There is no shortage of challenges in the energy world.
Some are obvious. Around the globe, decision makers are wrestling with the issue of how they meet growing energy demand while simultaneously reducing emissions.
Other challenges are less tangible. These include our ability to have pragmatic and practical conversations about energy, discussions that are connected to the realities of life rather than chained to ideology.
All people need energy to survive (and thrive), so why aren’t we better at talking about it?
I’ve been thinking about this question quite a bit over the past few months – in part because of a workshop that the Asia Natural Gas and Energy Association held in Singapore in January, in partnership with the Institute of Energy Economics, Japan (IEEJ) and the Economic Research Institute for ASEAN and East Asia (ERIA).
The event brought together a wide range of stakeholders, not only from the natural gas value chain but global and regional energy organisations and governments around the region.
The IEEJ and ANGEA teams at the workshop.
And while the workshop was focused on LNG, a major issue we spoke about is common across the energy space: how can energy be delivered with the lowest possible carbon footprint, while also remaining affordable?
It was a frank and forthright dialogue among a group of people who are strongly invested in helping Asia negotiate the energy trilemma of security, affordability and sustainability. The world needs more conversations like this.
One theme stood out to me – that decarbonisation of supply chains will inevitably add to the cost of producing energy. This leads to another very relevant question. At what point will buyers and consumers be prepared to pay a premium for lower-carbon energy?
It’s an important question for a number of reasons. For starters, it applies to all types of energy, including renewables (which must be integrated into grids), nuclear (where many nations in Asia lack established industries), and coal (where abatement of generation will require significant investment).
Secondly, it highlights the fact that decarbonisation can’t happen in a vacuum. For energy to serve its purpose and drive economic growth, it must remain affordable.
I can’t think of too many industries where an increase in the cost of producing an item doesn’t lead to an increase in the price at which it is purchased. Extending this logic to energy, how and where will and should higher costs be passed on?
A situation where they are absorbed only by communities and industries hardly feels fair or helpful for economic growth. Will governments aspiring to climate targets provide support by way of subsidies or some other mechanisms?
As with most aspects of the energy transition, there are unlikely to be easy answers. Solutions will need to be realistic and flexible and based on collaboration between a diverse group of stakeholders.
Against the backdrop of these complex challenges in Asia, it was very positive to see the South Australian Government’s recent decision to invest in a 10-year supply of gas from Santos’ Moomba project to underpin transformation of the Whyalla Steelworks.
Steel is among a range of industries that are essential to everyday life but highly challenging to reduce emissions.
In the long-term, it may be possible to decarbonise steel manufacturing using hydrogen produced from renewables. Today, this is neither economically feasible nor is the required volume of hydrogen available.
By employing affordable and available natural gas to produce directly reduced iron, Whyalla Steelworks will keep production and economic contributions flowing while cutting emissions by 50 per cent from the current coal-fired process.
This is exactly the type of sensible and responsible decision-making that is required on energy.
It also highlights the versatility of natural gas.
The case is already well-established for gas as a reliable source of power generation that produces far fewer emissions than coal, and which is perfectly placed to support expansion of renewables. This applies to both Australia and trading partners in Asia who invest in Australian LNG.
However, the vast range of critical industries that use gas as a feedstock or fuel is sometimes overlooked.
The Whyalla decision is a timely reminder of the value of gas to industries in Australia and around the world. I look forward to steelmaking in South Australia being powered by natural gas to at least 2040 and likely beyond.
Paul Everingham was CEO of the Asia Natural Gas and Energy Association (ANGEA) from September 2022 to June 2026. ANGEA works with governments, industries and communities in Asia, providing affordable solutions that promote energy security, economic growth and decarbonisation.
This article was first published by Energy News Bulletin
