Carbon emissions.
The report below looks at the implications of exploiting Canning Basin and other unconventional gas resources for achieving climate targets. These resources are vast and the analysis shows that the domestic carbon pollution from the full exploitation of all of Western Australia’s gas resources would be 4.4 times higher that what Australia’s entire energy system can emit to comply with the Paris Agreement.
https://climateanalytics.org/publications/2018/western-australias-gas-gamble/
With its vast reserves, Western Australia is a global player when it comes to natural gas. By the end of
2018, its liquefied natural gas (LNG) production will account for around 11% of global capacity. Any
decision Western Australia makes when it comes to new gas projects will have a global impact. By the
same token, how the global energy markets respond to the global shift away from fossil fuels and
towards renewable energy will have serious implications for the profitability of current and potential
natural gas projects in Western Australia.
Full exploitation of the petroleum resources of the Canning Basin would increase very significantly the whole of Australia’s carbon budget under the Paris Agreement which of course Australia is a signatory of. (see below)
At present these developments focus on conventional natural gas resources but now the development
of unconventional resources, including exploiting shale gas in the Canning Basin using hydraulic
fracturing (fracking) is under discussion.
In addition to environmental impacts associated with fracking,
these resources contain much more energy and carbon than conventional resources and using them
would entail large carbon emissions.
Additionally, because shale gas and other unconventional
resources are so much more difficult to extract, they also have a substantially higher risk of leakage
and losses of methane – a powerful greenhouse gas released during the extraction process.
As a Paris Agreement signatory, Australia - and thus by extension Western Australia - need to reduce
their greenhouse gas emissions to be in line with the climate treaty’s long-term objective to hold
global temperature rise to “well below” 2°
C above pre-industrial levels and pursue efforts to limit it to
1.5°
C.
The world has warmed by 1°C since the Industrial Revolution and even at this level of warming
Australia is already experiencing severe climate impacts – from coral reef loss to devastating bushfires
linked to increasingly long and intense heat waves and droughts. Limiting warming to 1.5°C is
particularly important to Australia as it represents a chance to avoid much worse climate impacts.
To keep the chance to limit dangerous climate change within reach and meet the goals set out in the
Paris Agreement, there’s a limited amount of carbon the world can emit collectively – the so-called
global carbon budget. Australia’s share of this carbon budget – and Western Australia’s portion of it –
is correspondingly limited. The global carbon budget is shrinking rapidly even without any new fossil
fuel developments. We show in this report that any new gas development in Western Australia based
on unconventional resources – globally significant by their sheer scale – would undermine both
Australia’s and the world’s efforts to meet the Paris Agreement’s climate goals.
By signing the Paris climate agreement, governments, including Australia, agreed that greenhouse gas
emissions must reach zero globally within the second half of this century, which spells trouble also for
the natural gas market, as demand is likely to peak within the next ten to fifteen years.
As the world
begins to implement the Paris Agreement, governments are stepping up efforts to cut emissions and
roll out renewable energy. The combination of rapid progress in renewable energy and storage
technologies and the continually falling costs, which is making renewables more cost-effective than
fossil fuels, including natural gas, in a growing number of markets also casts doubt on the wisdom of
developing new gas projects in Western Australia.
At the same time, Western Australia is uniquely placed to take advantage of the economic opportunity
the Paris Agreement represents as the world transitions to a low-carbon future. Not only is it rich in
minerals needed to make the global low carbon transformation possible but it also has enormous and
easily accessible solar, wind and geothermal renewable energy resources.
This report does two things. Firstly, it shows how significant the impact of exploiting Western
Australia’s gas resources would be on achieving state, national and global climate goals.
It estimates
EXECUTIVE SUMMARY
Implications of natural gas extraction in Western Australia 2
the carbon footprint of Western Australia’s natural gas resources and compares it against the relevant
Paris Agreement-compatible carbon budgets – what the world can emit collectively, and what share of
it falls to Australia and Western Australia.
Secondly, it looks at how Western Australia could make use of its vast renewable energy potential to
transition from a natural gas giant to a renewable energy.
superpower.
The domestic emissions expected from all conventional gas reserves are about 40-75%
above what Western Australia’s energy sector could emit in order to comply with the
Paris Agreement.
Upstream emissions from domestic use of natural gas - including fugitive emissions during
extraction, processing, handling and transportation - would be about 300 million tonnes of
CO2 equivalent (0.30 GtCO2e).
• Emissions from direct use in WA – power production, mineral processing and LNG
production add approximately 1.4 billion tonnes of CO2 equivalent (1.4 GtCO2e)
• Total domestic carbon footprint of conventional gas reserves is about 1.8 billion tonnes of
CO2 equivalent emissions (1.8 GtCO2e). This is about 800 million tonnes above the Paris
Agreement-compatible emissions budget for Western Australia, which is one billion tonnes
of CO2 equivalent (1 GtCO2e). This budget is for the whole energy sector including power,
industry, transport and buildings, not just those parts that depend on natural gas.
