Crikey's Bernard Keane has a look at energy minister Martin Ferguson's inexplicable obsession with expensive and unnecessary nuclear power- The energy paper’s peculiar logic about nuclear power.

Energy Minister Martin Ferguson’s long-awaited energy white paper — released yesterday in draft form — adopts a peculiar approach to domestic nuclear power.

As befits the product of a Labor government, it makes clear nuclear power is off the agenda for the time being. “The Gillard government unambiguously does not support the use of nuclear energy in Australia,
noting that at present there is no necessary social consensus over this technology nor is there currently a compelling economic case …” the draft says.

If you subscribe to all those theories about how Ferguson is a secret agent of the uranium industry, you might almost see in that phrasing an attempt to suggest that, but for the lack of a “social consensus”, nuclear power would be on the table for consideration.

But there’s more: the draft goes on to suggest that, in the event “new low‐emissions baseload energy or energy storage technologies” can’t be commercialised over the next 15 years, a long-term switch to nuclear might need to be reconsidered. And in doing so, the draft is realistic:

“Given the long lead times for plant approval and construction and for development of appropriate regulatory frameworks, this would necessitate a decision to move ahead considerably in advance of expected deployment — lead times would be at least 10 years, with 15 years more probable. If this were the case, such a decision would need to be taken by the latter part of this decade if deployment was required by 2030 or 2035.”

That is, to get a domestic nuclear power industry up and running by the 2030s we’d have to be making decisions in the next few years about developing a skills base and a regulatory framework and starting construction on reactors that on average take nine years — but can take up to 20 — to build.

But there are some flaws and inconsistencies in the draft’s analysis of the issue.

It uses International Energy Agency data to argue that global use of nuclear power will increase from 6% to 7% over the next 25 years. “The Fukushima nuclear incident in Japan in 2011 is not expected to significantly affect nuclear growth in the medium to long term, although some countries may be prompted to diversify their energy base with natural gas, coal and renewables,” the draft concludes. But as we pointed out back in May, Fukushima has prompted several countries, including India and China, to pause and review their nuclear industry development plans, or in some cases abandon nuclear power altogether.

Moreover, nuclear power will actually decline as a source of power in the overall global energy mix because most of the world’s 439 nuclear reactors were built decades ago and are now nearing the end of their life cycles. In January, there were 60 new reactors under construction worldwide — nowhere near enough to replace the reactors that will be shut down over the coming decade. Nuclear power is an ageing, shrinking energy source globally.

That’s a mere detail, though, compared to the strange twist in logic the draft uses about nuclear power. The draft commendably urges state governments to privatise energy generation and distribution assets:

“The Australian government notes that government ownership of energy assets may act as a barrier to effective competition, particularly where new entrants may not have sufficient certainty around their ability to compete with public businesses in the energy markets. This can arise from private investors not being certain that the decision‐making by government businesses is fully commercial and that the projected returns are in line with the risks they are bearing, or from the potential for governments to intervene to deliver particular budget or reliability outcomes. An appropriate focus should be given to ensuring competitive neutrality in the interim, with continued privatisation remaining the preferred policy goal.”

Well put. This elicited the odd sight of the notionally free-market Labor Queensland and Liberal NSW governments angrily rejecting the idea of privatisation. But that logic vanishes when it comes to its proposals regarding nuclear power. Nuclear power is so astonishingly expensive to construct — it is easily the most expensive possible form of power generation, with sources such as Moody’s rating agency and The Wall Street Journal estimating construction costs at $7000-8000 per kilowatt-hour — and reactors take so long to build and are so prone to cost blowouts that nuclear power is beyond the capacity of the private sector to fund. Instead, either direct government funding or government loan guarantees for billions of dollars are critical to reactor construction.

That is, while the draft paper urges governments to get out of power generation and distribution, its “fallback” option of nuclear power requires a massive intervention by government in the power generation sector.

This is why it’s particularly amusing to see federal Coalition types such as Greg Hunt spruiking nuclear power when the two things critical to it — a carbon price, to make coal-fired power more expensive, and a heavy government role in power generation — are anathema to them.

Subsidies or loan guarantees aren’t the only form of state intervention when it coms to nuclear power. The costs of cleaning up the aftermath of a nuclear catastrophe are potentially huge and the subject of greater focus since Fukushima. “What is changing is our view of the sheer magnitude of liability associated with an event risk occurrence,” Moody’s concluded in April this year, while noting that the industry had an overall strong safety record. Moody’s had already issued a warning about the financial risks associated with nuclear power in 2008. Governments are ultimately the ones who will pick up the bill for cleaning up after nuclear accidents.

And none of that factors in the cost of storing nuclear waste securely for tens of thousands of years.

