Will Australia have a gas and coal export-led COVID-19 recovery?

May 11, 2020
Australia is embarking on a fossil fuel-led economic recovery from the pandemic.

Even while global oil, coal and gas prices are down as a result of the COVID-19 pandemic, the climate emergency continues with United Nations figures showing the highest ever greenhouse gas concentration in history observed at Mauna Loa Observatory in Hawaii recently.

While the next major climate summit, COP26, has been postponed until 2021, countries are being urged to unveil their next commitment to cut greenhouse gases this year. Australia, however, is embarking on a fossil fuel led economic recovery, with a new team spruiking the benefits of gas and coal.

The National COVID-19 Coordination Commission (NCCC), announced in March 25 by Prime Minister Scott Morrison, largely comprises corporate mining and energy sector CEOs and former Australian Council of Trade Union leader Greg Combet, a former sub-contractor with Australian gas giant AGL.

In charge is Neville Power, a former Fortescue Metals boss and a non-executive director of gas company Strike Energy, which has ambitions to become Western Australia’s next big gas producer.  David Thodey, his deputy, is a former Telstra CEO and the current chair of the Commonwealth, Scientific and Industrial Research Organisation (CSIRO). Other members of this special committee are: Catherine Tanna , a former managing director of Energy Australia after a career in the oil industry; career bureaucrats Jane Halton, Mike Pezzullo and Phil Gaetjens; and Paul Little, a property developer and managing director of transport company TOLL.

The fossil fuel industry, considered an essential service, has been driving full steam ahead while public scrutiny has been made harder during the COVID-19 lockdown. The federal government is overhauling federal environment legislation and the New South Wales government has given approval for Peabody Energy to expand a coal mine underneath Woronora Dam.

The federal government is determined that gas, coal and oil are the linchpins for Australia’s COVID-19 economic recovery. Energy minister Angus Taylor put it like this: “I like to think of the other side of Covid-19 as being a gas-fired recovery”.

Resources minister Keith Pitt is pushing the line that Australia’s fossil fuel resources are benevolently going to help other countries get back on their feet. “Our energy and resources will be important in getting not just our economy back on its feet, but vital in assisting our important trading partners to kick start their economies,” he said on April 17, the same day that Arrow Energy announced it was starting work on the largest undeveloped coal seam gas reserves in Queensland’s Western Downs region.

These views are shared by Power, who has also gone on record stating that “natural” gas is Australia’s solution for a clean and cheap energy future.

Sustainable plan needed

Their stark opportunism flies in the face of energy experts’ advice. Institute for Energy Economics and Financial Analysis economist Bruce Robertson said that while oil and gas prices have collapsed globally, Australia could still not produce it as cheaply as other suppliers.

“You can’t build a stimulus on it because it’s uneconomic. [Producers] can’t keep on losing money on it,” he said.

Chairperson of the Australian Renewable Energy Agency Martijn Wilder told Fairfax Media on April 28 that economies being rebuilt sustainably, post COVID-19, would have a competitive edge and that Australia risked being left behind. New Zealand and 17 European countries have signed on to a European Green Deal, which binds them to shaping their recovery around policies to reach net zero emissions by 2050.

Wilder said that if Australia overhauled its tax policy to support renewable energy and sustainable industries, including electric vehicles, it could reduce its dependency on foreign energy and a strategic oil reserve.

The Australian Energy Market Operator (AEMO) has said that there is no technical reason why the grid cannot sustain up to 75% renewable energy by 2025. (The current share of renewable energy in the National Electricity Market has been at around 25% in recent months and has occasionally for brief periods exceeded 50%.) It has already outlined a pathway to 90% renewables by 2040. AEMO chief executive Audrey Zibelman said that wind and solar are the lowest-cost way of providing electricity but to harness that power source to its potential would require a change in regulations.

The International Renewable Energy Agency and the International Monetary Fund (IMF) are championing investment in renewables as part of the COVID-19 economic recovery.

IMF spokesperson Kristalina Georgieva told the Petersberg Climate Dialogue on April 29 that COVID-19 economic recovery measures must also tackle climate change. She wants governments to spend on green technologies, clean transport, sustainable agriculture and climate resilience, and put a price on carbon. She wants “harmful” fossil fuel subsidies to be phased out. “The IMF estimates that a low-carbon transition would require $2.3 trillion in investment every year for a decade.”

German Chancellor Angela Merkel and United Nations Secretary Antonio Guterres also called for a “green recovery” from the pandemic, and there are roadmaps being put forward.

An International Renewable Energy Agency (IRENA) report released on April 20 found that renewable energy could power an economic recovery and help tackle the climate emergency.  IRENA director general Francesco La Camera said the global pandemic had exposed “the deep vulnerabilities” of the current system.

IRENA’s report found that accelerating investment in renewable energy would, in effect, pay for itself. Low-carbon investment would significantly pay off, it said. “A climate-safe path would require cumulative energy investments of US$110 trillion by 2050, but achieving full carbon neutrality would add another US$20 trillion.”

Just three European countries have exited from coal-fired energy. Belgium has been coal free since 2016. Sweden became coal free on April 16 and Austria a day later.

While the unprecedented decline in economic activity precipitated by the pandemic will likely drive the largest single-year reduction in global carbon dioxide emissions, unless governments like Australia drop their support for fossil fuel energy, we are headed into even bigger crises.

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