Energy Superpower

The Future of Fossil Fuels

Australia is on the cusp of becoming a global gas superpower – and it may happen sooner than previously thought. A 2013 report by investment bank Morgan Stanley predicts that Australia could overtake Qatar as the number one liquefied natural gas (LNG) exporter on the planet as early as 2017…
Coal is also expected to play a key role in Australia’s export future, the Telegraph reports, and will help lock in the nation’s position as a major global energy supplier by 2030. By that time, combined LNG and coal exports are expected to equal Australia’s massive iron ore shipments.

Rich in fossil fuels and located near Asia’s developing economies, Australia is in an ideal position to supply growing energy demands. Even Japan, which has traditionally relied on nuclear power, has suddenly become dependent on LNG imports after the Fukushima disaster. Furthermore, the Australian government has recently announced its intention to help propel the nation toward energy superpower status, ensuring that the cards are fully stacked in Australia’s favour.

The recently released ‘Energy White Paper – Green Paper, Commonwealth of Australia 2014’ lays out the government’s intentions to support the growth of the energy industry. “While Australia consolidates its position as an energy superpower, it is essential that we have a long-term framework in which the energy sector can grow,” Minister for Industry Ian Macfarlane explains in the paper’s forward. He also acknowledges that “Australia’s economy and prosperity are built on access to secure, affordable and reliable energy”.

With Australian resources playing such a key role both at home and abroad, setting the appropriate policy is crucial, and Mr Macfarlane insists that the government is already taking steps in that direction. “Getting our policy settings right will facilitate further growth and enhance productivity,” he explains. “This means ensuring Australia remains a premier destination for investment in energy and resources. The Government has lifted the burden of the carbon tax and the mining tax and is continuing to cut red tape and unnecessary regulation, all of which will enhance Australia’s attractiveness for new investment.”

The paper also expresses government’s desire to remove barriers to new gas supplies and to assist in the development of well-functioning gas markets. The paper specifically pushes for the development of new, unconventional sources including coal seams and shale gas, which have the potential to create “huge growth” in export earnings. “The development of this industry is of national importance, because the growth in gas exports, coupled with ongoing coal and uranium exports, supports Australia’s position as a regional energy superpower,” the paper explains.

The paper also reveals notable changes in Australians’ attitudes regarding uranium and nuclear power. South Australia is the main source of uranium exports and 48 per cent of its residents now support nuclear power (which relies on uranium) while 33 per cent oppose it, the paper reports. Furthermore, in 2012 the Queensland Government repealed a ban on uranium mining and the New South Wales Government repealed a ban on uranium exploration. Australia is home to the largest known uranium resources on the planet – 31 per cent of the world total, according to World Nuclear Association, so this softening attitude could bode well for the mining industry.

Increasing gas production and energy productivity and stabilising electricity prices are key goals outlined for Australia’s near future. Overall, the nation is moving in the right direction with the repeal of the carbon and mining taxes, according to the paper’s findings, but there is still work to be done to help Australia reach the goal of energy superpower.

Not everyone is on board with this vision, however. Concerned over the government’s focus on fossil fuel exploitation, critics are pushing for a stronger emphasis on clean energy options such as wind and solar in Australia’s future.

Some of these critics are looking to use the power of the dollar to fight fossil fuels via an orchestrated divestment movement, which seeks to slow the industry’s advancement by stripping it of its debt and equity investors. The Sydney Morning Herald recently reported on Future Super, which claims to be the first super fund in Australia to exclude fossil fuels from its investment portfolio. Co-founder Simon Sheikh told the Herald that he believes the concept is gaining momentum and that there will be “a proliferation” of similar funds in the future. “One of the most powerful tactics in history when it comes to changing the social licence of an industry is divestment, to help people move their money out of it,” he is quoted as saying.

The Sydney Morning Herald also cites a recent Australia Institute report which found that “one in four Australians was willing to shift their superannuation into a fund that didn’t invest in coal and coal seam gas.” If one quarter of Australians were to follow through with this divestment, it could result in as much as $247 billion being moved away from fossil fuels.

Funds that support fossil fuels are still getting plenty of support, however. Notably, the Future Fund continues to invest in fossil fuels, even while dropping support for tobacco. When questioned about this decision during a Senate estimates hearing, ABC News reports that Peter Costello, the fund’s chairman, responded by saying, “I think it would be extraordinary if the government of Australia in its sovereign wealth fund said it was going to pull out of coal or gas or oil. These are very, very important industries to Australia.” Mr Costello added that, “It would be a very strange thing for a country like Australia, which exports coal and which exports gas, for its government to say we think these things are so filthy and so wrong that we won’t even touch them on the stock market.”

In fact, coal mining and oil and gas extraction are the largest energy industries in the nation, and contributed $64 billion to industry gross value added in 2013–14, according to the Energy in Australia 2014 report by the Bureau of Resources and Energy Economics. The energy industry as a whole contributed nearly $106 billion to industry gross value added during that same time period – around 7 per cent of Australia’s gross domestic product. In addition, the energy industry supports a large range of manufacturing industries and provides significant employment and infrastructure in every state and territory, Geoscience Australia points out.

Currently, renewable energy sources only make up around 5 per cent of Australia’s primary energy consumption and 7 per cent of electricity generation, according to Geoscience Australia. Driven by concerns over climate change, renewable energy use is certainly on the rise and its related technologies continue to break new ground, but clean alternatives such as solar and wind have a long way to go before they can realistically give fossil fuels a run for their money.

With the nation still heavily dependent on fossil fuels for its own energy – and with global energy markets looking to Australia for cheap, efficient energy sources – fossil fuels are likely to play a key role in the Australian economy for the foreseeable future. Australia has the resources to be an energy superpower – and significant steps are being taken to fully realise this vision, with both industry and government actively working to live up to Australia’s potential to power the world.

Strategic Resources

There are 17 classified rare earth elements, many of which have strategic purposes. Rare in name only, these elements are anything but scarce as they are found all over the world. The challenge rare earth elements pose is during extraction, as they exist in low concentrations and are difficult to separate from one another.

February 27, 2020, 2:48 AM AEDT


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