• The domestic carbon footprint from Western Australia’s unconventional gas resources is
about three times what Australia is allowed to emit in order to comply with the Paris
Agreement. The carbon footprint of Canning Basin resources alone is equivalent to about ''double'' this budget.
The domestic carbon footprint from unconventional gas resources would fundamentally
undermine Western Australia and Australia’s contribution to global efforts to limit
warming to 1.5°C.
The Canning Basin and other unconventional gas resources are not needed in Western
Australia or Australia for the energy transformation required to meet Paris Agreement
goals.
WA consumes more gas than any other state in Australia: in 2015-16, WA’s domestic gas
consumption was 562 Petajoules (PJ), accounting for around 37% of Australia’s total gas consumption.
OPPORTUNITY FOR WA TO TRANSITION FROM A GAS EXPORTER TO A
RENEWABLE ENERGY SUPERPOWER
Overall, it can be concluded that production of unconventional gas would leave hardly any or no space
for the necessary transition of electricity, transport and industry towards zero emissions, even with
optimistic assumptions about reduced leakage rates.
This shows how unsustainable the extraction
and processing of these resources would be: exploitation of conventional, let alone unconventional
resources is fundamentally inconsistent with the Paris Agreement, in terms of associated domestic
emissions, even without the implications of end-use emissions abroad.
On the global scale, we have already shown that exploitation of additional resources is inconsistent
with the Paris Agreement, given that only half of the existing proven reserves could be used, let alone
any additional resources, and that a continuation of LNG export rates as projected risk investments
into stranded assets, given the expected decline in global gas demand.
The Paris Agreement creates a major opportunity for Western Australia to transition towards
becoming a renewable energy superpower in its own right.
This will mean that investments and
operations need to be transitioning away from fossil fuels to meet the Paris Agreement goals as well
as benefit from the opportunities of such a transition.
It is important to take a long-term perspective
to ensure a transition avoiding disruptions, but also avoiding locking into carbon intensive
infrastructure and thereby creating stranded assets.
Unlike coal, which must be phased out very quickly, gas plays an important but limited role in this
transition, allowing some time to develop alternative renewable energy industries, infrastructure and
markets.
Over commitment and over investment in gas, as would be the case for the exploitation of
the Canning Basin resources, would obstruct instead of facilitate the advantage of this once in a
generation opportunity.
Recent international assessments indicate that implementation of the Paris Agreement is beginning to
build momentum. For example the Climate Action Tracker, a scientific consortium of three institutions
including Climate Analytics, has calculated for the first time since it began its international
assessments in 2009, that the effects of climate policy in place and planned are likely to reduce
projected global warming to 2100 (Climate Action Tracker 2017c).
This reflects the build-up of
renewable energy in India and China, the stagnation or even reduction in coal use in many parts of the
world as well as a range of other developments.
While the outlook for gas demand in the mid to longer-term is not promising under the Paris
Agreement, this does not mean that the economic outlook for Western Australia as a major resource
exporter is under a cloud. Like in many regions, economic transformation is an essential element of a
strategy focused on economic growth and renewal. The Paris Agreement offers immense
opportunities to the region. Western Australia has very large and accessible renewable resources,
notably solar, wind and geothermal, as well as mineral resources critical to the global low carbon
transformation.
Western Australia hosts the technical, engineering and logistical capacities to take
advantage of these opportunities.
Apart from further development of mineral resources essential for the low carbon transition globally
(World Bank 2017), two major branches of renewable energy exports to replace the gas industry in the
mid-to long-term are under active discussion.
These are (a) the production and export of renewable
hydrogen, in one form or another, and (b) the export of renewable energy electricity directly to the
rapidly growing Southeast Asian region, and in particular to Indonesia.
Implications of natural gas extraction in Western Australia 52
Renewable energy carriers such as hydrogen can be burnt in gas turbines to produce electricity, or
directly involved with steel production.
South Australia has, for example, invested about $150 million
in scoping opportunities for hydrogen production systems (Dunis 2017).
The Pilbara and northwest
coastal regions of Western Australia have very high solar energy potential, as well as engineering and
transport infrastructure and capacities, which could help to facilitate a transition from gas export to
renewable hydrogen export over the next few decades.
In relation to direct electricity export, Indonesia is in fact very close to northern (Western) Australia
and is a rapidly growing market confronting serious air pollution and energy resource development
bottlenecks. Providing significant sub-sea engineering issues can be overcome, supplying renewable
sourced electricity to this region could become a very important market in the next 20 years.
In the
Pilbara, on the back of a recent pre-feasibility study, support is now being sought from the Northern
Australia Infrastructure Fund (NAIF) for initial work on solar photovoltaic capacity ultimately for export
to Indonesia.
