Australia is party to the Paris Agreement, under which, it had pledged to achieve net zero emissions by 2050. However, Australia’s economy is heavily reliant on the fossil fuel industry – the major contributor to greenhouse gas (GHG) emissions.

In 2020, Australia was ranked as the world’s 7th highest natural gas producer, with an annual production of 142.5 billion m³, triple that of a decade ago.

Australia became a net exporter of natural gas in 1988, and by 2020, 72% of Australia’s gas was devoted to exports – see Figure 1. Liquefied natural gas (LNG) is Australia’s second largest export commodity after coal, delivering revenue of over $50 billion in the 2018-19 financial year. Global demand for gas is likely to peak around 2025-30, and Australia’s gas exports are expected to decrease from the late 2020s, especially given that Australia’s gas is expensive to produce compared with international competitors, making it a risky proposition for the volatile future world market. Most of the exported gas is sold to Asian markets: Japan (38%), China (37%) and Republic of Korea (10%), with smaller amounts to Taiwan, India and other countries.

In 2020, Australia used approximately 40.9 billion m³ of natural gas, an increase of around 11 million m³ (+27%) over the past 10 years. The largest percentage of local gas is used for electricity generation (8.2% of total production), and the second largest percentage is the gas industry itself 7.5%), followed by manufacturing, domestic use, mining, and other minor uses – see Figure 2.

It is difficult to get a clear picture of trends in Australia’s GHG emissions over the past few years due to the influence of the COVID-19 lockdowns; however, Australia’s GHG emissions in the year to September 2021 totaled 501.5 million tonnes CO₂-e (carbon dioxide equivalents), which is 0.8% (4.0 million tonnes CO₂-e) less than the previous year. The reduction was mainly due to decreases in emissions from electricity production driven by increased adoption of renewable energy sources, a slight decrease in electricity demand, and lower furtive emissions despite increased emissions from transport and agriculture (Note: these figures are likely to grossly underestimate actual values because furtive emissions are not fully tracked, and values do not account for the emissions produced when Australian gas exports are burned overseas).

Natural gas is a hot political topic in Australia at the moment, with a federal election just a few weeks away. In a recent poll of 10,000 Australians, 62.3% of voters said that climate change is the number one issue that needs to be addressed. The Morrison Government, which is openly skeptical of climate science, is accelerating priority gas infrastructure projects, and has put the gas industry at the heart of its economic recover from COVID-19 pandemic.

The 2022-23 budget investment includes hundreds of millions of dollars to support low emissions LNG and clean hydrogen production, increases in private sector investment in low emissions technologies including hydrogen, and an enhancement of Australia’s supply chain security through new low emissions manufacturing facilities. However, individual Australian state and territories are implementing their own plans to reduce gas consumption for electricity production. Victoria, for example, plans to cut natural gas consumption by 25% by 2025 and by 50% by 2030, through reductions in household consumption (which accounts for about 60% of the state’s demand). Plans like these are already having a measurable effect: in 2021, renewable energy sources provided five times more power to the Australian grid than natural gas with gas providing 7.7% of the annual electricity generation.

These efforts, however, are at odds with the recent Government approval of gas projects such as the one at Scarborough of Western Australia, which, it is estimated, will produce more than 878 million tonnes of GHG emissions by 2055. The Government insists these projects will avoid a gas supply problem in Australia as has been seen elsewhere in the world, and no such shortage is likely to develop because Australia produces five times more gas each year that is used for domestic purposes.

Overall, the Australian Government gets a ‘thumbs up’ for state and territory initiatives to decrease local gas usage, but a big ‘thumbs down’ for increasing investments in natural gas extraction and export because of the huge amounts of GHG emissions that will be produced. The development and funding of new projects for increased production of natural gas and other fossil fuels are inconsistent with Australia’s broader goal of achieving net zero emissions by 2050, putting the country in danger of breaching the global goals of the Paris Agreement, and increasing the risk of further catastrophic weather resulting from global warming on our global environment.

Learn More Sources

[1] https://www.industry.gov.au/policies-and-initiatives/international-climate-change-commitments [2] https://worldpopulationreview.com/country-rankings/natural-gas-by-country [3] https://www.climatecouncil.org.au/resources/australia-must-move-past-expensive-polluting-gas/ [4] https://www.ga.gov.au/digital-publication/aecr2021/gas [5] https://theconversation.com/unjustifiable-new-report-shows-how-the-nations-gas-expansion-puts-australians-in-harms-way-151199 [6] https://www.appea.com.au/industry/policy/economic-contribution/ [7] https://climateanalytics.org/media/australia_carbon_footprint_report_july2019.pdf [8] https://www.statista.com/statistics/667184/australia-natural-gas-consumption/ [9] https://www.climatecouncil.org.au/resources/passing-gas-renewables-are-future/ [10] https://www.industry.gov.au/data-and-publications/national-greenhouse-gas-inventory-quarterly-update-september-2021 [11] https://www.climatecouncil.org.au/unjustifiable-new-report-shows-how-the-nations-gas-expansion-puts-australians-in-harms-way/ [12] https://www.climatecouncil.org.au/wp-content/uploads/2020/07/climate-media-centre-guide-to-gas.pdf [13] https://theconversation.com/climate-change-the-environment-and-the-cost-of-living-top-the-settheagenda-poll-181933 [14] https://theconversation.com/rising-authoritarianism-and-worsening-climate-change-share-a-fossil-fueled-secret-181012 [15] https://www.minister.industry.gov.au/ministers/taylor/media-releases/accelerating-priority-natural-gas-infrastructure-projects [16] https://theconversation.com/australias-biggest-fossil-fuel-investment-for-a-decade-is-in-the-works-and-its-greenhouse-gas-emissions-will-be-horrifying-172955 [17] https://www.minister.industry.gov.au/ministers/taylor/media-releases/2022-23-budget-backs-australian-industry-energy-security-and-net-zero-emissions [18] https://www.reuters.com/markets/commodities/destroy-demand-or-boost-supply-australia-shows-natural-gas-dilemma-2022-03-24/ [19] https://www.climatecouncil.org.au/resources/record-year-renewables-provided-5x-more-power-than-gas-2021/

This Post was submitted by Climate Scorecard Australia Country Manager Judi Walters

Figure 1. Historical trends in Australia’s gas production, consumption and LNG exports (Source: Geoscience Australia, https://www.ga.gov.au/digital-publication/aecr2021/gas, accessed 29 April 2022)

Figure 2. Uses of Australian natural gas with percentages of total production (Source: Climate Council, https://www.climatecouncil.org.au, accessed 29 April 2022)