Mystifying calculations in report
APGA Chief Executive Officer Steve Davies has posted on LinkedIn about some mystifying calculations from an American organisation about allegedly proposed pipelines in Australia. This is his post.
"Every once in a while you read a report that is so wrong, so misleading, that you don’t even know where to begin in responding to it," Steve writes.
"That’s exactly how I felt yesterday as the messages (the first from my Dad!) and emails starting coming in linking to this Guardian article covering the anti-fossil fuel group Global Energy Monitor’s (GEM) report Pipeline Bubble. The one sentence summary of the report is that there is AUD 56 billion worth of pipeline projects in the pre-construction phase in Australia and they will collectively produce as much carbon emissions as 33 x 1000MW coal power stations.
"I’ve had some time to think now, so I am going to start with the investment figure. Every Australian in the gas industry, every financial analyst, every energy commentator and policy maker should know that the idea there is $56 billion of investment in the pre-construction phase to deliver 8,500km of new pipelines is nonsense. Firstly, APGA estimates the replacement cost of Australia’s 40,000km of existing pipeline is between $50 and $60 billion.
"Secondly, the report uses a USD 5 million/km figure for construction costs. I can’t speak for international projects, but that is nothing like the actual costs of pipelines in Australia, primarily as we typically build narrower pipelines than other markets. Even the largest project loosely on the drawing board and more comparable to international projects, the West-East pipeline, is estimated to cost between AUD 4.5 and $7 billion to deliver a 2,900km pipeline. This comes out a mid-range cost of AUS 1.7 million/km to deliver, under a quarter of the construction cost used by GEM.
"Why does it matter the construction cost is wrong? GEM is inflating the costs of pipelines, making them seem to deliver little value when the opposite is in fact true. High-pressure gas pipelines are the most efficient way of moving energy, moving between 4 and 10 times the energy of electricity transmission infrastructure on a capital expenditure basis. Pipelines also store energy, something electricity transmission infrastructure does not do.
"GEM would have the readers of the report believe that pipelines do not deliver energy, but rather deliver emissions. The report claims the purported Australian pipeline investment will deliver emissions equal to 33 x 1000MW coal fired power stations. I cannot begin to unpick that number, so I’m not going to. I would expect that, ultimately, it is about as accurate and useful as the investment number I have addressed above.
"I did go down an extended rabbit hole trying to work out gas vs coal in Australia, it’s long and probably confusing. If you would like to look, the full information is on the APGA website.
"The point I wanted to make is this. Total amount of emissions is irrelevant. Emissions intensity is the characteristic we should be looking at. In this case, that means we should be comparing the amount of energy delivered and the amount of emissions produced. If the goal is to inform climate and energy policy, looking at only one of the these metrics is nothing less than deliberately misleading.
"GEM claims gas pipeline investment in Australia will deliver the same total emissions as 33 coal fired power stations. Hazarding an educated gas, on that metric, I would say that the pipelines are probably delivering the energy content of 100-150 coal fired power stations.
"The task to achieve net-zero emissions across the global economy is the challenge of our and the next generation’s lifetime. Sensationalism does not help. A proper understanding and representation of the facts is essential to inform public debate, policy making and investment. Natural gas is a low emission intensity energy source. It is not zero emission. When looking at all the ways we must reduce emissions to achieve net-zero, we must focus on the emission intensity of all our activity, not just energy, and look for opportunities to reduce or replace high emission intensity activities to deliver the greatest and most beneficial emission reductions."