Issue 28 April 2007
The record-breaking Australian Petroleum Production & Exploration Association conference in Adelaide this month -- it attracted more than 1,600 delegates, the most for an APPEA conference on the eastern seaboard -- saw the upstream oil and gas industry renew its drive for a dash to gas in new power generation.
Most of the commentary and lobbying has been said before, but Santos chief executive John Ellice-Flint opened an interesting new front in the industry's confrontation with the coal sector over the fuel market for the 10,000 or so megawatts of electricity plants to be built in the next 10 years.
The debate, argues Ellice-Flint, is as much about water as it is about carbon. "How we ignore the indelible relationship between energy, electricity, carbon and water in the current environment is beyond me," he says. "It's time for government and the media to be talking about the inter-relationship of carbon, water, electricity and energy forms in the same breath.
"If I read another editorial or another article that simplifies Australia's energy and carbon challenge over the next 20 years to clean coal, renewables and nuclear, I will lose the last of my follicle resources," Ellice-Flint adds. "How do people think we are going to transition to a future cleaner energy mix overnight? We all know that substantial technical advances are required in all areas to develop large-scale clean energy sources."
The Santos boss, of course, sees natural gas as have a major role to play here and now, pointing out that his product emits up to 60 per cent less carbon dioxide than black coal and outperforms brown coal in this respect still more.
The second string to his bow is the claim that most existing coal-fired generators use 200 times more water than equivalent dry, gas-fired power plants -- consuming 2,000 litres per megawatt hour. "In eastern Australia," says Ellice-Flint, "that translates into coal-fired generators using more than 800 million litres per day, or 300 Olympic-sized swimming pools of water. The gas-fired equivalent would use just two Olympic pools per day.
Ellice-Flint also raises another interesting plus for the onshore gas supply industry in the debate on greenhouse gas abatement. He points out that it has the potential to play a major role in carbon storage. "We already have the technology to store carbon dioxide in depleted fields," he says. "We have been storing gas in central Australia for more than 15 years and have reservoirs that could store more than 20 million tonnes of CO2 per year over a very long period of time."
Spending, committed and proposed, on low-emission electricity projects is nowhere near enough, says one of Australia's leading corporate advisers on energy.
Ron Loborec, national leader of Deloitte's energy, infrastructure and resources division, argues that "$100 million here and there" for demonstration plants will not address Australia's needs for new baseload power with a low environmental footprint nor the national aspiration to show leadership in global warming mitigation.
Loborec says public sentiment is driving global warming policy in Australia at present -- resulting in announcements designed to persuade voters that their concerns are being heard -- and the major political parties have to do much more to establish an appropriate platform to meet the twin Australian challenges of reliable, affordable power and reduced greenhouse emissions.
He adds that both government and industry have to review the financial commitment they are prepared to make in electricity technology development.
"The IT industry has been prepared to spend far more money on innovation than the energy sector," he says. "The level of capital spending required to deliver clean coal technology by 2020, or earlier, goes way beyond what is currently committed. Policymakers have to get on to the front foot to produce much stronger investment."
He agrees that there is an opportunity for Australian innovation to win worldwide market, especially in China, where 600 coal-fired power stations are planned for development in the next 20 years.
"The Chinese are the world's quickest followers," Loborec says. " Make clean coal technology available and they will be fast to adopt it."
He argues that the current status of zero emission projects in Australia and the United States will deliver only a small amount of commercial power by the middle of the nextdecade, by which stage both countries will have had to invest substantially in new electric generation.
Prime Minister John Howard used his keynote address to the Victorian Liberal Party in Melbourne -- delivered at the same time the ALP national convention in Sydney was agreeing to change its stance on uranium mining, but not only nuclear power in Australia -- to stake out afresh his platform for energy and climate change policy ahead of the federal election.
"We have to understand the nature of our economy," Howard told the Victorians. "It is virtually unique: a low population, a very high standard of living, a vast amount of fossil fuels and a huge, largely uninhabited continent. And the last thing we should do is adopt a European solution for an Australian problem."
Howard's way forward on energy policy embraces both clean coal technology and nuclear power. "The cheapest form of generation in this country is obviously coal -- its very plentiful and also very dirty in its combustion. If you are to reduce greenhouse gas emissions, you must progressively find an alternative to the current use of coal -- and that inevitably brings you to clean coal technology. As you do that, you must accept that the cost of generating electricity is going to go up. And, as you do that, nuclear power becomes more economic."
Surprisingly ignoring natural gas and coal seam gas, Howard asserted to the Victorian Liberals that, on the advice of the Australian Chief Scientist, he saw only two sources of fuel for baseload power: coal and nuclear. "Wind and solar deserve appropriate levels of encouragement," he added, "but you cannot run (baseload) power stations on them." He made "a firm commitment" to Australia's participation in the next generation of advanced nuclear technology.
Industry Minister Ian Macfarlane did not lose the opportunity of the APPEA conference pulpit reserved for the national energy minister to have another go at Western Australian Premier Alan Carpenter over his proposal to mandate retention of a portion of the state's massive natural gas reserves for domestic use.
Macfarlane told the conference in Adelaide that Australia is on track to be one of the world's top three LNG exporters within 10 years.
"Australia is in an excellent position," he claimed, "to meet strong future demand in Asia and North America. The Pluto, Gorgon, Browse, Ichthys, Pilbara and Darwin phase 2 LNG projects have the potential to increase our production to more than 60 million tonnes a year within the next decade -- almost four times current capacity."
He also noted ABARE predictions that domestic consumption of natural gas will rise by four per cent a year to 2030 and almost double in 25 years.