There’s one other flaw in the draft’s reasoning on nuclear power. Nuclear power has lower operating costs once it is built than many other forms of power generation — at least assuming the cost of uranium doesn’t get out of hand. That means the overall costs of nuclear power — combining construction and operation — are more competitive than would be the case based on construction alone.

But according to a 2008 US analysis by financial advisers Lazard, nuclear power overall is more expensive in megawatt-hour terms than wind, biomass, geothermal and gas combined-cycle, and about the same cost as solar thermal. Of these, geothermal and biomass are both baseload power sources, and baseload solar thermal (which also high construction costs, but even lower operating costs than nuclear) is already in operation in Spain. The draft’s carefully-constructed scenario in which renewable baseload capacity can’t be commercialised at a cost below that of nuclear power already looks highly improbable.

All of which begs the question of exactly why the draft makes such an effort to propose a backstop role for nuclear energy?

Platts has a report on the new Australian energy white paper - Australia needs $243 bil invested in gas, electricity sectors: minister.

Australia needs around A$240 billion ($243 billion) invested in the next two decades in the gas and electricity sectors for generation, transmission and distribution to meet future energy demand requirements, Minister for Resources and Energy Martin Ferguson said Tuesday, as he released a draft of a "white paper" on energy policy.

"Over the next two decades, Australia will require massive investment in the gas and electricity sectors," Ferguson said. "We need sound regulatory frameworks and confidence from investors to ensure that the necessary investment is delivered, and the white paper seeks to deliver this stable framework."

The draft will now go through a period of public consultation running to mid-March, with the government intending to release the final energy white paper around the middle of 2012.

Along with the draft on the nation's new energy policy, the government also released the 2011 National Energy Security Assessment and its Strategic Framework for Alternative Transport Fuels.

The government is also proposing that a strategic review of national energy policy be undertaken every four years, with a review of national energy security every two years.

The previous energy policy paper was released seven years ago, and since then Australia's energy exports have increased from A$24 billion a year to around A$69 billion, Ferguson said. He also noted that investments in the energy export sector have grown "at an unprecedented scale in the last seven years, with over A$140 billion committed to LNG projects alone since 2007."

That along with developments in the coal and uranium sectors, as well as increased investments in electricity networks that have resulted in rising electricity costs, all point to the need for a new national energy policy and procedures to keep it resilient and up-to-date, he said.

Along with the policy papers, the government also said it would no longer proceed with the introduction of emissions standards or carbon capture and storage requirements for new coal-fired power stations.

The SMH has a look at the relaxation of emissions standards - Dirty power plant rules abandoned.

THE Gillard government has dumped an election promise to introduce rules to limit greenhouse gas emissions from new power plants. Launching a long-awaited energy policy paper, Energy Minister Martin Ferguson said the proposed emissions standards - which Prime Minister Julia Gillard said would mean an end to the building of ''dirty'' coal power plants - had become redundant, given Australia was introducing a carbon price. ...

Climate Institute chief executive John Connor called the decision to dump the emissions standard ''short-sighted.''
Energy Supply Association of Australia acting chief Clare Savage welcomed the focus on encouraging the states to deregulate retail prices.

The energy road map came as the owners of the Latrobe Valley based brown-coal fired Yallourn power station wrote down the generator's value by $350 million as a result of Labor's carbon price. Yallourn - previously valued at $1.7 billion - has been put forward for the first stage of the scheme to pay to shut heavy-emitting power plants.

The SMH also has a more generalised look at the white paper - Energy privatisation back on the agenda as demand rises.

The federal government will lead a renewed push for the privatisation of state electricity assets after warning the country urgently needed energy market reform and huge investment to meet power demand at home and abroad.

Energy Minister Martin Ferguson, unveiling a draft energy paper, said the government would also focus on developing the country's vast energy resources - particularly gas - and speeding clean energy projects after the recent passage of the largest carbon price scheme outside Europe. "Over the next two decades, Australia will require massive investment in the gas and electricity sectors, around $240 billion in generation, transmission and distribution," Mr Ferguson said today.

"The White Paper also focuses on the next round of energy market reform, including further privatisation of energy assets and the removal of retail price regulation to increase efficiencies and remove distortions in markets that deter private sector investment."

To help drive fresh investment to replace Australia's ageing coal-fired power stations - many of which date back to the 1960s - Ferguson also announced the government would no longer apply emissions standards for new coal power stations following the passing of carbon price laws last month.

Australia is one of the world's worst per capita polluters, due to its reliance on coal-fired power for 80 percent of its electricity needs. Privatisation efforts have stalled in the face of resistance from consumers and state governments.

The conservative government in New South Wales state, which has an economy larger than South Africa and Thailand and is responsible for a third of the country's GDP, said last month it would proceed with a controversial privatisation of power assets expected to reap $5 billion, but would retain ownership of the transmission network.

Ferguson complained ahead of the white paper that construction of new power stations had plunged, blaming investment uncertainty on threats by resurgent conservative rivals to unravel the carbon scheme if they won 2013 elections.

