Dubbed Gorgon, for the snake-haired Greek mythological creature with the power to turn people to stone, it has helped Australia edge past Qatar to become the world’s largest exporter of LNG.
Yet the $54 billion engineering marvel operated by California-based Chevron poses a climate conundrum. In a country suffering massive wildfires widely seen as linked to climate change, the Gorgon project symbolizes the nation’s bargain with the fossil fuel business.
Australian LNG exports, which are up more than fourfold since 2011, largely go to Japan, China and South Korea, according to the U.S. Energy Information Administration.
The climate effects of those exports are mixed. During combustion, natural gas emits about half the quantity of greenhouse gases as coal. But leakage from wellhead valves, pipelines and liquefaction equipment offset much of the difference.
In addition, new LNG supplies have driven down the price of gas. That helps undercut coal, but it also stimulates greater demand for polluting energy in general.
“Australian LNG is helping reduce the carbon intensity of the Chinese economy and Korean economy because those countries are importing more and more LNG, and replacing coal-fired power plants,” said Pavel Molchanov, an energy analyst at the U.S. investment firm Raymond James.
“Increasing LNG exports helps to make gas more affordable,” said Jason Bordoff, founding director of Columbia University’s Center on Global Energy Policy. “That’s helpful if you are replacing coal and less so if you’re undermining the economics of renewables and nuclear.”
LNG exports give the Australian economy a boost. On the Gorgon project alone, Chevron and its partners have spent more than $40 billion on Australian goods and services and awarded more than 700 contracts to Australian companies. Overall, LNG exports make up about 2.5 percent of the Australian economy.
“The Australian debate is dominated by the idea that acting on climate change is bad for our economy,” said Paul Gilding, one-time head of Greenpeace who now teaches at the University of Cambridge and lives in the Australian island state of Tasmania.
But Gilding, who advises businesses on climate change, and other political observers say that the devastating wildfires will alter perceptions of the economy and climate change by damaging the tourism business, disrupting other parts of the economy. And they think the fires will tie fossil fuels more closely with greenhouse gas emissions.
Australian Prime Minister Scott Morrison and others defend the mining and gas sectors by saying the country’s carbon footprint is relatively small. The Union of Concerned Scientists says that Australia makes up 1 percent of global emissions.
But Australia, which is also the world’s largest exporter of coal, has seen its greenhouse gas emissions rise as a result of LNG expansion. The country’s emissions grew 0.6 percent as LNG output jumped 19 percent, the government said in an August 2019 greenhouse gas update. And a major coal-exporting terminal on the northeast coast is in the works, with coal destined for India.
On a per capita basis, UCS says, Australia would rank second after Saudi Arabia and ahead of the United States in greenhouse gas emissions.
Bordoff said that the Australian government should be paying closer attention to these domestic numbers as a matter of policy.
“The Australian government is retreating from what it takes to reduce its own emissions and is retreating from playing a leadership role of getting other countries, including India, to move more quickly in a low-carbon direction,” he said. Instead, at the recent climate conference in Madrid, the United States, Brazil and Australia joined to undercut efforts to slow down climate change.
Australia’s position makes climate change “a difficult collective-action problem,” Bordoff added “Countries won’t increase their ambition if they don’t see others doing that as well.”
Chevron has already tangled with the state Environmental Protection Authority in Western Australia, which early last year said it would impose a zero-carbon guideline for large natural resource projects. The agency later withdrew the proposal for further analysis.
The Gorgon field, which began operating in 2016, contains an unusually high level of carbon dioxide along with its methane; the CO2 makes up 14 percent of the gas the project produces on average. Sensitive to climate concerns, Chevron has planned and belatedly begun a more than $2.5 billion project to capture carbon dioxide from the Gorgon gas venture and inject it underground. The company said it hopes to eventually store 40 percent of the project’s CO2 in a reservoir 1¼ miles under Barrow Island.
During a three-and-a-half-year delay in the carbon capture project, Gorgon became one of Australia’s leading sources of CO2 emissions. Chevron was the nation’s sixth-biggest carbon polluter in 2017-18, according to Bloomberg News. Exxon Mobil and Royal Dutch Shell are also partners in the project. The carbon capture project began in early August 2019.
There are several other LNG projects in Australia.
Gilding said that growing concern about climate change will undercut the appetite for all fossil fuels, including LNG.
“Once you flip that, the debate changes,” he said. “I think it will change the politics. It’s going to become toxic to invest or lend to the coal and LNG companies. There’s going to be a push by the activist community against the banks and financiers not to associate with those companies.”
Gilding said “those projects won’t stop because of climate change but because of market change.”