CCS, gas and clean hydrogen are the winners in the Australian budget. Pic: via Getty Images
GOT GAS: CCS, clean hydrogen and LNG – these are the real budget winners
Energy
share
- CCS, gas and clean hydrogen are the Australian budget winners
- Renewable energy and electric vehicles ignored
- Investment in gas is an investment in a mature sector
When it comes to gas and energy spending, the big pre-election Federal budget is completely unsurprising to the point that you could see it coming a mile away.
It was so obvious that if you really believed that a government that spruiked a gas-fired recovery as the means to revitalise the economy after the COVID pandemic would spend more on renewables, well, I have a bridge to sell you.
A complete lack of anything to support the uptake of renewable energy from Mr Frydenberg – instead we will see funding for the Clean Energy Finance Corporation, Australian Renewable Energy Agency and Clean Energy Regulator slashed over the next four years and nothing to boost the uptake of electric vehicles.
What we do get is $300m to support liquefied natural gas and hydrogen production in Darwin as part of a broader $1.3bn package backing carbon capture and storage, low emissions steel and clean hydrogen – the government’s code word for blue hydrogen that needs CCS in order to be anywhere remotely close to being an environmentally friendly source of the gas.
In short, the government is doubling down on its support for fossil fuels by betting that new technology will help clean up the resulting emissions.
Budget favourites aren’t everyone’s cup of tea
Let’s be clear. CCS is a proven technology that has worked before and will continue working in the future.
However, cost is very much an issue and that’s where the ability of that technology to address emissions is questionable.
There is the cost associated with finding the right geological structures in the crust that can safely store CO2, costs associated with capturing and concentrating the CO2, and costs for transporting the CO2 to the storage facility.
CCS will undoubtedly play a role in achieving net zero, but there are some very specific criteria that need to be met and you have to be dreaming if you think it is a one-size fits all solution.
Likewise, there is nothing wrong with further gas investment.
The European gas experience has proven that energy security is paramount and with Australia being fairly dependent on natural gas, it behoves us to maintain our ability to keep producing the fossil fuel up until renewables/energy storage/hydrogen can take up the slack.
What’s unnecessary is more government investment in natural gas in its budget.
Not only is the sector mature with plenty of infrastructure and established companies, we need to remember that unlike Europe, Australia is a net exporter of natural gas.
In a real crisis, exports will be the first casualty to ensure energy security.
Where the government can contribute is in cutting red tape and opening up new acreage for exploration.
But that’s not the path that the Morrison government is taking with its budget if it is returned to power in the upcoming federal election.
The alternative? Well, we’re going to have to wait for the Opposition’s budget response.
