement requires no new oil and gas developments.

The strategy is being slammed by climate scientists, environmentalists, Greens, Teals and just about anyone who is concerned about Australia meeting our Paris climate targets.

The strategy will not support state and territory government moves to ban fossil gas from our homes, and it sends a disheartening message to householders trying to decarbonise their homes.

The Institute for Energy Economics and Financial Analysis (IEEFA) has already debunked the basis on which the Government has developed its Strategy in its response to the Government - Reducing demand: A better way to bridge the gas supply gas.

They outline a much stronger financial case for supporting energy efficiency and electrification than investing in costly new supply options.

Here's a summary:

Claim #1: Additional gas investment and supply will be needed to avoid supply gaps in the domestic market and ensure sufficient supply for households, power generators and industry.

FALSE:  Affordable and focused actions to lower the amount of energy used in homes and industries will reduce the chances of not having enough energy on certain days each year, as well as during times of highest demand. This will also bring down the cost of energy bills.

Increasing gas supply, or importing liquified natural gas (LNG) is likely to have the opposite effect and will increase energy bills. IEEFA found that Australian households are locking in $1.2 billion in unnecessary costs for each year that new gas appliances continue to be installed. See https://lnkd.in/gXYbaSXg and https://lnkd.in/gH-Nv_PU

Electrification with efficient heat pumps also has the potential to dramatically reduce gas use in residential buildings and industry. If gas appliances were replaced by efficient electric appliances at the end of their life, the average Victorian home could save $1,200 a year on its energy bills.

IEEFA estimates that each year we delay ending the sales of new gas appliances costs Victorians a collective $912 million in locked-in lifetime costs.

Investments in energy efficiency and electrification reduce energy bills, while every dollar invested in new gas supplies, plus a profit margin, will have to be recovered through energy bills.


Claim #2: Australian liquefied natural gas (LNG) will see strong demand out to 2035 to meet existing contractual commitments.


FALSE:  The market for liquefied natural gas (LNG) is about to have too much supply because of all the new facilities now being built. Australia might have a hard time keeping up with Qatar and the US because they're adding more capacity and can produce LNG cheaper than Australia. See https://lnkd.in/gzmCHh-p


Claim #3: Key trading partners rely on Australian LNG and demand for Australian LNG “is expected to sustain throughout the transition”.


FALSE:  Japan and Korea, important countries that trade with us, are using less and less liquefied natural gas (LNG), and this trend is likely to continue until 2030. Japan already has too many contracts for LNG, selling more gas than it actually imports from Australia. By 2030, China is also expected to have too many contracts for the amount of LNG it needs.See https://lnkd.in/gzmCHh-p and https://lnkd.in/gaQgffh8


Claim #4: To make industries cleaner and reduce their emissions, we'll have to use a process called carbon capture, utilisation, and storage (CCUS)


FALSE:  Carbon capture, utilisation and storage is an expensive, unproven technology, with a history of failure and underperformance.  See https://lnkd.in/gHZPUnef

Author
Anne Delaney
SwitchedOn Editor
May 26, 2024
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