Bureau of Resources and Energy Economics figures show just two wind projects worth $488 million have been completed in the past year. In 2009, 17 projects worth almost 10 times that amount were finalised.

Ferguson ruled out domestic development of nuclear power, although he said the debate would continue as long as Australia remained committed to reducing carbon emissions.

The ABC reports that the Greens don't think much of the paper or Ferguson's constant pushing of fossil fuels and nuclear power (not matter what the cost) over renewable energy - Government pushes states to privatise power.

Prime Minister Julia Gillard has consistently said the Government would not embrace nuclear power, but Mr Ferguson continues to argue Australia may one day need to consider it. "Nuclear for Australia is always there as an option. We don't have to invest in research and development and innovation on that front, other nations are the specialists," he said.

Greens senator Christine Milne says she is not surprised but is disappointed by Mr Ferguson's stance.

She says the white paper focuses too much on coal and gas and not enough on renewables. "Martin Ferguson is a big supporter of nuclear, he's the one who's pushed the ALP to change its policy on uranium exports to India," she said. "He keeps saying that if renewable energy was to fail then we'd need nuclear and we need to make that decision in the coming decade, but the fact of the matter is he talks down renewables at every turn."

Giles Parkinson at The Climate Spectator has some thoughts on the white paper (unlike the rest of the media, the CS actually interprets the announcement and makes some sensible commentary) - Australia's great big energy challenge.

The biggest weakness of the draft energy white paper released this morning by the federal government is not immediately obvious – it’s found on page 269 of the 291-page report. It reveals that the data used by the Department of Resources and Energy for its energy modelling is already out of date.

In a world that is preparing for a dramatic shift in energy sources, a transformation to renewables, smart grids and electric cars – scenarios not invented by green-spinning NGOs, but by the International Energy Agency and the world’s leading industrial groups – Australia’s energy bodies cling grimly to the belief that not much will change, that fossil fuel and its attendees (carbon capture and storage) will continue to dominate.

The white paper acknowledges the existence of the IEA and other international reports, but relies on modeling provided by the likes of Treasury, the Australian Energy Market Operator and its own Bureau of Resource and Energy Economics, which predicts that Australia will have between 20.5 per cent and 22.2 per cent of renewables by the year 2030, barely more than its 20 per cent target in 2020.

How does it get this so wrong? By relying on modeling that predicts technologies such as solar PV will fall to a cost of around $220/MWh by 2035. Little wonder, then, that it thinks that solar will account for just 1.3 per cent of generation by 2030. The IEA, however, notes that the cost of solar PV has already fallen to between $160-$230/MWh, and will fall to $50-$100 by 2035, when it expects solar to be producing one fifth of the world’s energy. China thinks solar PV will be as cheap as coal by 2021 and its growth will boom. Australia’s white paper predicts small-scale solar PV will cease to grow after 2030.

This is important, because the inability to get a grip on the rapidly changing price of technology and their developments has been at the core of some of the lousiest energy policy decisions in this country in recent years – notably the NSW solar feed-in tariff, and the structure of the solar multiplier by the federal government. Given that these cost declines are accelerating, and now reaching a point where they compete with other technologies, it seems that there is a huge risk of more blunders when planning for the future. Given that minister Martin Ferguson says that more than $200 billion will be spent in the next two decades on Australia’s energy needs, there is much at stake.

That’s the negative part of the white paper – so just ignore their forecasts. However, it's the assessment of the current state of the energy industry which is more interesting, and has the potential to change the nature of the energy debate in this country, which it clearly seeks to do: for the first time the government has put together a significant document that underlines some of the home truths about the energy industry that many in the sector try to hide and many in the media choose to ignore.
The most significant of these statements, particularly in the context of the current popular debate, is that the cost of cleaner energy will impose only “marginally” higher energy costs on consumers in the short to medium term. And, it says, the industry will create jobs, offer commercial opportunities for Australian researchers and support our export industries. As Ferguson repeated on several occasions, Australia will never compete in clean energy manufacturing, but it has the potential to be among the world leaders in developing new technology and exporting that knowledge and IP.

The second important point is that the cost of network upgrades are underpinning the rise in retail costs, particularly in meeting peak demand, and Ferguson made a point of emphasising the cost of Australia’s growing dependence on air conditioning. He noted that for each $1,500 air conditioner (2kW) that was installed, a cost of $7,000 is imposed on to the electricity system which has to be cross-subsidised by other users. This subsidy is at a scale far beyond anything that exists for renewables, yet it is rarely mentioned.

The white paper also recognises the growing importance of distributed generation – such as solar PV – that is located close to demand and will have an impact on the local grid management and require greater flexibility in the distribution network. And Ferguson says demand management, the ability to shave the tops off peak load, will be a critical component of future energy requirements.