However, Macfarlane argued there is no place for uncommercial state government-mandated (read WA) domestic gas reservation policies that impose artificial constraints on export capacity. " They will harm our international reputation, erode industry confidence and potentially stop LNG projects from going ahead."
One of APPEA's main international speakers, Jesse Ausubel, director of the Program for the Human Environment at The Rockefeller University in New York, was another who devoted a large part of his address to talking up the potential of methane and nuclear as important steps on the long path to the decarbonisation of the global economy, but he did not miss an opportunity to slam dunk the renewable energy sector.
"Renewable forms of energy may be renewable but calculating spatial density proves they are not green," he said. "The best way to understand the scale of destruction that hydro, biomass, wind and solar promise is to denominate each in watts per square metre that the source would produce.
"In a well-watered area like Ontario, Canada, a square kilometre produces enough hydro-electricity for about a dozen Canadians while severely damaging life in its rivers. A biomass power plant requires about 2,500 square kilometres of prime farmland to equal the output of a 1,000 MW nuclear power plant on a few hectares. To equal the output of the same nuclear plant, windmills must cover about 800 square kilometres in a very favourable climate. Photovoltaics require a carpet of 150 square kilometres to match the nuclear plant.
"No economies of scale adhere to any of the solar and other renewable sources, so trying to supply India or eastern China would require increases in infrastructure that would overwhelm these already crowded lands."
Ausubel also pointed out that a typical wind system requires 130 times as much steel and 30 times as much concrete per megawatt hour produced as a typical natural gas combined cycle plant.
In changing climate, he added, renewable energy operations confronted substantial risk. "Clouds may cover the deserts investors covered with photovoltaics. The wind may no longer blow where the windmills were built. Rain may no longer fall where dams are built and areas planted with biomass for fuel.
"Without vastly improved storage, the windmills and photovoltaics are supernumeraries for the coal, methane and uranium plants that operate reliably around the clock, day after day."
The "Earth Hour" pursued on Saturday, 31 March exemplifies the problem society confronts in dealing with global warming: the pursuit of style overs substance.
Set that gesture against the International Energy Agency's reporting that use of coal is growing at a faster rate than almost any other fuel, rising by almost five per cent in 2005. It predicts that coal-based power generation will triple by 2030 -- and that coal will be providing 33 per cent of global electricity generation at that point, down from 39 per cent today.
Note that burning coal to make power today results in the emission of 6.3 billion tonnes of carbon dioxide a year.
Note, too, that the largest emitter of carbon dioxide will soon be China and that its plans for power development involve the continuing construction of hundreds of coal-fired plants. And China is not alone in its startling growth -- the so-called BRICs economies, Brazil, Russia, India and China -- could account for more than half the size of the currently dominant G6 nations (the US, Britain, Germany, Japan, Italy and France) by 2025, according to Goldman Sachs. Currently they are worth less than 15 per cent. With their growth will come large increases in greenhouse gas emissions.
If the BRICs do come anywhere close to meeting the projections for their development, the consequences for global warming are significant, to put it mildly.
None of this is an argument for doing nothing or for pursuing only token amounts of abatement in Australia. Quite the contrary. But our primary focus, when the global outlook is considered, should surely be mostly on two things -- finding cost-effective ways to sequester carbon emissions and working harder and faster towards low-emission and zero-emission technology development.
The technological developments we achieve here can be magnified an enormous number of times if taken up by China and other fast-growing "developing" nations (see Ron Loborec's comments above).
Which is why it is painful to see the "Earth Hour" gimmick, worthy though the notion may be, given overwhelming media attention, with hardly a paragraph in newspaper or a second on electronic media devoted to a scientific report, out this month, confirming that the Gippsland Basin, offshore Victoria, has the potential to permanently store very large volumes of carbon dioxide.
Victorian Energy Minister Peter Batchelor announced that the report identifies the offshore and onshore Gippsland basins and the onshore and offshore Otway basins have favourable characteristics for CO2 storage. Batchelor points out that Victoria's power stations now emit almost 70 million tonnes of CO2 a year, somewhat more than half the state's emissions, and there is the capacity to store them in the offshore Gippsland Basin's run-down petroleum wells and natural deep geological features alone for 120 years.
This would represent a reduction of a third of Australia's power station greenhouse gas emissions.
It also represents good news economically, given the $5 billion Monash Energy plan to develop a project to convert Victorian brown coal to diesel fuel at a time when buying transport fuel from overseas has turned Australia back to being a net importer of energy despite our massive exports of coal, uranium and LNG. Being able to sequester the project's CO2 in the offshore Gippsland Basin is a critical issue for its success.
Most Australians must have heard about "Earth Hour" through the media. Many people overseas learned about it, too, through high-profile coverage by television stations around the world. How many, here or abroad, heard the good news about Victoria's sequestration prospects -- even though the Victorian Government spoonfed it to journalists through a media statement?
How far can technology developed here go towards international efforts to reduce electricity emissions? To quote Batchelor: "Mounting scientific evidence that it is feasible to capture and store large amounts of carbon put Victoria in a position to patent clean coal technologies that could be used in other countries, particularly countries like India and China, which have similar brown coal reserves and a massive demand for power."
(By the way, isn't it interesting that no-one talking up "Earth Hour" has spared a thought for the idea that doing it once a month across the country and accumulating the money saved in power bills could be built in to a useful, albeit small contribution to providing energy for light and cooking in some of our poorer neighbouring countries? As they say about Christmas gifts, it is the thought that counts -- but far too much of the thinking that is going on here is wrongheaded, that's the problem.)
Keith Orchison
29 April 2007
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