Mapping Australia’s energy future

Despite benefits from a new “golden age of gas”, the world must immediately slow carbon emissions or it will not be able to keep global warming to a two-degree increase, a Brisbane audience was told today.

International Energy Agency chief economist Fatih Birol gave his only public speech in Australia as part of the Energy Exchange series of four breakfast lectures, sponsored by the Energy Policy Institute of Australia.

Natural gas as an energy source burns fewer carbon emissions that burning coal for energy.

Dr Birol predicted Australia could be the world’s largest exporter of liquid natural gas by 2035, exceeding Qatar, and said Australia should invest in “social and economic” areas with the export revenue.

Natural gas is no silver bullet

However, Dr Birol said increasing the use of natural gas as an energy source alone did not guarantee that the world could keep carbon emissions to a 2 per cent increase trajectory.

“Alone, without any efficiencies, without nuclear, without CCS (carbon capture and storage), with renewables, natural gas alone cannot be the solution to bring us to the two degree trajectory, if there is not a CCS compact,” he said.

The IEA’s World Energy Outlook, that Dr Birol presented this morning, described coal as “the forgotten fuel” because it was rarely discussed, yet had produced nearly half of the increase in global energy use in the past 10 years, mostly in emerging economies.

Natural gas, oil and renewable energy provided the other additional power sources.

Dr Birol told the audience that if no new power plants were built, emissions from the existing power network around the globe would absorb 80 per cent of what was “permissible” to stay under a two degree increase.

“That is, of course, impossible,” Dr Birol said.

If the decision is made to keep operating “as normal” until 2015, 95 per cent of the emission rights will be eaten up by the existing electricity generating infrastructure, Dr Birol said.

“If there are no major legally binding agreements to go to a two degree trajectory worldwide until 2017, our chances to go to that two degree trajectory will be closed forever,” he said.

“The door will be closed forever and our energy system will be locked in for many decades to come.”

Durban talks plan emissions target to operate by 2020

Last weekend, United Nations climate talks in Durban negotiated a new mitigation regime against carbon emissions by 2015, and to get it working by 2020.

The agreement included, for the first time, China, India and the United States.

Scientists expect the world to warm by an average of 3.5 degrees this century if the current energy use mix is dramatically unaltered in the next few years.

However Dr Birol said the world faced the problem where hundreds of millions of people in emerging nations demanded better living standards, which meant higher energy demands.

Dr Birol said new oil markets would be constrained by geopolitics and faced higher production costs and uncertainty over carbon storage and sequestration.

“Whereas natural gas opens many new options in terms of new supplies and new demand options,” he said.

Gas companies need to have tighter controls from government

Dr Birol said natural gas industries must watch over its own standards to keep faith with local communities.

“Yes, we may well be entering a new golden age of gas,” Dr Birol told delegates this morning, reminding them the IEA predicted a “silent revolution” in natural gas production in 2008.

“I am not saying we are in the golden age of gas (now), because I see one major roadblock.”

Dr Birol said gas companies that did not follow strict and safe gas production technologies did the industry a worldwide disservice.

He gave an example of a US company in Wyoming that used poor cement in a plant to extract natural gas, which led to contamination of water supplies.

“This is a real problem, a real problem in many countries. There is a negative attitude to shale gas production in many communities,” Dr Birol said.

Dr Birol said the problem could be minimised with the existing technologies and said government should tighten controls on natural gas plants to improve their reputation.

“Governments should make precise strict regulations in order to make the industry play the game fair,” he said.

“The second message is for the industry, if you really want to see a golden age of gas, you have to apply golden rules and golden standards to your extraction and production technologies.”

Dr Birol predicted both China (now 5 per cent) and India had considerable room to grow their use of natural gas for industrial use, compared to 12 or 13 per cent for OECD countries

“Their is a lot of room for gas to increase its market share in China,” he said.

“India is the same.”

Fukushima damage cools western enthusiasm on uranium use

Dr Birol said the damage to Japan’s Fukushima nuclear plant from the 2011 tsunami had caused doubts in the minds of some western governments about the reliability of nuclear energy.

He said China, India and Russia had decided to go ahead with their expansion plans.

“However there are significant question marks in the minds of many governments,” he said.

Dr Birol said France was now considering reducing the share of energy provided from nuclear energy.

“This is something that could not have been imagined in France a couple of months ago,” he said.

“There is also a very strong debate in Japan about the future of the nuclear industry in Japan.”

Dr Birol said Japan was considering retiring many existing nuclear power plants.

Ziggy Switkowski, the former head of the Australian Nuclear Science and Technology Organisation, was a panellist at the function.

Dr Switkowski said the Fukushima incident set back the nuclear power industry in western countries.

“However the developing economies such as China, India, Russia, Brazil and north Africa, have reviewed their nuclear plans and endorsed them to confirm that they were going to continue on an aggressive growth path,” he said.

Dr Switkowski gave the example of India, which now has 20 nuclear reactors producing about 2 per cent of the country’s electricity.

He said the world’s 440 nuclear reactors would fall to about 400 after Fukushima and then begin to increase again.

“The expectation is that the investment in nuclear power will be driven by the investment by China and India, particularly by the year 2050, could see a doubling of that number,” he said.

Dr Switkowski said even at that scale, nuclear energy would provide only a quarter of India’s needs and less of China’s energy needs.

Dr Birol said the expansion plans were optimistic and governments plans should be viewed “cautiously”.

Energy industry ‘disconnected’

Clinton Foundation Clean Energy Projects director Tony Wood said the energy industry was disconnected from reality.

“If you look at it globally, Australia has, with the exception of large-scale hydro, an enormous potential in energy wealth,” Mr Wood said.

“But the biggest contribution we have to contribute to that world scene is CCS (carbon capture and storage).

“But as many of you will know the world of CCS is going slower, rather than faster in terms of what has to be done and I think that disconnect internationally is a big challenge.”

Mr Wood also noted Treasury modelling forecasts for carbon capture and storage and geothermal energy for 2050 were very optimistic.

After the function, Mr Wood said the impact of the federal government’s $23-a-tonne carbon pricing scheme on oil and gas which remain the cheapest energy sources, had to be calculated.

“You are still in Australia and in other parts of the world able to build a coal-fired power station without having to capture your CO2,” he said.

“Now you are not allowed to build a nuclear power station without capturing your nuclear waste.

“So until that changes, you wonder is the world really going to adopt carbon capture and storage which will drive up the cost of fossil fuels and therefore improve the relative affordability of renewable energy.”

Mr Wood said geothermal energy was the one form of renewable energy in Australia that could provide energy when it was available “on demand”.

Mr Wood said, until investment in small geothermal industries allowed them to investigate their market capabilities, they remained a potential.

“So the two energy sources the economic modellers are saying are going to be our saviours by 2050 don’t produce any electricity today because there is nothing to drive the investment,” he said.

Brisbane Times