Australia Faces Energy Crisis As Manufacturers Threaten To Exit Green Madness

  • Date: 07/06/19
  • The Wall Street Journal

Australia is experiencing an energy crisis so severe that the country, one of the world’s biggest exporters of liquefied natural gas, is considering imports to shore up supplies for manufacturers and avoid possible blackouts.

The country’s commitments to sell LNG overseas as well as the shuttering of aging coal-fired plants have made it a struggle for electricity producers at times of peak demand. Some of Australia’s manufacturers have threatened to move production overseas to escape a costly and unreliable energy supply.

Sydney, Melbourne and other cities on the country’s eastern coast have experienced occasional blackouts, hitting everything from health clinics to schools. Analysts predict a widening shortfall of LNG, raising concern manufacturers won’t have enough power to run food-processing factories or chemical plants.

While Australia is rich in natural gas, it lacks a nationwide network of pipelines to supply users at affordable rates. The fuel is super-chilled into LNG for shipment around the country and abroad. Australia is projected to export 80.73 million metric tons of LNG this year, compared with 70.23 million metric tons in 2018, according to the research firm Wood Mackenzie.

The electricity blackouts occurred as Australians endured a scorching Southern Hemisphere summer, with heat waves across the country that were unprecedented in scale and duration. On a couple of days in January, the temperature in Sydney reached 108 degrees Fahrenheit. This year, the country recorded its warmest January-through-May period ever, according to the Bureau of Meteorology.

Electricity use for cooling spikes with such temperatures, but it isn’t only in summer that demand for LNG can outpace supply. In the southern city of Melbourne, gas supplies are at their tightest in the winter when demand for heating kicks in.

Climate change became a central issue in Australia’s latest election campaign following a summer of wildfires, drought, floods and extreme temperatures.

Voter support for policies targeting climate change was at its highest level since 2007, though it wasn’t enough to save Australia’s center-left party, which put the issue at the heart of its campaign. It was defeated by the incumbent conservative government in the May election on fears ambitious environmental targets would boost the cost of living and hurt the country’s coal industry.

Several state government have restricted gas developments due to environmental concerns. Proposals to prevent energy shortages involve supplying regions in need with LNG from elsewhere in the country and even from overseas. Those looking to import LNG include a billionaire entrepreneur who made his fortune shipping iron ore to China, U.S. energy giant Exxon Mobil Corp. and Australia’s biggest power retailer, AGL Energy Ltd.

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