Taylor leaps on the LNG bandwagon

ANGUS Taylor has picked up on industry’s more recent talking point, that gas and specifically Australian LNG exports will displace coal use in Asia and thus reduce global emissions.
Taylor leaps on the LNG bandwagon Taylor leaps on the LNG bandwagon Taylor leaps on the LNG bandwagon Taylor leaps on the LNG bandwagon Taylor leaps on the LNG bandwagon

Helen Clark



Taylor wasn't discussing this prior to the election but since then his portfolio has been expanded from energy to encompass emissions reduction.

Writing in the Australian Financial Review today he said that "more LNG-related carbon here means lower emissions in the rest of the world. Critics must take that into account" before delving into data from the latest government data which suggests "Australian LNG can lower emissions in importing countries by around 148 million tonnes of CO2 because electricity generation from coal has around double the emissions of gas".

"The success of our LNG exports means that we can help lower global emissions below what they would otherwise have been, by up to 27% of Australia's annual emissions."

The notion that LNG producers are offsetting carbon elsewhere in the world might draw criticism from activists but also opens the global carbon debate the government has been avoiding, but it is a more complicated picture than either Taylor and industry, or opponents, usually paint.

Woodside Petroleum has argued it should receive carbon credits for coal displacement via LNG exports and subsequent coal-to-gas switching in Asia, and also called for the certainty of a national carbon price, most recently at May's APPEA conference.

Resources minister Matt Canavan said at the same event the public returning the Coalition to Canberra for a third time proved business calls for a carbon price put it out of step with the Australian people.

In Western Australia Environmental Protection Authority chairman Tom Hatton said Monday of LNG's role in Asian coal-to-gas switching that "those arguments may very well be valid" though the body had made no decision on scope 3 emissions, which are centred on users of products rather the emissions which go into making them.

The WA EPA and Woodside recently butted heads over a draft emissions document from the former issued in March then withdrawn a week later that mandated net-zero emissions from all new projects and expansion to existing ones.

An International Energy Agency report of earlier this year noted that while CO2 emissions last year had risen alarming coal-to-gas switching had mitigated some 95 million tonnes of CO2 globally. It also noted the role renewables, and to a lesser extent nuclear power, had played in offsetting further emissions.


That figure has been cited by Woodside and Santos when arguing the value of LNG globally versus the emissions rise it has caused in Australia, now taken up Taylor despite the minister not offering much in the way of carbon price talk other than the old Kyoto credit canard, which is disliked by climate activists. 


In a piece published on platform Medium Dan Goucher of the Australasian Centre for Corporate Responsibility - which hammered both Woodside Petroleum and Santos at their respective annual general meetings and nearly forced through a climate resolution at an Origin Energy AGM last year - deconstructed some of Taylor's argument.

Goucher pointed out what industry already knows, which is that Australia's largest LNG export market Japan has primarily used its increased LNG imports to replace nuclear power after the Fukushima accident, while coal has held steady.

"This logic assumes that Australia's emissions from gas production and transportation are insignificant; that fugitives are accurately measured and taken into account; and, that Australian gas always displaces coal, rather than delaying a full scale transition to renewable energy, or displacing nuclear for that matter," he wrote yesterday.

Whether Australian LNG is delaying renewable uptake in sophisticated economies in North Asia that are already legislating for nascent hydrogen economies is debatable and its exports outside these nations largely concentrate on China, which is the world's largest coal importer and also installed more renewables capacity than the entire OECD last year.

South Korea, which is Australia's second- or third-largest customer month-to-month has recently been setting in place taxes that penalise coal while preferring LNG, suggesting moves to coal-to-gas switching. The nation dropped its tariff on Australian LNG from 3.5% to 0.5% on the signing of the Korea-Australia Free Trade Agreement of late 2014.

In China the case is more clear cut: coal-to-gas switching has been happening on a large scale mandated by aggressive policies from Beijing such as its Blue Sky policy, though this is primarily designed to deal with pollution and its immediate health hazards first and emissions and climate targets second.

This week China's heavily polluted Hebei province reported that for the first time it was in line with national guidelines on PM2.5 particulate matter in the atmosphere at 33 microgram per cubic metre versus the national standard of 35, though the World Health Organisation rating sits at 10. Coal-to-gas switching was credited in part.

Further afield and far from Australia's LNG markets the UK's first-ever coal-free days were underpinned by both gas, and renewables.

The UK's baseload power was made up last year of 43.9% gas, 27.5% renewables and just 6% coal-fired generation and gas and renewables uptake has driven coal out of the market to a point, though there are plans for increased renewables to eventually do the same to gas.

Long championed by industry too is that United States Energy Information Administration data has shown a decrease in emissions since 2017  as coal was retired and cheap, abundant shale gas began power the nation.

However gas flaring and venting of methane across the Permian Basin in New Mexico and Texas is at over 650 million cubic feet per day, according to Rystad Energy as takeaway capacity cannot keep up and pipeline outages exacerbate issues, though this may change in the latter half of the year as new gas pipelines come online. Given methane profile as a much more damaging greenhouse gas than CO2 when not contained this undercuts the argument somewhat on a local scale of gas' inherently clean profile.

BP's 68th Statistical Review has suggested energy demand and emissions rose in tandem last year driven by weather events. It found renewable installation, while one of the fastest growing energy areas cannot keep pace to offset overall emissions, but that were 10% of global coal generation switched to gas emissions could come down.

Taylor may choose to ignore these points but if he's going to take note of the Australian petroleum industry's latest talking point he may find he has to pick more than one and look at national carbon pricing too.


  • FREE coverage of the coronavirus pandemic. Visit our COVID-19 hub
  • NEW: 2020 Social Licence Report - where is the industry heading? Read more
  • EMAGAZINE: ENB's latest special print edition is now online. Read here