Gas glut sparks concerns among 'clean coal' backers

Age
Monday 5/4/2010 Page: 3

A LOOMING natural gas glut is raising fears that investment in "clean coal", seen by some as the saviour of our coal and power industries, will be put on the back burner. Amid ballooning gas supply and with possible falls in gas prices, a big supplier to utilities says investors could shy away from backing carbon capture and storage (CCS), which involves burying power station emissions underground.

Philippe Paelinck, director of CO2 product at Alstom, a global supplier to utilities, called the gas bubble the biggest threat to the development of carbon capture in the next five years. "I think if you look at the main threat to GCS in the coming five years, it is really gas," Mr Paelinck said last week in Sydney.

In the past two to three years, global gas reserves have surged after technological advances and increased demand made "unconventional" reserves commercially viable. Soaring demand has also increased the world's yearly supply of liquefied natural gas by 50% in the past two years. In Australia, this trend has manifested in the coal seam gas boom, which has attracted tens of billions in investment dollars from the world's oil giants.

"All of a sudden gas becomes a lot more available at an affordable price," he said. "If you have low gas prices, there will be a clear temptation - it's already there - to switch to power generation from gas." Alstom produces power generation equipment for both fossil fuel and renewable power stations. It is backing several CCS projects in Europe and America.

In Australia, which generates more than 80% of its power from coal, gas is expected to meet a growing share of generation needs, with investment in gas plants expected to cost $15 billion in the next decade. Consecutive governments have talked up the potential of CCS as a solution to cutting carbon, but the technology requires hefty subsidies to be economic.

Mr Paelinck said making "clean coal" viable depended on significant investments in the developed world, as emerging nations such as China were not pouring enough funds into the technology: "If we don't develop CCS because of gas in the US and in Europe, we won't have any CCS in the rest of the world - that's the problem."