News from the front desk, Issue 482: Five or six years ago the notion of cheap and plentiful gas available to our homes and offices might have been something to fear for its impact on climate and our greenhouse gas emissions.
This was the time when gas prices hit the front pages as Queensland sent its supplies to Japan, Korea and China, leaving the home fires to find alternative fuel. Prices soared and solar started to look even more attractive than before.
But things have changed.
With the “Technology investment roadmap discussion paper”, (misleadingly) subtitled “A framework to accelerate low emissions technologies”, minister for energy and “emissions reduction” Angus Taylor gives a nod to renewables as the future of energy but clearly wants to cap their potential to dominate energy supply by making it clear his favourites technologies are gas and carbon capture and storage.
The plans include a nice tax payer funded pat on the back (money from “we the people” remember) to the sector, such as a $6 billion gas pipeline across the country to Western Australia.
But if you think this means that gas will now fire up the offices and homes of Australia, that’s not so clear.
Once you start digging around this focus on gas turns out to be mostly hot air.
First, no one much wants gas anymore.
The property sector’s response on Thursday was more a collective yawn rather than a stampede to make new gas connections. More scratching of heads than worries that the Abbott years had been unleashed upon us again – like the walking dead.
Some sectors such as industrial and manufacturing will no doubt heed the call and take up more gas, but in office buildings and homes things have moved on.
What about the cogeneration and trigeneration plants lying dormant in the basements of many CBD buildings; will they be turned back on?
For those who’ve been mercifully spared this stage of the green buildings story, cogen and trigen are gas fired generators that can either capture and reuse heat from the generation of electricity (cogen) or convert it to cooling through absorption chillers (trigen). Many of these plants were installed with gusto into the basements of green buildings in the belief that gas was a good transition fuel, much lower in emissions than coal.
Most were turned off either in response to soaring gas prices or because kits were overspecified – too big and powerful for the job at hand and therefore inefficient.
Let’s not be too hard on these landlords. It’s one of the dangers of innovation: to get to a better future, you need to take risks and be prepared for some failures. Blackwater treatment plants for commercial buildings fall into the same category.
But with gas prices now low, you might reason that owners, worried about keeping down operational costs during this recession, will be tempted to fire up the plants again.
Following this reasoning, you’d expect a spike in the fuel we once thought was lower in emissions, but which the thinking and research now says is as bad as coal.
This is important because buildings create about half of all our greenhouse gas emissions.
One observer, Digby Hall from consulting engineers Northrop, says with the focus on gas, the government wants to “take us backwards 10 years”.
“It’s just as dirty as coal when it’s ignited and burnt and not as clean as we thought.”
And it won’t work, he says.
First, the economic horse of renewables has bolted. After the capital investment the rest is pretty much free, he says.
“It’s almost a passive investment.” Not to mention the jobs potential of green energy the opening up of the pathway to a just transition to a low carbon future.
It’s an interesting time, Hall says. On the one hand you’ve got the pollies paying strict attention to the science and the modelling on Covid and on the other, a complete blindness and deafness to the science and the modelling on climate.
He thinks some in the property industry will be tempted to go back to gas.
“Definitely, yes.” But not many.
Especially with the growing risk and reputation to brand property leaders join the move to go carbon neutral.
And especially after big gas supplier AGL is still smarting after the Norwegian sovereign wealth fund embarrassingly, publicly, dumped its shares. (The rumour is that AGL itself is moving away from installing gas in new homes.)
And especially when you can now build an all-electric big public building like the Melbourne Conservatorium of Music, which Amelia Milne, Aurecon’s associate in the built environment team, says is not exactly easy when you have big heating and cooling needs.
Key is the building has no gas and is designed to feed directly from a carbon neutral grid sources as they evolve.
There will be more such buildings.
Francesca Muskovic, national policy manager at the Property Council, says, “I hear from those guys it was an impossible task a couple of years ago but now they’re getting their heads around it.”
Her advice to consultants is to skill up for more all-electric commercial buildings.
Muskovic’s view is that the conversation on gas is overhyped.
“The use of gas into the future is what members are looking to get out of.”
What’s far more interesting to her members, she says, is hydrogen. There are legacy issues to deal with such as an overhaul of the existing gas grid to accommodate hydrogen (because it make pipes brittle if more than 10 per cent of hydrogen is mixed in). And the industry also wants its usual costings of transition to be well mapped out and understood.
But the leaning is clear, “Our members have strong ambitions around net zero emissions.”
More reasons why gas is not a thing
There are other angles that put into question the viability of gas into the future. They suggest Taylor could be posturing more than he’d (no doubt) like.
Some observers point, for instance, to the gap between the political rhetoric from the Feds on bilateral funding agreements with NSW on energy with their focus on gas, and the policy realities where feisty energy minister Matt Kean looks to be pushing forward on his net zero plans that he says will lead Australia.
“There’s a lot of noise but maybe it’s for the sake of the fossil fuel lobby,” one source says. Perhaps a touch of appeasement (with taxpayer funds) as the world moves on to better things.
Because surely the government knows what’s going on in the real world that it can’t control, no matter how much public money it throws at its fossil fuel limpets: the economics of cheap renewables, consumer demands, increasingly nervous corporates and institutions worried about their brand and the very real and very public impact of climate heating that will no doubt come around to bite us again next summer.
One clue to back up this thinking, apart from the open mention of renewables as the obvious economic choice, is that coal is mentioned in the discussion paper but the focus is carbon capture, not new coal fired power stations. Nuclear power is also mentioned, but that’s a safe political bet because everyone knows it’s like living in Disneyland.
Another deception is the price – it’s already cheap
Jake Thodey, principal engineer at Simons Green Energy, is another observer who agrees office buildings are unlikely to be big future customers for gas. His company installs cogen plants for industrial companies such as abattoirs and big commercial users such as clubs where they still make sense on price and, he argues, on lower emissions.
First, office buildings don’t generally use much gas so they find it difficult to take advantage of the bulk buying spot price opportunities that are available for amounts of around 10,000 GJ.
The sectors most likely to be attracted are facilities such as clubs.
The numbers look like this: A small RSL might have an electricity bill of about $20,000 a month (more than $200,000 a year). A cogen unit, costing around $500,000 can halve that cost of power, but into the equation must be added about $5000 a month for gas. Payback will be in about four to five years.
He says the big promise on gas is not falling prices but stabilising prices. That’s because prices are already low, something that’s not widely known.
Five years ago, when gas was on the front pages, the gas cost hit $15 a GJ on the spot market.
At present, he says, it’s about $5 a gigajoule (GJ) with Jemena the major gas distributor in NSW adding about $2.50 for each GJ.
On Wednesday it was $4.50.
This is not widely known, he says, and the gas companies are happy to keep it that way. That’s because people at home are paying effectively $35 a GJ.
He’s heard that, for Jemena, this means that for every apartment building they hook up they usually pay off the installation costs in six months.
“I hate to demonise the gas industry but Jemena is absolutely ripping off gas households,” Thodey says.
“People still think that gas is really expensive and gas companies are still pushing that wheelbarrow.”
Yet more hot air.