Coal rules Australia's energy fiefdoms

KING Coal still dominates Australia’s energy production despite a concerted effort by the renewables industry to dethrone it, but both oil and gas remain vital to Australian business, new government data shows.

Haydn Black

The Australian Bureau of Statistics says coal continues to supply around two-thirds of Australia's electricity generation despite an increase in renewable energy supply.

Non-renewable sources, largely coal and gas, accounted for 88% of Australian electricity generation in the 2014-15 financial year, down from 93% in 2008-9, while renewable power generation increased from 9.6% to 12% over the past three years.

Coal has lost some ground. It is down from 70% in 2010 to 64.9%, a robustness that is said to be due to the massive electricity demand from the six train development of the Gladstone LNG plants and the power requirements of thousands of CSG production wells across the Bowen-Surat Basin.

Hydropower remains the largest Australian renewables player at 5%, however wind power is catching up with 4% on the market, and new wind farms are constantly being constructed, whereas hydropower is effectively built out in Australia.

Australia’s reliance on brown and black coal is far above the international average, with the International Energy Agency saying that globally coal accounts for around 40% of power production, while the nation lags behind the international renewables average of 22%.

The Australian Petroleum Production and Exploration Association said the ABS data confirms that petroleum products are essential for Australian businesses, with more than $27.4 billion was spent by Australian businesses on petroleum products in 2014-15 in Australia including diesel ($19.8 billion), natural gas ($4.9 billion), petrol ($2.1 billion) and LPG ($538 million).

Most of the diesel and refined petroleum products are imported.

APPEA also said that, despite concerns over gas supply in the east coast, manufacturers have increased their consumption of gas by about 5% since the last ABS survey.

“Natural gas continues to be an essential energy source and feedstock for Australian businesses, especially for the manufacturing and electricity generation sectors,” APPEA CEO Dr Malcolm Roberts said.

“Natural gas accounts for about 27% of the energy costs of manufacturers – almost $2 billion in 2014-15. Gas is used both as an energy source and as a feedstock to produce essential items such as fertilisers, glass and bricks.”

Another $1.3 billion worth of natural gas was consumed in the electricity supply sector for peaking plants.

“As the share of renewable energy in our energy mix increases, we will need more gas-fired generation to ensure reliable supply. The more renewables we have, the more we will need gas,” Roberts said.

Of course, APPEA said the ABS data means state governments around Australia should not lock up ground for exploration.

The Australian coal experience contrasts with the US, where King Coal is rapidly losing the war.

US coal production is expected to decline by almost one third to 230 million tons, between 2015 and 2040 in Energy Information Administration’s Annual Energy Outlook 2016 reference case, which assumes the implementation of the Obama Administration’s Clean Power Plan.

If maverick Donald Trump is elected as US president, and scraps the CPP along with most other environmental regulations, coal production could be expected to remain stable for the next 35 years.

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