Indeed, one of the big themes of this paper, and a welcome one, is the attempt to switch the focus from energy supply to energy demand. That will require much greater focus on energy efficiency, and customer education and engagement, particularly as network upgrades impose significantly higher costs, and consumers have greater exposure to rooftop solar, smart meters, and even electric vehicles.

The white paper talks of the “significant long-term transformation” that needs to occur in the way Australia produces and consumes energy. “This transformation will be a massive challenge,” it writes, and adds that this transformation could also be dramatic. Although it relies on forecasts a coal and gas based future, it canvasses the potential for significant changes to the way energy is produced and the fundamental building blocks of the grid. “We cannot predict with any certainty future cost reductions and technical breakthroughs, or even how the market may ultimately deploy technologies,” the paper says. But it emphasises that this uncertainty needs to be managed with a flexible approach.

The Climate Spectator also has a summary of the paper - Energy white paper: the highlights package.

Energy modeling: The white paper acknowledged the work done by the International Energy Agency on technology and policy scenarios, and future cost curves, and then ignores them. The three scenarios relied on by RET are based on data that is at least two years old, and ignores the huge declines achieved in solar PV, for instance, in that time frame. According to the Bureau of Resource and Energy Economics, more than half of the country’s brown coal generators, and two thirds of the black coal generators would still be in operation by 2030 – with no carbon capture and storage. No model predicts solar at more than 1.3 per cent by that date, or 3.3 per cent by 2050. (Most industry modeling puts it at least one third by then). One model has geothermal at 8.4 per cent by 2030 and 22.9 per cent by 2050. The final version of the white paper is due in 2012, and will then be repeated every four years: let's update the technology costs, it might change the picture.

Feed-in tariffs: Ferguson again railed at the “dog’s breakfast” of state-based feed-in tariffs, but would not bite at the prospect of a national tariff, preferring instead to see some “harmonisation” of state-based schemes. He said state and territory governments would be held accountable for the rises in electricity costs that overly generous schemes produce. He was particularly scathing of NSW and the ACT. This latter is a little ironic, as it is just about to hold its first tender for a large-scale solar tariff, allowing the market to set the lowest possible price. That may prove embarrassing to the federal government’s own stalled schemes.

Clean energy costs: One important aspect of the white paper was its statement on the costs of clean energy. The Australian government acknowledges that cleaner energy will impose marginally higher energy costs on consumers in the short to medium term. However, it will also offer commercial opportunities for innovative Australian researchers and businesses through the creation of new jobs and skills and regional development opportunities, and potentially support our export industries. It said this was the case for CCS, as well as large-scale solar, geothermal and energy storage technologies.

Electric Vehicles: The white paper predicts only a "modest" uptake of EVs, particularly in the short to medium term, due to cost and the relatively slow speed of fleet turnover. But it recognises that it has the potential to be a "disruptive" technology if current barriers can be addressed, including limitations in battery technology, establishing charging and battery infrastructure, managing impacts from recharging on the grids, and increasing consumer awareness. It says, however, that even a high level of EVs would result in only a moderate increase in energy demand, and with new metering and pricing structures could reduce the need for more expensive peak generating capacity.

Privatisation: Ferguson is not in a position to impose electricity privatisation on the remaining states, but he says the experience in Victoria, which has had demonstrably lower increases in network tariffs, has proved their worth. This goes back to the “gold plating” argument, raised by Professor Ross Garnaut, that so upset some of the utilities. Privatisation, however, is not the only answer; regulatory change is also key. The Australian Energy Regulator is seeking to have its power boosted so it has the ability to resist the bullying tactics of the network operators. Right now, it says it is not a fair contest. Regulations that govern the deployment of distributed energy are also needed, as they are for interconnectors.

Peak demand: There have been numerous estimates of the cost impact on the electricity network from the widespread deployment of air conditioners, but Ferguson has produced the highest figure yet: $7000 of costs for each $1,500 air-con unit. This is based on new Queensland government data that estimates it costs $3.5 million for each megawatt of incremental network and generation capacity to meet peak demand growth. A 2kW unit therefore adds $7,000 to the cost. Demand swings can range as high as 65 per cent from day to day in the Brisbane area, and network operators are obliged to build infrastructure to meet that demand, even if it is only used for a few days, or even hours, a year.

Energy efficiency: The easiest and cheapest response to peak demand increases. The white paper says measures such as energy efficiency regulation on appliances will save 19.5 million tonnes of Co2e at a negative cost to the community of $56/tonne (That is, it saves money). It also speaks of the importance of incorporating distributed generation and direct load management, and forcing networks to seek demand-side alternatives, rather than just erecting more poles and wires.

