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Jan 11

With Australia’s Federal Government committing to review options for a Carbon Border Adjustment Mechanism to complement the enhanced Safeguard, it’s a good time to revisit this 2021

@The_AiGroup

report on how a #CBAM works. Full of juicy info, I promise! cdn.aigroup.com.au/Reports/2021/C

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Victoria’s new-look SEC could sell power direct to homes and businesses

Feb 3

Victoria’s new-look SEC could sell power direct to homes and businesses - The Age (this story describes this possibility as the first time in decades that Victorians might buy power from a public entity. Could have mentioned Feds’ Snowy-owned retailers!)

apple.news

The Andrews government is considering an expansion of the State Electricity Commission that could allow Victorians to buy their power direct from the government for the first time in more than two...

earthresources.vic.gov.au

Feb 3

Eg existing Otway Basin offshore wells & onshore processing took several years of exploration and 2-3 years development.

Gas producers are currently up in arms about the implications of the Mandatory Gas Code of Conduct for new investment. Personally I think that's wildly overblown. But assuming ordinary levels of investment enthusiasm, gas development can still take many years.

New processing capacity and pipeline capacity may be needed for some sites while others may be able to piggyback on existing infrastructure for offshore production or SA.

3b: how long will it take for Vic onshore conventional gas to be a thing? It could be a while. The legal/regulatory side is in place (though specific permitting then needs to happen). Commercial exploration can take a while, then development of specific wells

So plausibly-but-with-lots-of-uncertainty-either-way, Vic onshore conventional gas could supply maybe 9% of current Vic demand or 0.9% of Eastern demand (but more as demand falls). Judgment: enough for people to argue about; interesting for an offtaker or two; not transformative

(Aust & Vic gas demand will fall from current levels; AEMO's central Step Change scenario has a modest decline to 1,787/135PJ by 2040, but if we're actually on track to net zero emissions by 2050/45 gas demand will fall much further)

How much gas would 470+77PJ be if it's there and commercial? If *all* produced over 30 years (brisk!), that's 18 PJ/yr. Interconnected East Coast market is ~2,000PJ/yr today, of which ~1,400PJ is exports. Vic demand is ~200PJ/yr today.

Those are resource estimates based on a bunch of analysis of existing rock cores and other data. But nobody has gone to the prospective areas, drilled for gas, found it, and established characteristics for commerciality. All possible and doable, not yet done.

3a - how much onshore conventional gas is there? Nobody knows for sure! but the major geoscience effort to date (earthresources.vic.gov.au/projects/victo) produced a medium estimate (50% chance of underestimate) of 470 petajoules in the Otway Basin and 77PJ in the Gippsland Basin.

Victorian Gas Program

The Victorian Gas Program delivered a comprehensive scientific evidence base to underpin decision-making about onshore conventional gas, offshore gas and underground gas storage.

3. Onshore conventional gas development was banned for several years, but the ban was lifted in 2020 and regs to guide new exploration & development commenced in late 2021. However! a) there may not be all that much of this gas; b) getting going may take a while

2. Conventional offshore gas production is not banned and is Vic's dominant current source. There are some new investment prospects but overall offshore output seems doomed to fairly rapid decline - we've got most of the gettable gas

Quick note about Vic gas production prospects, because the topic keeps coming up in debates about East Australian gas: 1. Unconventional gas production is banned and support for that seems absolutely bipartisan (it's in the State Constitution! though Parliament can change that)

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⁩ reports: Energy bill relief payments pushed back to May Budget due to complications; household efficiency & electrification push taking further shape. (nb: there’s a lot of complexity, State interactions re household upgrades too!)

Budget to contain $3b of rebadged power price relief

Promised discounts will be repurposed in a cost of living package to be unveiled in the May budget.

Feb 2

The price levels against which commerciality of new gas projects are tested by proponents suggest there’s pleeeeeeeeenty of scope for development far short of recent price levels

Stray observations: The idea that ACCC-administered Mandatory Code price provision will not give due regard to the risk profile and return needs of gas exploration and development is hard to credit, given the depth of their engagement with supply issues here

Demand projections include a chunk of electrification as per AEMO Step Change. Policy to achieve this is not yet in place; but also the rate of gas transition in Step Change is well short of emissions targets. ACCC has no demand side ideas to offer, alas (not really their job)

LNG imports look crazy today; who knows, but by decade’s end global gas markets could well be awash and prices low.

