Not since wartime has the concern for Australia’s energy security been so profound.
Australia is on the cusp of an energy crisis, decades in the making. And ripples from this crisis have the potential to spread throughout the Indo-Pacific region.
Despite New Year’s celebrations having barely wrapped up, local energy giant Woodside and Japan’s INPEX are the latest industry participants to voice their concerns about Australia’s energy security in 2024.
In what was already shaping up to be a busy political year, energy security will consume more and more of our leaders’ attention as threats to supply and generation mount, and local and export markets become increasingly nervous.
The clock is ticking because even while the much-vaunted energy transition stalls and investor confidence is in free fall, authorities have committed to the rapid closure of our existing baseload plants.
The need to secure Australia’s energy supply could not be more urgent and so our nation’s approach to providing energy security for domestic and international customers needs to be an all options on the table exercise. Science, engineering, and economics demand this.
Gas Is Key
Each day, more stakeholders are urging the federal government to include gas-fired power generation in its new Capacity Investment Scheme for Australia’s electricity markets.
The scheme, cobbled together at the end of last year to address stalling investment in renewables, seeks to use the government balance sheet to plug the gaps in our energy mix, but it explicitly excludes gas—the only fuel at hand with the capacity to balance out intermittent renewable energy.
An all too often neglected fact is the bedrock technical requirement that electricity generation and load must be balanced every second of every day of the year; and to balance intermittent renewables, the use of gas is non-negotiable.
The federal government’s scheme as it stands will only exacerbate, not ameliorate, the very problems that prompted its introduction.
Gas is also a vital export commodity that ensures energy security throughout our increasingly tense region.
Japanese LNG giant INPEX has expressed alarm at “unprecedented government intervention” and is reported to have warned the federal government that it was gambling with Australia’s sovereign risk profile.
With the head of the Minerals Council of Australia warning of declining investor confidence in the resources sector as a result of new government policy decisions, future Australian supply of all of the big three energy forms—gas, coal, and uranium—is now in doubt.
Full Renewable Energy Grid a Bridge Too Far
Exacerbating the threat, our energy system is coming up against the practical limits of the renewable energy roll-out, ones related to the fundamental physics that underpin the operation of the grid.Low-density, weather-dependent, non-controllable energy can, and does, contribute a limited share to the mix, but only up to a level of saturation. The belief that energy flows from the wind, sunshine, and rain—and can largely replace gas, coal, and uranium—is a scientific fantasy.
Meanwhile, various bans on nuclear energy remain on the statute books across our federation.
Experienced Canadian and American voices are warning Australia we risk being left behind in a global strategic race to secure supply chains of nuclear micromodular reactors, not to mention the larger small modular reactors for our main grids.
It is ironic that the energy policy trilemma—the need to balance cost, environmental, and energy security considerations—is recognised in the very first sentence of the federal government’s Future Gas Strategy consultation paper, released in late 2023:
“Australia’s gas policy settings impact energy security, affordability, the environment, and local economies. This is true in Australia and our export markets.”
Actions on the ground, however, do not reflect this recognition.
The first decision to make is to keep our current baseload power stations operating until Australia develops a realistic energy plan that can actually deliver energy. Given net zero ambitions, this is impossible without a role for nuclear energy.
In navigating the accumulated contradictions of Australia’s multiple self-imposed constraints on energy policy, the great challenge for our leaders in 2024 will be ensuring the lights do not go out at home or for our friends abroad.