Will the lights go out? As part of the white paper, the government released an update of its National Resource Security Assessment. One of the scenarios it considered was a sudden loss of capacity from Australia’s largest coal-fired generator, the Loy Yang A power station. What would happen? Well, not a lot actually. Australia has an excess of baseload capacity, and if Loy Yang went offline, other generators would come online. The lights wouldn’t go out, although prices would, inevitably, rise. This would even be the case after the proposed buyout of 2000MW of capacity (but expect even higher prices). The closure of Loy Yang may actually reduce network constraints, the study concluded.

Gas: Ferguson is firmly convinced about the “golden age” of gas, even in the IEAs grim 450 scenario when I posed the question to him. Indeed, the government appears poised to release a significant upgrade of Australian gas reserves following a new survey by Geoscience Australia – presumably, this is centred around the potential of shale gas, which in the US has proved even more contested than coal-seam gas in this country.

Nuclear: The support for nuclear in Australia is based on the premise that renewables, or other clean energy technologies such as carbon capture and storage, cannot deliver. Ferguson, possibly thanks to ALP politics, is obliged at least to give renewables a go at proving their worth, and the white paper notes that there is no compelling energy security argument now in support of nuclear, given Australia’s diverse energy resource base. However, the white paper says a future government may wish to review the nuclear question, if technologies such as “low emissions base-load” energy or energy storage cannot deliver by 2025. But it says a decision may need to be taken earlier, because deployment would be required by 2030-35 and it would take 10-15 years to roll out, even if, as Ferguson suggested, Australia could buy “off the shelf” nuclear technology.

Crikey has a look at the restructuring of government control over renewable energy rpograms, with fossil fuel and nuclear power fan Martin Ferguson having has authority over the area removed - $3.2b later, Ferguson loses in the ARENA of renewables.

Resources Minister Martin Ferguson has suffered a defeat at the hands of the Greens in the Multi-Party Climate Change Committee process and will lose control of $3.2 billion worth of renewable energy programs to the new, independent Australian Renewable Energy Agency (ARENA) as part of the carbon pricing package to be announced on Sunday.

ARENA will operate under the Commonwealth Authorities and Companies Act and be headed by an independent statutory board to be appointed by cabinet. But unusually for a statutory agency, it will report directly to cabinet -- CAC bodies normally report to cabinet and Parliament via their portfolio minister. This further limits any role for Ferguson in the administration of renewables programs. The new body is likely to be staffed by existing Department of Resources, Energy and Tourism staff.

The board will be responsible for allocating $3.2 billion in existing funding, just under half of which is already committed; it is understood existing allocations will be honoured by the new board. However, the agency will also receive an additional, as yet unspecified amount of new funding to be announced Sunday.

The existing RET programs to be rolled into the new agency will be:

* Solar Flagships Program
* Australian Solar Institute
* Low Emissions Technology Development Fund (solar)
* Renewable Energy Demonstration Program
* ACRE Solar Projects
* Renewable Energy Venture Capital Fund
* Australian Biofuels Research Institute
* Emerging Renewables Program
* Second Generation Biofuels Research and Development Program
* Uncommitted funding from the Connecting Renewables Initiative.



Ferguson's lack of enthusiasm for renewables and vocal support for nuclear power has long made him a particular target of the Greens, who regard him as the friend at court of the fossil fuel and nuclear industries. But they have been particularly concerned that the Rudd and Gillard governments' investments in renewables have been plagued by delays, cuts, re-announcements and continuing uncertainty for the renewables industries.

The intention of ARENA is to provide a greater strategic focus to what is currently a disparate range of programs and provide greater long-term certainty for an industry highly dependent developmental and regulatory assistance until a carbon price closes the gap between renewables and cheaper emissions-intensive energy.

That gap may be some time in closing. While under a sufficiently high carbon price, renewables programs should be unnecessary, the likely $23 a tonne starting carbon price and assistance for the electricity industry means a long transition time in the energy sector.

Shifting the allocation of government funding in renewables to an independent board -- which will include appointees from business with backgrounds in energy, finance and business -- charged with taking a more strategic approach to support for the industry is likely to provide better direction than officials and ministers administering discrete programs.

The Climate Spectator also has some notes - New start for green funding.

Funding for large scale green energy projects and R&D is to be stripped from the control of Energy Minister Martin Ferguson and put under the control of two new independent statutory bodies. The newly formed Australian Renewable Energy Agency will take charge of $3.2 billion of funding for R&D, pilot and demonstration projects, around half of which is already committed, while a Clean Energy Finance Corporation will also be created to ensure the continued rollout of commercial projects around the country.

The creation of two new bodies independent of the Department of Energy was considered to be crucial, as funding for new technologies such as geothermal and solar were constantly delayed and was always focused around the narrow measures of grants based schemes, which made it impossible for many new companies to raise matching funds.

