Scott Morrison’s energy deal with NSW, announced this morning, is a huge win for fossil fuel company Santos, a major political donor with extensive ties to the Coalition.
Morrison’s deal with Gladys Berejiklian’s Coalition government will provide $960 million in funding, mostly through loans, for renewable energy projects and grid infrastructure in exchange for “commitments from the NSW Government to facilitate investment opportunities to inject an additional 70 petajoules of gas per year into the east coast market” and “an undertaking from the NSW Government to remove barriers to coal supply to the Mount Piper Power Station”.
At the National Press Club on Wednesday, Morrison argued expanding natural gas supply for power generation represented “climate action now”, that “we need to get the gas from under our feet” and that “there is no credible energy transition plan for an economy like Australia in particular, that does not involve the greater use of gas as an important transition fuel”.
That statement is clearly, and easily shown to be, false.
As Giles Parkinson explained at RenewEconomy, the Australian Energy Market Operator itself has shown that there is no need for gas to play an increased role as Australia moves toward a higher level of renewable energy sources and under several scenarios, including the “step change” scenario in which Australia moves rapidly to significantly curb emissions, gas plays a declining not increasing role.
As Bruce Robertson of Institute for Energy Economics & Financial Analysis noted, gas has been declining as a power source due to its high cost, despite a massive expansion in available gas. There is no currently committed investment in gas-powered generation.
Despite Morrison’s claims that Australia is a world leader in renewable energy investment, renewables investment collapsed in 2019 as a result of federal government inaction on climate policy and regulatory uncertainty.
Despite the reputation of gas as a “transition fuel” because it has lower emissions intensity than coal, the gas distribution and storage process — especially the cooling required for LNG — produces significant greenhouse emissions in its own right, in some cases sufficient to rival coal-fired power. Coal seam gas projects also require colossal amounts of water.
The energy deal announcement incurred the wrath of farmers potentially affected by coal seam gas projects like Santos’ Narrabri gas project, which is awaiting approval by the NSW government. As a number of observers and commentators noted, the 70 petajoule level announced by Morrison is the amount Narrabri is expected to produce.
The Lock The Gate Alliance called the deal a “betrayal from the Commonwealth and NSW governments”. Greenpeace also pointed out that the Mount Piper coal-fired plant generates toxins such as mercury and sulphur dioxide at far higher per unit levels than permitted in China or the EU.
Santos is a major political donor: in 2017-18 it handed over $95,000 to Coalition branches and slightly less to ALP branches around the country, with particular generosity aimed at the Queensland LNP and ALP. Queensland is home to its Gladstone LNG facility.
The company has handed nearly $2.5 million in donations to both sides of politics in the last 20 years, not including figures for 2018-19, which are not released until Monday. Santos also has extensive political connections with the Coalition and, to a lesser extent, the ALP.
Under the guise of supporting renewable energy projects, the government will in effect bribe NSW to hand companies like Santos licences to increase emissions by significantly expanding gas.
Santos shares immediately spiked nearly 2% when the ASX opened this morning — understandably given the coming windfall. Thank you taxpayers.