September 21st 2019


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Articles from this issue:

COVER STORY Federal Government should abolish Renewable Energy Certificates

ENERGY BP annual Review shows consumption, production up

CANBERRA OBSERVED NSW Labor caught in Panda's paws doing 'whatever it takes'

RELIGIOUS FREEDOM Religious discrimination bill: A litany of questions

FOREIGN AFFAIRS Boris' brinkmanship shakes up Britain, EU

WATER POLICY Angry farmers protest over Murray-Darling Basin Plan ... again

TECHNOLOGY Are we the dumbest devices in the room?

HISTORY AND POLITICS Lord Acton, nationalism and multiculturalism, Part 2

LITERATURE D.H. Lawrence: The Modernist in exile

MUSIC Dialectical transcendence

CINEMA The Farewell: Elegant and bittersweet

BOOK REVIEW Owning up to market imperfections

BOOK REVIEW Heroism and faith under tyranny

BOOK REVIEW The love that comes after love is gone

LETTERS

EDITORIAL Gladys Liu controversy ignores reality of China's interference

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ENERGY BP
annual Review shows consumption, production up


by Chris McCormack

News Weekly, September 21, 2019

 

  • BP Review puts self-interest before reason
  • Globally, all energy sources consumed more in 2018
  • Australian renewables boom is driven by skewed policy

While some valuable data can be gleaned from the BP Statistical Review of World Energy 2019, the annual Review has succumbed to being just another platform to propagate the decarbonisation agenda and BP’s self-interest.

In the group chief executive’s introduction to the Review, Bob Dudley writes: “The world is on an unsustainable path: the longer carbon emissions continue to rise, the harder and more costly will be the eventual adjustment to net-zero carbon emissions. Yet another year of growing carbon emissions underscores the urgency for the world to change … this is not a race to renewables, it is a race to reduce carbon emissions across many fronts.”

He envisages some role for fossil fuels (this is British Petroleum, after all) but suggests extensive switching from coal to gas – which would benefit BP’s bottom line, no doubt – at the expense of the lowest-cost form of electricity generation, coal, and an attendant sharp rise in industry, business and consumers’ power costs.

The push for renewables suits BP because natural gas, which BP extracts, is needed when gas-powered plants fire up on demand when renewables can’t produce any power. Coal-fired power plants cannot provide instantaneous power when idle: they need to run continuously.

But on-demand, gas-fired power plants have demanded the maximum spot price for electricity in Australia, asking the ceiling price currently set at $14,500 per megawatt-hour. Additionally, wholesale natural gas in Australia is trading at historically high prices of around $8 per gigajoule (GJ) and predictions are that it could rise to around $16 per GJ by 2030. What is good for BP is not necessarily good for everybody else.

BP group chief economist Spencer Dale chipped in, saying that future generations will look back and see a time when there was “growing societal awareness and demands for urgent action on climate change, but where the actual energy data continued to move stubbornly in the wrong direction … I fear – or perhaps hope – that 2018 will represent the year in which this mismatch peaked.”

Passing over the ideological or vested interest line in the Review, we turn to what has taken place in the last 12 months in energy production and consumption in Australia.

Australia’s oil production increased from 14.8 million tonnes to 15.2 million tonnes, a 2.7 per cent increase over the previous year, contrasted with a contraction of 4.8 per cent a year between 2007 and 2017. Oil refining capacity increased 13.8 per cent last year, compared with an annual contraction between 2007–17 of 3.8 per cent.

Oil consumption in 2018 increased 4.4 per cent from the previous year, compared with a growth rate per annum of 1.4 per cent between 2007–17. Total proved reserves of oil was unchanged from the previous year, at 4 billion barrels, with a reserve-to-production ratio (r/p) of about 31 years.

Australia’s primary energy consumption rose 2.7 per cent, compared with a 0.8 per cent rise per year between 2007 and 2017; and our primary energy consumption per capita rose 1.4 per cent, compared with an average yearly contraction of 0.8 per cent in the 2007–17 period.

The mandated-by-law large-scale renewable energy certificates (LRETs), which electricity retailers must purchase in order to comply with the Federal Government’s renewable energy target of 23.5 per cent by 2020, is responsible for driving the 24.1 per cent increase in renewable energy in the last 12 months as 38 projects came online, adding a nominal capacity of 2.3 gigawatts, according to the Clean Energy Council.When broken down by resource, Australia’s energy consumption showed oil consumption increased 4.3 per cent, natural gas 0.28 per cent, coal declined 1.77 per cent, renewables grew 24.1 per cent, and hydroelectricity grew 25.8 per cent. Given that no new hydroelectricity generation was built in Australia last year, one would imagine the increase is the result of water storages in Tasmania recovering from earlier lows, in addition to plugging the gap in the shortfall of base-load electricity supply after the closure of Hazelwood power station.

Total proved reserves of natural gas in Australia remained static at 2.4 trillion cubic metres (84.4 trillion cubic feet (tcf)), while the r/p ratio fell 42.5 per cent, from 32 years to 18.4 years.

A 15.3 per cent increase in production could possibly explain the lower r/p ratio, but with an estimated 1000 tcf of shale-gas reserves in Australia, this r/p ratio would climb dramatically if these reserves were proven. Natural gas exports rose 19.9 per cent over the last year, compared with the 2007–17 per annum average of 13.9 per cent.

Australia’s coal reserves increased 1.8 per cent in 2018, comprising 14 per cent of the world total and the r/p ratio increased from 301 to 304 years. Coal production rose 0.7 per cent compared with the 2007–17 yearly average growth of 2.8 per cent.

On a global scale, energy consumption grew by 2.9 per cent in 2018, almost double the previous decade’s average annual increase of 1.5 per cent, with all energy sources being consumed more.

The Review claimed that this increase “[could] be traced back to weather-related effects, as families and businesses increased their demand for cooling and heating in response to an unusually large number of hot and cold days”.

It went on to say that, if weather patterns were the result of increased carbon dioxide, “there are grounds for us to be worried”.

BP should stick to its knitting instead of playing the clairvoyant.




























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