The new institutions will likely consider loan guarantees as well as tariffs to encourage the deployment of renewables, as these have proved to be the most effective in the US and Europe, as well as in South America and Asia. Further details are likely to be unveiled at a solar summit to e held in Canberra on Friday, which will discuss the measures needed to support the rollout of large scale solar projects, which are coming down rapidly in cost and which are now increasingly recognized as critical for the transformation to a low carbon electricity grid.

ARENA will absorb the activities of 10 different programs, including Solar Flagships, the Renewable Energy Development Program, and the Emerging Renewables Fund, as well as the activities of institutions such as the Australian Solar Institute and Australian Centre for Renewable Energy. While Arena will focus on commercialization, the CEFC will have carriage over the deployment of such technologies. Details of ongoing funding will be released as part of the carbon pricing package to be released on Sunday.

Greens Senator Christine Milne said there are currently 11 different funding programs run by the Commonwealth government for renewable energy and, historically, almost none of them have been appropriately run, and many technologies and entrepreneurs had been forced overseas. “Government funding programs are announced with a big public splash, innovators and entrepreneurs start to gear up to deliver them, and, after months or years of delay, the programs are re-badged, re-allocated, scrapped or so badly designed that nobody is able to take advantage of them," she said.

The New York Times has an article by Andrew Revkin of all people revelling in the shale gas boom in the US and predicting it will go global (I suspect that scaling up shale production will be harder than the industry's boosters are claiming while resistance to the environmental damage will continue to grow - but we'll have to wait and see about that - in the meantime the "natural gas cliff" guys have mercifully gone quiet) - The Gas Age.

The Energy Information Administration has released “ World Shale Gas Resources,” an important commissioned report providing an assessment of how much natural gas is locked in shale deposits in 14 regions around the world. (Here’s its overview of shale gas in the United States.) Here’s a map of the surveyed regions:

The report includes some pretty remarkable numbers from countries that currently have limited domestic gas options, including China and quite a few western European nations that have been held somewhat hostage by Russia. Its publication comes in sync with a disturbing article in The Times noting how much crop production, including tropical staples such as cassava, is being diverted to making biofuels. ...

The first reply came from Ausubel, a Rockefeller University scholar who long ago predicted the ascendancy of gas as part of humanity’s move away from carbon and toward hydrogen. He stressed that more conventional gas deposits are already changing the energy game:

While the shale gas matters a lot for the overall outlook and industry confidence, my money remains on the “clean” deep gas, both offshore and continental, as the bigger source of supply delivered over the long run. Discoveries and technologies keep appearing. See [this link] – a rig for 3,000 meters of water and 10,000 meters of seafloor, delivered.

Google the Tamar and Leviathan gas fields off Israel.

I sent him this followup question:

Between the clean gas and the shale options, though, is it fair to say this is “The Gas Age”? Are we going to move off the “coal rung” of Loren Eiseley’s heat ladder more quickly?

Ausubel’s answer:

Yes, we live in a world of Methane Abundance. Recognition is diffusing

Australian energy minister / fossil fuel industry cheerleader Martin Ferguson is predicting a gas age in Australia too - Australia entering an “LNG age”: Ferguson.

Federal Energy and Resources Minister Martin Ferguson has addressed LNG project issues, including overseas demand, taxation reform and skills shortages, at the APPEA 2011 Conference and Exhibition in Perth.

“If we are to meet the twin drivers of increasing demand and lower emissions, we are entering the LNG age,” Mr Ferguson said in his speech.

He noted that the recent earthquake and tsunami in Japan could lead to increased demand for LNG over both the short and longer term, and said that Australia’s proposed and established projects would render the country well-placed to help meet this increase in demand.

One obstacle holding up the gas boom is a shortage of key resources, particular labour, which Wood Mackenzie says will put project timeframes under pressure Gas projects face cost crunch: Wood Mackenzie.

Australia's coal seam gas operations will have to work together to avoid cost overruns and meet tight project completion goals as key resources are in short supply, a Wood Mackenzie executive said.

"The fact that Australia is already producing 670 millions of cubic feet per day (mmcfd) demonstrates the proven materiality of Australian CSG plays," Wood Mackenzie's head of Australasia upstream research Craig McMahon said.

But with three projects BG Group's Queensland LNG, Santos' Gladstone LNG, and ConocoPhillip's Australia Pacific LNG – expected to go ahead, competition for a range of resources from rigs to workers, will mean projects will need to work together.

"To some extent, the projects are in it together. If one project timeline suffers, it could affect the others," Mr McMahon said.

BG and Santos have already sanctioned their projects, while APLNG is expected to do so this year, with completion dates seen from 2014 to 2015.

Bechtel Corp will manage LNG plant construction for all three projects, which are all are located in Australia's eastern Queensland state and, in some cases, occupy adjacent areas.

"Bechtel has been effectively charged with delivering 33 million tonnes per annum (mtpa) of LNG capacity over effectively two years. That's a huge challenge," he said.

