The University of Queensland's Global Change Institute undertook modelling of the costs and environmental benefits of shifting from coal to gas power generation. The research also compares this with the benefits of shifting to renewable energy.

The university's energy economics researcher John Foster says the findings contradict a widely held view that renewable energy is too expensive compared with fossil fuels.

He says the modelling also suggests gas may push up electricity costs and produce only marginal emission reductions compared with coal.

"While our findings might indicate that pursuing a gas-centric scenario will lead to increased prices and reduced carbon emissions, they may not be sufficient to change the dominant industry view, which is intent on replacing coal with gas," Foster said.

He said wholesale gas prices would be higher than converting to renewable power.

"There is no justification for the claim that a high proportion of energy sourced from renewables will drive up wholesale costs, in comparison to a power system heavily dependent on coal seam gas," Foster said.

The study considered 2 scenarios: Business as Usual, which reflected the dominant industry view as detailed in the draft Energy White Paper; and a Consumer Action Scenario, which predicted that renewable energy would be deployed as a result of public support and the industry would be influenced by a global roll out of new technologies emerging as a result of developments in Europe, Japan and China.

The results from modelling BAU, using Treasury projections for carbon price, predicts that generators in the National Electricity Market (NEM) will invest $61 billion to deploy 26GW of combined cycle gas turbines (CCGT), 2GW of open cycle gas turbines (OCGT) and 12GW of wind power to meet demand in 2035.

The investment in gas-fired and wind generation will result in a reduction in emissions, from 183 million tons of CO2 emissions per annum (mtpaCO2) in 2010 to 167 mtpaCO2 in 2035. This is sobering since a target to reduce emissions to 80% below 2000 levels by 2050 would require emissions from power generation in the NEM to decrease to 32 mtpaCO2.

A further reduction of 135 mtpaCO2 to reach the 80% target in just 15 years would be extremely unlikely.

Consumer Action scenario

The study predicts that this scenario may be likely if widespread support for renewable energy and a strong perceived need for action on climate change translates into the roll-out of Concentrated Solar Thermal with storage and geothermal power to replace coal-fired generation as it was retired. To transmit power from remote locations to load centres, investment in transmission infrastructure will be made.

In addition, high power prices would encourage community action to ensure against rising electricity bills. Political inertia would drive consumer-led action toward more sustainable sources of energy by investing in distributed generation technologies, including solar panels on rooftops (for domestic and commercial use) to help reduce the impact of meeting daily and summer peak demand and the deployment of micro-gas turbines, landfill gas, co-and tri-generation using renewable sources for gas.

The findings come just as the Federal and Queensland governments have backed the development of CSG and liquefied natural gas (LNG) industry to get the economy back on track.

“A mix of large-scale renewable energy generation, including solar and wind, together with consumer action to use power more efficiently, will deliver the most resilient Australian power market by 2035,” Foster added.