Gas is the cleanest, or least dirty, fossil fuel, and it could become even cleaner.

In large power plants, gas-fired power generation produces about a third of the greenhouse gas emissions of coal-fired power generation – between 0.3 tonne per megawatt and 0.4t/MW.

And unlike coal, gas can be used for distributed or embedded power generation – production of power at point of use or at point of grid constraint.

These environmentally preferable forms of generation, which use technologies such as microturbines and fuel cells, hugely reduce transmission losses.

Given Australia’s considerable proven and probable gas reserves, it seems natural that gas should be a significant element in any national attempt to tackle climate change.

But without a carbon price signal, progress in this area will not be a quick as it otherwise could be.

Many of the issues central to developing a nationally accepted framework for connecting renewable energy to the grid also apply to a wide array of gas-friendly power technologies.

Some pundits claim fuel cell power generation could one day effectively produce heat and power generation suitable for small-scale commercial and residential applications, or even as an alternative for oil-based transport fuels.

The growing interest in renewable energy developments, coupled with emerging technologies such as fuel cells, has resulted in the Ministerial Council for Energy forming a working group to explore issues associated with large numbers of small-scale power generators connected to the grid.

On paper, increasing the mix of renewable and gas-based power generation in the national energy combination offers several advantages, including smaller, “cleaner” power systems that can supply power (and sometimes heat) onsite as required.

Companies such as CSIRO spin-off Ceramic Fuel Cells claim that fuel cells can be modified to use a range of fuels, and with the highly developed delivery infrastructure already in place throughout most urban areas, natural gas appears to be an obvious choice.

Associate Professor Hugh Outhred, an electrical engineering and power systems expert at University of New South Wales’ Centre for Energy and Environmental Markets, has been working on the issues presented by sustainable energy models for more than a decade. He said despite natural gas’ clear advantage as a power source, there were still considerable obstacles.

Clean technologies languishing

Outhred expressed reservations over much of the hype surrounding new technologies such as fuel cell power generation, which some enthusiasts believe will enable gas to be widely used in small-scale applications providing “clean” power and heating to commercial and residential buildings, reducing demand for coal-based power supplied through the grid.

He said while emerging technologies such as fuel cells may have piqued people’s interest in distributed small-scale gas-power generation, several existing gas-friendly technologies such as reciprocal engines and microturbines have already failed to significantly increase gas’ market penetration.

“I have gas connected to my house here, so if I wanted to, I could already go out and buy a reciprocating engine and hook it up,” he said.

“I would have to deal with all of the issues the MCE is working on, the technical and legal issues, and then I’d have to consider the cost-effectiveness, and what they call the ‘externalities’: noise, pollution and so on.

“Fuel cells don’t change that – they’re just another choice. At the moment, neither residentials nor small commercials are rushing out to install fuel cells, so unless fuel cells can make a breakthrough – which to me is very implausible – they’re not going to change much.”

According to Outhred, Australia’s large coal reserves of coal – and Victoria’s heavy reliance on brown coal (or lignite) – were a major obstacle to cleaner gas-fired power taking a more prominent place in the energy mix.

He said the only way gas could make real headway into the energy market would be the introduction of an Australian carbon market, and in his view, the Federal Government was unlikely to move in that direction.

“The only point in having a carbon price indicator is to combat climate change, in which case it has to be big enough to make a difference in terms of changing our preference amongst the fossil fuels,” he said.

“Gas is certainly the preferable of the fossil fuels. There would be no point in having a price signal unless it opened up a lot of opportunities for gas – the two things go hand in hand,” he said.

Unfortunately, Australia’s mechanisms to support natural gas are inadequate, according to Outhred.

“There is some state level stuff, and the MRETs [mandatory renewable energy targets] provided a little bit of cash flow for renewables. But there’s nothing that helps to bridge the cost-effectiveness gap for gas [compared to coal] and the prime minister has said we’re not going to have one. That’s the big difference between Australia and some of the European energy markets.”

Outhred said the introduction of carbon pricing into the energy market would automatically make gas a preferred primary energy source. But in his view, federal politicians were unlikely to upset the apple cart by promoting one fossil fuel over another.

“Renewables are less difficult for them because at the moment it’s not amounting to much and politically, it’s easier than subsidising gas,” he said.

But Business Council for Sustainable Energy executive director Ric Brazzale said the Federal Government will eventually have to reconsider its current plans for power generation and its emphasis on “clean coal” technologies, including carbon capture initiatives.

“Given the challenges of energy security and rising greenhouse gas emissions, the government has no choice but to introduce measures that will see a reduction in the market share of coal for power generation,” Brazzale said.

“There is no other way to reduce greenhouse emissions – carbon capture and storage is much more expensive in greenhouse abatement terms than use of natural gas.”

Brazzale said natural gas was a necessary component of any concerted effort to establish a sustainable energy industry.

“Any business involved in energy as either a consumer or supplier needs to take this into account, and we believe that the progressive and successful energy suppliers in the future will need to be looking at gas-fired generation and distributed generation if they are to be successful in meeting their customers’ energy needs in a cost-effective way,” he said.

Although less optimistic about the likelihood of significant federal policy shifts with regard to carbon markets, Outhred also maintained that gas would have a large role to play if the Government was serious in its attempts to implement sustainable energy and combat climate change.

First published in a different form in the November issue of Petroleum magazine