The Climate Spectator has a skeptical look at Minister Ferguson's stance on renewable energy - Clean out of time.

Sometimes politicians travel so much and speak to so many different audiences that it must be easy to forget what they should be saying, and to whom. Particularly if your responsibilities straddle multiple portfolios, such as those of Martin Ferguson, the Federal Minister for Resources, Energy (both brown and green), and Tourism.

Ferguson was in Abu Dhabi this week for the inaugural meeting of the International Renewable Energy Agency (IRENA), the second Clean Energy Ministerial, and for a visit to Masdar City – the ambitious project by the United Arab Emirates, the world’s most energy and emissions intensive states, to create a carbon-neutral metropolis.

Ferguson, speaking after Australia’s election to the council of IRENA, noted how wind and solar PV were predicted to deliver nearly one quarter of the world’s electricity needs by 2050, and spoke of Australia’s commitment to clean energy.

But if you wanted to know what he really thinks about clean energy and resources, and what he thought his audience wanted to hear, you needed to read his speech to a business breakfast the following day. No prizes for guessing that the focus was on coal, LNG and uranium, and Australia’s massive mineral exports. There was little more than a passing reference to “clean energy”, a brief mention of geothermal, and nothing on wind and solar.

Meanwhile, the International Energy Agency, the body charged with mapping out a blueprint of the world’s future energy needs if it is to meet its ambitious emissions reductions targets, was also in Abu Dhabi to present its inaugural Clean Energy Progress Report, the first detailed assessment of where the world is at in the transition to cleaner energy sources.

As report cards go, it barely rated a B minus. Despite apparent efforts by many countries to make significant investments in clean energy technologies, these are being overtaken by continued investment in fossil fuels. The IEA fears that the world is more likely than ever to miss its energy target – creating geopolitical, as well as financial and environmental risks – and is rapidly running out of time to introduce the sort of ambitious, long-term and predictable policies required.

If the world is going to meet its long-term emission reduction targets, the IEA estimates that it needs, at the very least, to reduce half its emissions from energy sources by 2050. We’re about a third of the way through the time frame allotted, and the growth in fossil fuels is still outstripping that of renewables; and the surge in incomes in emerging economies means that more people than ever want their own cars and to plug things into sockets and use more energy.

There are basically four options to meet the energy target – other than just to switch stuff off, which is clearly not going to happen. These options are: to clean up coal and gas production with carbon capture and storage; to use energy more wisely (energy efficiency); to use more renewables; or to use more nuclear. The IEA says it needs to be a mixture of the four, but none of these elements look like delivering without a step change in international policies.

Here is a summary of the IEA's assessment:

– Clean energy technologies are making clear progress globally, but fossil fuels continue to outpace them, mostly because they get far more in subsidies per year; $318 billion in 2010 versus $57 billion for renewables. The IEA says those fossil fuel subsidies need to be removed and governments need to introduce transparent, predictable and adaptive incentives for cleaner, more efficient energy options.

– Solar PV and wind power are achieving strong growth, thanks to favourable policies, but they need to maintain these trajectories so that the use of renewable energy doubles from current levels by 2020. However, the IEA says there are signs that policy support is weakening due to government austerity plans. It says that instead of eliminating successful policies, governments need to put in place dynamic schemes that respond to technology markets.

– While coal has been the fastest growing global energy sources in absolute terms for the past decade, there has not been anywhere near enough investment and deployment of carbon capture and storage, which it says is critical to achieve climate change goals. It says around 100 large-scale projects are needed by 2020, and 3,000 by 2050. There are currently just five that are operational right now. (Ferguson and other ministers on Friday announced they had agreed to do more to fast track CCS projects).

– Energy efficiency is progressing, but while some countries have proven to be very competent at switching to more efficient lighting, and introducing efficiency standards on fridges, there has been significant under-investment in the buildings and industry sectors, and little attention to other appliances. The IEA says energy efficiency can deliver around 38 per cent of the targeted emission reductions from the energy sector, making it the most important new fuel source of the future.

– Biofuels have shown steady growth, but still only represent 3 per cent of global road transport fuel consumption. They need to grow ten-fold – and be of the new generation, sustainable variety – to reach climate change targets in 2050.

– Electric vehicles are poised to take off, and global sales could reach 20 million by 2020. But this would still account for around 2 per cent of light vehicles, and fuel economy measures need to be ramped up rapidly to achieve a 50 per cent improvement by 2030.

– While nuclear capacity has remained nearly flat for the past decade, countries are currently constructing 66 nuclear reactors that should add 60 Gigawatts by 2015. However, the recent earthquake in Japan and resulting damage have led countries to review nuclear safety and investments across the board. As a result, nuclear expansion is likely to be slower than planned.

– An increased level of systems thinking is needed to integrate the broad range of individual clean energy technologies into the energy system. Increased attention and resources are required to expand smart grid pilot projects on a regional level.

