By JR on Tuesday, July 12, 2011
Their kneejerk hostility to mining trumps all else
THE gas industry has demanded the Greens stop trying to derail coal-seam gas projects, which are crucial if it is to build up to $60 billion worth of new gas-fired power stations to meet Julia Gillard's plans for a clean energy future and back up unreliable wind energy.
The Australian Petroleum Production and Exploration Association, representing firms such as Santos, said coal-seam projects in Queensland and NSW would provide a "great deal" of the gas needed to meet the expected 200 per cent rise in gas due by 2050 because of the price on carbon.
"The biggest constraint is ironically going to be the opposition to the development of coal-seam gas by the Greens," association chief executive Belinda Robinson said. "This is the party which has established itself on the moral high ground on reducing greenhouse gas emissions. "But it's also the party that poses the greatest threat to the development of the one fuel type that provides the greatest opportunity for significantly reducing Australia's greenhouse gas emissions."
Greens deputy leader Christine Milne has described coal-seam gas as a "disaster" for Australia, while protests from residents have flared in inner-western Sydney and the Hunter Valley, and legal action looms over a project in Queensland's Darling Downs.
The warning comes as figures compiled by the Australian Energy Market Operator for The Australian reveal it would cost about $2.4bn to build the gas plants required to replace the 2000 megawatts of energy production from high-polluting coal plants that will be closed. There would also be annual running costs ranging from $585 million to $1.46bn by 2030.
The government plans to buy out and close high-polluting coal-fired plants, with the "polluting dinosaur" Hazelwood power station in Victoria expected to be among those to close. As well as replacing coal, gas will be crucial to backing up wind, which is notoriously intermittent.
When demand for power rocketed to its highest level in South Australia last summer, the state's 1150MW of installed wind power generation was only able to contribute 60MW of supply.
Treasury modelling forecasts that under a carbon price system, between $50bn and $60bn of gas electricity generating plants will be needed by 2050, with between $1bn and $9bn needed in the next nine years.
More gas will be used to generate electricity as it will become more profitable when the carbon price starts. But there are fears that although Australia has ample gas reserves, electricity generators will struggle to secure long-term contracts for gas supplies because of the surging Asian demand for liquefied natural gas.
On top of this, domestic gas prices are expected to rise as LNG is exported from the east coast after 2015, while the gas transmission industry has warned that its costs will rise because a carbon tax is likely to increase the costs of operating the compressors that move large amounts of gas over long distances.
While there have been 9420MW worth of gas generation projects publicly announced, new figures from AEMO show none has moved to the advanced or committed stage that means a project can proceed.
Ms Robinson said coal-seam gas supplies would have to grow if more gas-fired power stations were to be built. But she said the approvals processes for the projects were becoming more complex, despite previous criticism from the Productivity Commission about convoluted approval requirements.
She said the approvals process was "often a reflection or a response to the level of political opposition being brought to bear". "If we are going to do this, the Greens must be accountable and responsible for the decisions they take and the extent to which they oppose the coal-seam gas industry," Ms Robinson said.
The switch from coal-fired power to gas is expected to require investments in upgrading the pipelines that transport the gas from the south to the north of the country, and can transport gas back down from the coal-seam projects in the north.
Extra capacity will also be needed for the pipelines that feed gas to the big cities.