Hydrocarbon Engineering

There is also no doubt that the industry is under pressure,

and that new projects and developments will face

increasingly stringent environmental regulations. Despite

efforts to reduce fossil fuel consumption, it still provides

for nearly 93% of Australia’s primary energy needs. The

country committed itself to reducing carbon emissions,

but the path toward reducing carbon intensity has been a

political battle. Australia must cut coal use if it is to meet

its goals, but recent years have stalled progress. The

country possesses massive coal reserves, and is the world’s

largest exporter of coal, with exports in 2018 valued at

US$47 billion. BP notes that the reserve-to-production

ratio for Australia’s coal is 304 years. However, a growing

number of Australians fear that they may not have a viable

country in 300 years if global climate change continues to

worsen.

On the downstream petroleum side, several Australian

refineries have already closed, and the remaining four still

have work to do. The industry lobbied for a

postponement to 2027 of the switch to 10 ppm maximum

sulfur gasoline, stating that a rapid move to this standard

could threaten their viability. The European Union moved

to Euro 5 standards in 2009, so Australia is lagging far

behind its European allies. Auto manufacturers have

criticised the oil industry, noting that the most advanced

and efficient engines require ultra-low sulfur fuel. The

Australian Institute of Petroleum was quick to point out

that each remaining refinery contributes approximately

AUS$1 billion per year to the local economy, and that over

AUS$2 billion has been invested in the refineries over the

past five years. They now have eight years to make the

investments needed to produce 10 ppm sulfur gasoline.

LNG is the brightest spot among the fossil fuels, since

so many importing countries rely on LNG as a means of

reducing carbon emission from coal and oil. By late 2018,

Australia was exporting more LNG than Qatar, and it

appears that Australia will be the world’s largest LNG

exporter this year. Australia is expanding its infrastructure

to increase natural gas use domestically as well.

Australia’s 2020 target was to reduce greenhouse gas

emissions 5% below 2000 levels. Early on, the Department

of the Environment and Energy stated that the country

would beat this target. But the carbon tax was enacted

and quickly repealed, and Australian CO

emission rose. BP

reports that year 2018 emissions were 16% above 2000

emissions, making its initial pledge nearly impossible to

achieve. In November 2016, Australia ratified the Paris

Agreement and the Doha Amendment to the Kyoto

Protocol. Under the Paris Agreement, Australia must

reduce emissions by 26 – 28% below 2005 levels by the

year 2030. Australia intends to cut per-capita emissions by

half, since its per-capita emissions are so far above most

OECD countries. But for the past few years, Australia has

been moving in the wrong direction, raising the question,

can Australia reduce its carbon intensity as pledged?

References

1. ‘Statistical Review of World Energy 2019’, BP, Group Chief

Economist’s analysis.

2. ‘Resources and Energy Quarterly’, Australian Department of

Industry, Innovation and Science, (March 2019).

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