Crikey has an article on a chat between the "minister for coal" (Martin Ferguson) and some climate change campaigners - Minister for coal out of step with climate change action.

Martin Ferguson holds the eminently safe but greening Victorian seat of Batman. A couple of weekends earlier, an Earth Hour demonstration at his Preston office had called on the champion of emissions-intensive fossil fuel exports and power generation to switch to renewables. Australia is heavily dependent on coal for its domestic energy supply, and is the world’s largest coal exporter.

Now Ferguson was sitting across the table from us, a minder scribbling quietly beside him. He said the Government would take the emissions trading scheme to the Senate again in May, but it would fail and Labor would face the next election without a price on carbon.

What of the Greens’ proposal for an interim, two-year carbon tax? Ferguson offered two main objections: a lack of certainty for business, and the blunt statement that there would “never be a settlement” with the Greens on this issue.

While some business uncertainty is surely a reasonable price to avoid the certainty of climate impacts, Ferguson’s blanket exclusion of a climate settlement seems at odds with claimed negotiations between climate change minister Senator Penny Wong and Greens Senator Christine Milne. In the week following our meeting, in fact, The Age quoted Greens leader Bob Brown as being “in a mood to do a deal” on the ETS.

Nothing, however, would be good enough for the Greens, Ferguson claimed – climate change was, for them, a political question, while for Labor it was an economic and environmental one. He had no reply to the argument that the Greens would be hard-pressed to reject for political motives any plan that actually reflected the climate science, in stark contrast with the measures currently proposed by Labor.

While there was some enthusiasm when the talk switched to renewables, Ferguson said coal “would be with us for both our lifetimes”, with no option, it seemed, to leave it in the ground – an imperative of the strongest current science on solving the climate crisis.

He asserted, instead, that carbon capture and storage (CCS) was a “proven technology”, challenged only by the “cost of deployment”. This contrasted with large-scale concentrated solar thermal (CST) technologies already working in Spain and the United States. Solar, according to Ferguson, needed to be “proved up”.

Yet for James Hansen, the world’s leading climate scientist, clean coal is an “illusion”. In September 2009, ABC TV Four Corners also questioned the beleaguered technology in its program. A few days after our meeting, it also aired ‘A Dirty Business’, a program exposing the health and environmental impacts of coal mining in the NSW Hunter valley. Without the elusive prospect of CCS, coal is more than twice as carbon-intensive as gas, which itself is more than 30 times more carbon-intensive than CST.

Despite the profound challenges of such a massively carbon-intensive energy source, the Government’s current ETS proposal includes $1.5 billion compensation for the coal industry and $7.3 billion for fossil-fuel electricity generators. To these billions of public funds can be added the slated $47-billion, five-year investment in an obsolete power grid that, according to Fairfax green business writer Paddy Manning, “entrenches electricity generation from fossil fuels and will only accelerate climate change”.

Though disagreeing with Manning’s analysis, Ferguson admitted that $100 billion would likely be needed “just to keep where we are” with the current power network – more than a Zero Carbon Australia 2020 plan would spend over 10 years ($92 billion) towards a renewables-friendly smart grid.

Strangely, Ferguson seemed also to draw support for his multi-billion-dollar fossil-fuel grid from evidence at the Victorian Bushfires Royal Commission about the role of faulty power lines in the Black Saturday fires. A safe grid is, of course, a necessity, but one geared to fossil fuels would only promote global warming and a consequent worsening of bushfire risk in Australia.

Bloomberg reports that Martin "Marn" Ferguson has noted once again that we don't have much oil left (unless we manage to find more somewhere). This isn't news of course, but the proposal that oil and gas companies who don't develop known reserves within 12 months or lose their leases is.

From Bloomberg - Australia Has Decade of Oil Left at Current Rates.

Australia's oil resources may last a decade at current production rates, making supply security a ``major concern,'' said energy minister Martin Ferguson. Australia will review all oil and gas leases granted to explorers for their ``commerciality,'' Ferguson said today at a conference in Darwin. Oil and gas field permit holders must work the fields if they can be profitably developed, he said.

The nation's spending on exploration jumped 57 percent last year to a record A$2.66 billion ($2.6 billion) even as the number of wells drilled fell because equipment and labor shortages drove up costs. ...

The government will review oil and gas exploration permits by the end of the year, Ferguson said. Companies that hold leases and haven't developed them will be given 12 months to prove the areas aren't viable.

Eni SpA, Italy's largest oil company, plans to start production from its Blacktip gas field in early 2009, Paul Henderson, chief minister of Australia's Northern Territory, said at the conference. The project will cost almost A$1 billion ($975 million). Australian energy production growth will be led by liquefied natural gas, with exports of the fuel set to jump by more than 7 percent a year through 2030, the government's commodities forecaster said in December.