Can Sydney Green The Grid?


Read part one of Norman Thompson and Justin Field’s story on Sydney’s trigas scheme here

Sydney Council’s Sustainable Sydney 2030 plan targets a 70 per cent reduction of greenhouse gas emissions from 2006 levels. At the centre of the plan is a trigeneration (trigen) network across the city that will burn gas to deliver electricity, heating and cooling to city buildings.

The aims of the plan are commendable and emission reductions on this scale are needed Australia wide. But the implementationvia a trigen network that will be built and maintained by Australia’s largest coal seam gas company (CSG), Origin Energy, raises serious questions about its ability to achieve the emission reduction targets.

According to the City’s Trigeneration Master Plan, council has "resolved that by 2030 renewable gases from waste and other … sources will replace fossil fuel natural gas in the trigeneration systems". This means that until that time CSG, which currently makes up around 5 per cent of NSW supply, will be used to power the system.

The plan suggests the City has identified sufficient waste-derived renewable feed-stocks to generate and supply biogas to the trigen system, however it acknowledges the plans for moving to renewable gas are yet to be finalised.

In April 2012 Sydney Council signed an agreement (pdf) with Origin Energy’s totally owned subsidiary Cogent Energy to begin building the trigen system. Under the agreement "Origin will be responsible for the ongoing operation and maintenance of the trigen plants".

Origin Energy has a 37.5 per cent stake in Australia Pacific LNG which is constructing a Liquified Natural Gas (LNG) plant at Gladstone in Queensland. Origin is responsible for construction and operation of the project’s CSG fields.

Neither Origin nor Cogent have notable experience in biogas projects and Origin promotes itself as Australia’s largest producer of coal seam gas.

Over the last 12 months, energy analysts have made clear their assessment that the construction of large gas export terminals in Gladstone will lead to the export of much of the available gas in production in the Eastern States and subsequently push up domestic prices. A recent Deloitte report (pdf) cited that "given the speed at which these projects are coming on line, supply constraints may mean … gas may be directed out of the domestic market — presenting challenges for domestic supply and pushing up prices significantly."

For NSW, which continues to get around 95 per cent of its gas supply from conventional gas fields in South Australia, the export gas expansions in Queensland create a real risk of escalating prices and difficulties meeting local demand.

Adding to this pressure, Sydney’s trigen scheme will consume 17 petajoules (PJ) per year representing an increase in state-wide gas consumption from current levels of nearly 12.5 per cent. NSW customers, including the City of Sydney’s trigen customers, will have to pay more for electricity derived by gas or alternatively local gas production will need to expand rapidly to keep prices down.

For Origin, who is building and running the trigen plants and whose coal seam gas field development and export plans are contributing to reducing available local supply and pushing up costs — it seems a win win. But neither of these options seem positive for customers or the environment — increasing local gas production inevitably means promoting polluting and farm-destroying coal seam gas.

The Deloitte Report makes clear that proven reserves of conventional gas from the Cooper Basin in South Australia, NSW’s current main source of gas, is declining and 80 per cent of proven gas reserves on the east coast are now CSG. In short, until the trigen scheme makes the transition to biogas, it will be burning more and more coal seam gas and will actually be helping to promote coal seam gas development to meet its demands.

Last week AGL was forced to voluntarily suspend assessment of its Camden Gas Project expansion plans due to community opposition. With AGL, APEX Energy and Dart Energy pushing to develop CSG fields across the Sydney basin and around Sydney’s drinking water catchment, the City’s trigen scheme has the potential to pit the council against the residents of greater Sydney.

Asked about concerns over the use of fossil gas to run the trigen system, City of Sydney Chief Executive Monica Barone said late last year, "our plan makes it clear that we want to move to renewable gas as soon as it becomes available. The infrastructure will have the capacity to do this and our contract with Cogent requires this".

This transition seems unlikely if not impossible.

Jonathan Prendergast of Prendergast Projects, who was a consultant to the City of Sydney on its plans, has since argued publicly that Australia needs to "green its gas grid" with substantial investment in biogas. But far from laying out a detailed plan of how Sydney could meet even its 17PJ gas demand, Prendergast presents a limited case study on Denmark’s biogas industry and called for direct government and industry investment in expanding biogas production.

Beyond Zero Emissions (BZE) raised concerns about biogas availability in a submission (pdf) last year to the City’s Draft Trigeneration Master Plan. It cites that for Sydney to meet its gas demand from biogas it would take around 10 per cent of Australia’s total biomas availability based on CSIRO studies.

In an article in response to Prendergast, BZE Executive Director Matt Wright highlights that Denmark’s renewable energy focus is large scale wind and that biogas is a fraction of renewable supply. In the last 10 years Denmark has increased its biogas supply only marginally from 3.6PJ to 4.2PJ even now only a quarter of the demand of the City of Sydney’s trigen project. This analysis seriously undermines the City’s claims about a biogas transition.

Added to all of these argument’s, in November last year scientists from Southern Cross University reported for the first time research suggesting significant methane leakage from CSG fields in Queensland. This fits with earlier research from the US shale fields suggesting fugitive emissions from unconventional gas may make the carbon footprint of shale gas burnt for electricity worse for the climate than even coal.

The facts seem to be that the City of Sydney’s trigen scheme is being developed by the largest coal seam gas company in Australia. It will run partly on CSG when it starts, by virtue of the current domestic gas supply in NSW and, given expected supply shortages on the East Coast due to massive demand from export plants in Queensland, it will promote increased production of coal seam gas for local use.

With CSG’s climate credentials seriously weakened by fugitive emissions studies, the unavoidable use and promotion of CSG as a feedstock for the trigen scheme undermines the rationale for the entire project.

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