Shortfall risk may be overstated because: * main projection doesn’t include LNG imports, but a terminal is being built & will be there if there’s demand (there is not much demand now) * there are lots of local supply options that could go ahead * demand side is underdone

Lots to think about in the latest ACCC gas inquiry report. accc.gov.au/system/files/G * Shortfall risk in near term has eased greatly since last time (HOA + sabre rattling) * 2027+ shortfalls look big without new actions * this may be too pessimistic but needs focus!

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Tennant Reed Retweeted

AER

@aergovau

Jan 30

Welcome Anthea Harris - our new CEO. Anthea has extensive experience in the energy sector, most recently as CEO of the Energy Security Board. We’re excited to have her on board as we continue to ensure energy consumers are better off now & in the future. bit.ly/3Xmz0MG

Safeguard Bill is as critical to all parties as to industry

Jan 31

SGM can shape the management of fossil Scope 1 while those industries last; and investment and management by industries with a long term future. Both are very important and details worth arguing about! But emissions overseas will be overwhelmingly determined by policies overseas.

Boring perspective: a lot of Safeguard fights are about future of coal and gas exports, but these are not actually at stake in this policy. - in medium term those exports are highly profitable with or without SGM - in long term customer commitments mean those exports are toast

Better release link:

"While debate over the detail of the reformed Safeguard Mechanism will continue, the crediting Bill before Parliament is essential policy infrastructure and it is strongly in everyone’s interest to...

Comment from

on the Safeguard Mechanism crediting legislation - "as critical to all parties as to industry", "Blocking it risks being self-destructive." elink.clickdimensions.com/m/1/43726113/0

13yo asked what I meant when I said I’d been doing some over-complicated spreadsheeting. So I told them. “I’m sorry I asked!” was the verdict

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Empirically grounded technology forecasts and the energy transition

Jan 27

There were several strong Wonkys contenders among the papers we discussed last year, but this was a unanimous decision with

@FrankieMuskovic

and

@LukeMenzel

. Who shall triumph in 2023??? Can’t wait to read the next wave of papers!

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Kudos to Rupert Way, Matthew Ives,

@PennyMealy

and J Doyne Farmer at

! Full paper at doi.org/10.1016/j.joul Well worth a read (including much longer attachment S1 if you’re very keen!)

sciencedirect.com

Rapidly decarbonizing the global energy system is critical for addressing climate change, but concerns about costs have been a barrier to implementati…

Spoiler Alerts have expired and I am pleased to tweet that the winner of the inaugural Let Me Sum Up Podcast Wonky Award for best climate/energy paper of 2022 was… “Empirically grounded technology forecasts and the energy transition” podcasts.apple.com/au/podcast/let

This specific worry about Code unpicking existing contracts should be able to be dispelled -

@angelamacd

my understanding from DCCEEW & Tsy is there’s no retrospectivity intended, as per the emergency cap. Hopefully someone can underline that on the record!

Hand-wringing aplenty to influence final shape of mandatory gas code. Perhaps withheld capital will be temporarily redeployed to a live-action adaptation of “Hard Times”.

Senex pulls $200m equipment order in gas investment freeze

Gas producers’ warnings that the market intervention would stymie investment have moved beyond threats as projects in Queensland and Victoria are put on ice.

China feeling global gas squeeze too, especially amidst cold local winter and especially for households (biz just paying more). Piece suggests increased exposure to gas market probs after smog-cutting coal-to-gas push of recent years via

@NYTimes

nytimes.com

Natural Gas Shortages Hit China as Temperatures Plunge

Local governments starved for cash after enormous spending on costly “zero Covid” measures cannot afford to keep up adequate supplies of gas.

Tweeting it into existence

Jan 24

Renewing my periodic proposal to fix Australia Day contro by moving it to 26 September, the anniversary of Australia II’s victory in the 1983 America’s Cup. ✅ involves boats ✅ involves criminals (Bondie) ✅ pleases nostalgic oldies (like me) ✅ only US yachtsmen dispossessed

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Jan 24

A thaw on gas contracting? One significant upstream and retail player resumes offers for 2023 gas (up to 8 PJ for now, so not nirvana in a 500-ish PJ local market. And as noted, final price to customers won’t be $12/GJ! But helpful)

Small manufacturers scramble for gas from Shell

Small manufacturers are unlikely to source any of Shell’s promised gas supplies, which is likely to go to large-scale commercial users and gas peakers.

Jan 24

Here’s the report itself: aemo.com.au/-/media/files/

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⁩ has key takeouts from the latest ⁦

@AEMO_Energy

⁩ report on energy markets in the last quarter of 2022. Power prices & futures down, renewables integration advancing. Gas prices eased a bit (🧊contracting not in focus here)