Gas is a fuel in transition, not a transition fuel

In delivering last night’s Solar Oration, hosted by ICEDS, Alison Reeve from the Grattan Institute made the case that the role gas plays in our homes and in society more broadly is changing. 

“I think that what the evidence shows is that gas’s time as a transition fuel has now largely passed. Instead, gas is actually a fuel that is in transition. It is moving from being widespread to being localised, from being the everyday fuel to being an insurance fuel, and from cheap to expensive,” said Alison. 

ACT’s progress towards net zero emissions 

The evening commenced with an update on the ACT’s progress towards net zero emissions. Fiona Wright Executive Group Manager for Climate Change, Energy, Water and Waste, ACT Government, said: 

“Our (ACT) emissions are now 46 per cent below 1990 levels. And on a per capita basis that equates to falling from around 11 tonnes of carbon per person per year to around 3.” 

Fiona also shared news of the Territory's recent national recognition. “In the last few days both the Electric Vehicle Council and the Energy Efficiency Council have put the ACT at the front of the pack nationally, on the EV transition and on energy performance policy.” 

Out of gas: managing the decline of gas in Australia 

Following the ACT Government update, the Solar Oration was delivered by Alison Reeve, Energy and Climate Change Program Director at Grattan Institute and Visiting Fellow at ICEDS.  

The title of the talk - 'Out of gas: managing the decline of gas in Australia'. Alison began her speech by providing her analyses of the state of gas production and use in Australia, highlighting that domestic gas use is largely on the decline. Alison’s speech drew upon the Grattan Institute report of the same name. 

Alison paid homage to Professor Mark Howden, inaugural ICEDS Director. 

“Climate change is with us now. 

“But even though that is the world we’re in now, I’m going to paraphrase something that I keep coming back to from Mark Howden, which he said at ANU Climate Update a couple of years ago," said Alison. 

Every half of a degree matters, every year matters, every choice matters. And to that, I’m going to add every tonne matters, and that is what brings me to gas, because if every tonne matters, then gas matters a lot, because gas is a lot of tonnes. 

“One quarter of Australia’s emissions come from producing and burning gas.” 

Alison went on to share her thoughts on Australian LNG exports, indicating that gas exports have probably peaked in the same way that domestic gas use has peaked. This is due, in part, to the following reasons - the amount of gas Australia can export is limited by the capacity of existing LNG trains (building a new LNG train would be a multi-billion-dollar project), Australian LNG is expensive to produce compared to other countries and demand from our traditional gas customers is on the decline. For example, Japanese demand for gas has fallen by 25 per cent since 2000. 

Gas tax reform 

Alison described the amount of revenue the Federal Government brings in from gas taxation as “perpetually disappointing”. 

“Australia’s gas resources belong to the Australian people, and those who extract it and sell it make profit from selling it. But the input that they get is there because of geological luck. It is not there because of innovation and ingenuity," said Alison.

“The way it’s taxed at the Commonwealth level at the moment is poorly designed. It’s very easy to avoid. And so it hasn’t raised the revenue that it could have. 

“I think the criteria that we need to keep in mind here for an ideal tax is it needs to be one that’s easy to understand and hard to avoid, and usually what that means is you tax volume, you don’t tax price,” said Alison. 

The event recording will be available on the ICEDS YouTube channel shortly.