Public financial institutions across China, Japan, and South Korea have bankrolled Australia’s gas projects to the tune of $28 billion (US$21 billion) over the last decade.
However, as Prime Minister Scott Morrison joins world leaders at COP26—the 26th United Nations climate summit in Glasgow—environmental groups have decried Australia over its continued inaction in halting coal, gas, and other emissions-generating projects.
A report by four environmental research centres across Australia, Japan, and South Korea found that while fossil fuel financing reached the tens of billion between 2010 and 2020, the same financial institutions had invested only $3.26 million (US$2.43 million) into renewable energy projects.
The report (pdf) said that while private financial institutions had shied away from lending to fossil fuel projects, overseas government-managed banks hadn’t.
“This public financing is often make or break for projects, subsidising or de-risking private financing and thus propping up fossil fuel projects that may not have got off the ground otherwise,” the report stated.
Australia, the world’s biggest liquefied natural gas (LNG) exporter, shipped over 72 million tonnes of LNG to North Asia between June of 2020 and 2021 alone—worth around $15.6 billion (US$11.6 billion).
China, in particular, has ramped up its gas consumption over recent months due to sweeping energy shortfalls that have left parts of the country with prolonged power outages and blackouts.
The report’s authors have also joined other environmental groups in urging Australia to fast track emissions reduction efforts in light of a recent report by the United Nations Intergovernmental Panel on Climate Change (IPCC) that concluded that man-made emissions are the cause of rising temperatures.
“Both new fossil fuel projects and the expansion of existing projects are incompatible with the goal of net zero emissions by 2050,” the report said.
“If we are to keep global warming below 1.5 degrees which is needed to avoid the worst impacts of the climate crisis, it is essential that overseas financial institutions stop financing fossil fuels.”
However, the federal government has been vocal about gas being a transitional measure to ensure sufficient power while the nation shifts to more intermittent generation such as wind and solar.
Speaking at a public hearing (pdf) last week, Paul Broad, CEO of government-owned energy provider Snowy Hydro, said that solar and wind generation needed “firming” capacity to provide energy for periods when the sun didn’t shine and wind didn’t blow.
“You need to think about the transition fuels. As Europe is showing today, the key transition fuel is gas,” Broad said.
An unexpected drop in wind has submerged the United Kingdom into an energy crisis as lowered renewable generation and increased demand for gas has swept the European bloc.
Broad also said that gas was advantageous in that it offered fast “ramping”—the ability to fire up rapidly and when needed.
“In Europe, the proportion of energy supplied by gas is 22 percent; in the NEM (National Electricity Market) it’s six per cent. The Europeans are probably five to 10 years ahead of where Australia is, in terms of recognising the importance of gas as a fill-in for wind and solar,” he said.