What’s next for natural gas as a transportation fuel in Australia?

A new study insists that Australia must start using more natural gas as a transportation fuel.

A new study insists that Australia must start using more natural gas as a transportation fuel.

Australia’s reliance on diesel imports for transportation fuel – currently importing around 90 per cent of its transport fuel needs – is a major flaw in its energy security. However, a newly published academic study has reinvigorated the argument to use natural gas to reduce this risk.

The study, which was led by the University of New South Wales (UNSW) and supported by bodies including Geoscience Australia, the Australian Strategic Policy Institute, CSIRO and the Grattan Institute, has concluded that Australia must start using more natural gas as a transportation fuel in order to avoid a major energy security risk.

The findings, published in Transport Fuels from Australia’s Gas Resources – Advancing the nation’s energy security in December 2014, is being used to bolster the push to use abundant domestic natural gas supplies in freight and transportation, which has stalled in recent years.

According to report co-author UNSW academic Professor Robert Clark, Australia’s fuel self-sufficiency could be increased to potentially 70 per cent by 2030 by using natural gas as a transport fuel, compared to just the existing 30 to 40 per cent sufficiency using current fuel sources.

Natural gas fuel is around 25 to 30 per cent less expensive than diesel, and trucks running on LNG produce up to 23 per cent less greenhouse gas emissions than diesel-powered trucks.

The findings from the UNSW publication have been complemented by a recent Engineers Australia’s report, which has found that, at any one point in time, Australia’s stockholdings of oil and liquid fuel consist of a meagre “two weeks of stocks at sea, five to 12 days of supply at refineries, 10 days of refined stock at terminals and three days of stocks at service stations” .

The lack of action by the Federal Government to reduce this risk exposure has been blamed on its actual comprehension of energy security, Engineers Australia has argued.

The organisation has pointedly rejected the current Government’s definition of energy security, saying the current definition is “too narrowly focused on economic harm arising from a loss of supply, and gives insufficient attention to the fact that energy security is a multi–dimensional concept intertwined with issues across the social, political, economic and environmental spectrum.”

The lobby group argues that the consequence of this restricted definition means that energy security is framed in a narrow way, limiting energy security policy attention to a few issues.

“This also reduces the opportunity for systematic engagement with other policy areas,” the report stated, and “that can both worsen energy insecurities or miss opportunities to build security.”

Queensland Liberal-National Party Senator Matt Canavan has thrown his support behind increased use of natural gas as a transportation fuel, saying that “Australia doesn’t meet the international energy agency obligations to hold 90 days’ worth of net oil imports in this country and at times are well below.”

However, Mr Canavan didn’t hold any promises, arguing that larger investments in a gas solution to energy security issues are “obviously going to be difficult given the budget situation if there is a government investment required”.

SO, WHAT’S NEXT?

A Senate inquiry on Australia’s transport energy resilience and sustainability is currently underway, and is expected to release its findings on the 25 June 2015.

The findings from the Senate inquiry will hopefully bring more attention to the plight of the natural gas transportation fuel lobbying efforts than the Federal Budget did, which, according to Gas Energy Australia, “missed the opportunity to support the development of an LNG highway, despite an outstanding election commitment to do so”.

The organisation argued that LNG transport was one of the key promises in the Federal Government’s Policy for Resources and Energy, released in September 2013, which stated that the Coalition would “work with industry to facilitate the development of logistics systems for LNG as a transport fuel, particularly in the Brisbane, Sydney and Melbourne transport corridors”.

Gas Energy Australia Chief Executive Officer Mike Carmody said the industry is endeavouring to uphold its end of the bargain by investing in LNG, such as BOC’s $200 million LNG micro plant near Chinchilla in Queensland and AGL Energy’s LNG plant near Newcastle in New South Wales, but the Federal Government is yet to come to the party.

“As we head to the back end of the Government’s first term, it’s disappointing that the opportunity to support increased uptake of this cleaner, cheaper, Australian fuel has been missed in this year’s budget,” Mr Carmody said.

“If anything, changes to excise policy have hurt the emerging LNG fuel industry and made the Government’s commitment harder to meet.

“Despite promises from both sides of politics that these fuels would not be excised at more than 50 per cent of the diesel energy equivalent – reiterated in the recently released Energy White Paper – natural gas fuels are now taxed at over 70 per cent of the diesel equivalent and rising.”

Gas Energy Australia recently released its Draft 2030 Vision for Cleaner, Cheaper Australian Fuels for public, government and industry consultation, available at gasenergyaustralia.asn.au.

Gas Today will cover the release of the Senate inquiry into Australia’s transport energy resilience and sustainability in June 2015. Head to gastoday.com.au to stay updated.

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