Climate change

Australia’s natural gas reserves have the unique potential to significantly reduce greenhouse gas emissions at low cost.

This could occur both within Australia through the greater use of natural gas (particularly for electricity generation), and throughout the Asia Pacific region by increasing liquefied natural gas (LNG) exports.

Natural gas offers the cleanest viable source of large-scale baseload and peaking power. When combined with other low or no-emissions fuels it can contribute enormously to reducing the growth in Australia’s greenhouse gas emissions. Electricity produced from gas produces 50-70 per cent less greenhouse gas emissions than current coal-fired power generation facilities.

As LNG, gas can also cut emissions in overseas export markets. For every tones of greenhouse gas emissions generated by LNG production in Australia, between 4.5 and 9 tonnes are avoided in Asia when this gas is substituted for coal in electricity generation.

Yet Australia’s tax regime disadvantages gas against coal, while subsidies and renewable energy targets disadvantage gas against renewable energy. A level playing field that allowed fuel-on-fuel competition would greatly enhance Australia’s effort to address climate change.

Throughout the world, national and regional policymakers are considering a variety of legislative and regulatory options to mitigate greenhouse gas emissions.  Assessing these options requires understanding their likely effectiveness, scale, and cost, as well as their implications for economic growth and quality of life.

An appropriately designed national climate change policy should lead to more natural gas being used in Australia’s power generation and resource processing.  This is because currently available natural gas technologies produce only 30 to 50 per cent of the emissions produced by current coal technologies in generating electricity.

Australia should make a contribution to reducing greenhouse gas emissions.

1. Australia should engage the international community in pursuing identifiable beneficial environmental outcomes through greenhouse gas emissions reduction action.

2. In this global context, Australia should develop a single national approach to reducing greenhouse gas emissions.  This national approach should be developed and implemented transparently to maximise community support.  It must provide stability and send clear signals to encourage sensible and broad-based investment. In addition:

• this approach should deliver emissions reductions at the lowest possible cost to the Australian economy – this is best achieved through a price on emissions imposed on the widest possible coverage of emissions
• in the event Australia takes action before comparable action is taken by the nations with which we compete, the approach should maintain the competitiveness of Australian export industries, particularly cleaner global contributor exports (including the LNG industry), by minimising the costs the industry faces in the absence of a carbon price being imposed on higher-emitting energy sources in customer and competitor countries.
• any approach should be administratively simple and not impose undue costs on participating companies.

3. Any additional measures targeted at reducing greenhouse gas emissions should only apply to sectors of the economy not covered by this single national approach.

Asia-Pacific Partnership

The Asia–Pacific Partnership on Clean Development and Climate (APP) consists of Australia, Canada, China, India, Japan, South Korea and the United States. This organisation works to accelerate the development and deployment of clean energy technologies.

The seven partner countries collectively account for more than half of the world’s economy, population and energy use. They also produce most of the world’s coal (65 per cent), cement (62 per cent), aluminium (52%) and steel (60%). The huge economic growth of China and India, and the continuing strength of the US and Japan, mean APP is likely to constitute an even greater proportion of global economic activity in the decades ahead.

The Australian upstream oil and gas industry is a member of one of the eight APP taskforces and during 2008/09 APPEA completed its work on the Asia-Pacific Gas Market Growth Project. The project was finalised and its report released in September 2009. This project is aimed at developing a larger gas market in partner economies to promote energy security, air pollution reduction, and the mitigation of carbon emissions in a way that promotes sustainable economic growth.

Australian Industry Greenhouse Network

APPEA is active in the Australian Industry Greenhouse Network, a group of industry associations and individual businesses that contributes to climate change policy debate. AIGN’s members see value in joint industry action on climate change policy issues in order to promote sustainable industry development.