The Future of a Future Gas Strategy
An approach to natural gas that underestimates its critical role across the economy and in reaching net zero and overestimates alternatives will undermine energy security and drive up energy prices, the peak body for gas producers has told the Federal Government.
In a submission to the Government’s Future Gas Strategy, Australian Energy Producers (AEP) said gas is essential for reaching net zero in Australia and the region, and provides a significant economic contribution, including in regional Australia.
It said independent analysis from Ernst & Young (EY), included as part of its submission, found that new gas supply is needed for all plausible net zero pathways for Australia.
“The analysis found that Australian natural gas will play a key role to 2050 and beyond in all plausible pathways to net zero and that a sustainable Australian gas sector is pivotal to managing the risks to energy security, cost-of-living and emissions reductions targets in Australia and the regions,” the AEP submission said.
“The Future Gas Strategy must prioritise removing barriers and putting in place the policy drivers necessary to facilitate investment in new gas supply.
“Barriers to new gas supply persist, including constraints on gas exploration and development in some States, lengthy and uncertain permitting processes, as well as regulatory approvals that are at risk of appeal.
“Following a year of regulatory interventions and market disruptions, a stable investment environment that gives confidence to investors is urgently needed.”
Woodside Energy, in its submission, said the strategy needed to address ongoing policy uncertainty related to timely approval, which is disrupting local and regional energy markets.
The company called for the Capacity Investment Scheme to be extended to include gas power generation.
It called on the Government to make “a clear and unequivocal statement in support of the gas industry, the jobs it sustains, the revenue it creates, the economic growth and living standards it supports and the role of gas in the energy transition.”
It pointed to data reflecting a 12-month average mix of fuels used to generate electricity in the four Australian mainland States connected to the National Electricity Market, which showed that gas can supplement renewables – as is the case in South Australia – and firm them as is the growing case in New South Wales and Queensland.
“It also offers Victoria a potential opportunity to eliminate coal-fired power generation more quickly.”
In WA, Woodside Energy expects to supply about 22 per cent of the State’s domestic gas supply.
“The WA gas demand profile has changed significantly with the State Government’s decision to retire State-owned coal-fired power generators by 2030,” the submission said.
“The Australian Energy Market Operator forecasts that renewable power generation will only partially compensate for the loss of coal-fired baseload power, with gas-fired baseload and firming capacity needed to support system stability and reliability.”
The submissions highlighted the importance of Carbon Capture and Storage (CCS) and Carbon Capture, Utilisation and Storage as technologies that will be required.
The EY report said, “all pathways to net zero will require significant deployment of renewable energy, natural gas, CCUS and a range of low-carbon hydrogen technologies”.
Woodside Energy said its portfolio of CCS opportunities had the potential to store more than 3 million tonnes a year of carbon dioxide by 2030.
CCS presented an opportunity for Australia to reduce the emissions intensity of its gas, other industries and support regional decarbonisation by offering CCS as a service.
The WA Chamber of Commerce and Industry submission said that as a result of the Safeguard Mechanism any new investment in major energy projects will need to be net zero, and CCS would therefore be even more integral for major energy projects.
“The Federal Government’s recent success in passing the Environmental Protection (Sea Dumping) Amendment (Using New Technologies to Fight Climate Change) Bill 2023 was a critical step in enabling the cross-border storage of carbon dioxide,” it said.
“By doing so, it also legitimises the suite of negative emissions technologies that are associated with carbon capture.
“To this end, it is critical that the Federal Government continues giving industry regulatory certainty, including by developing a National Carbon Capture Strategy, and address underlying social licence concerns.”
The Chamber said the Future Gas Strategy presented a pivotal opportunity for the Federal Government to not only provide a clear roadmap for the future of gas in Australia, but to also shape the narrative surrounding gas, and move to address the regulatory barriers that exist.
“As we stand at the crossroads of transformative energy transition, it is essential that the Strategy reflects the nuanced and indispensable role that gas plays in both our current energy mix and the future we envision,” it said.
Federal Resources Minister Madeleine King said the strategy would help government, industry and households make decisions about the future role of gas.
“The Future Gas Strategy will ensure Australia has the long-term policy clarity needed to support decision across communities, industry and governments,” Minister King said.
“The role of gas will change as the world decarbonises – both in Australia’s energy mix and in the energy use of our trading partners.”
Minister King said gas was essential to modern supply chains which connected Australia in complex ways with trade and investment partners, creating essential goods, services and jobs at home and abroad.
“We need to ensure gas demand decreases faster than supply through the energy transition,” Minister King said.
“Gas shortages, supply disruptions and high prices are among the consequences of reducing supply faster than demand.”
On the flip side, Greenpeace said the strategy should provide a clear and managed phase out of fossil gas use in Australia.
“Australia must urgently transition away from fossil fuels, including from fossil gas, if we are to have any chance of limiting the worst harms of climate change,” it said.
“Australia should not continue to allow expansion into new gas fields, including Woodside’s Browse proposal.
“The Australian government (should) strengthen the regulation of carbon offsets to ensure their quality and to limit the volume of offsets that proponents can use, develop regulations to ensure that green hydrogen is truly green, is not prolonging the role of fossil gas in the energy system, and that undue levels of RE (renewable energy) are not diverted from other more efficient decarbonisation efforts for the sake of hydrogen production.
“The Future Gas Strategy should incentivise renewable energy projects to ensure the sufficient pace of energy transition.”
On CCS, the Greenpeace submission cited the UN Production Gap Report 2023, which it said highlights concerns about the unreliability of both CCS and the use of offsets, which they refer to as Carbon Dioxide Removal (CDR).
“The report states that ‘there are large uncertainties in the technical, economic, and institutional feasibility of developing and deploying novel CDR and fossil-CCS technologies at the extensive scale envisioned in these scenarios. Around 80% of pilot CCS projects over the last 30 years have failed’,” it said.
The Australian Conservation Foundation recommendations included:
- Calling for CCS to be excluded from the Strategy.
- For the Strategy to include an explicit strategy to rapidly phase out oil and gas, starting with a ban on new gas project extensions and approvals.
- For the Federal Government to negotiate with major LNG importing nations to rapidly phase out the seaborne LNG trade with Australia and provide trading partners with a clear timeline for Australia rapidly phasing out gas.
- Prioritising electrification, particularly in buildings, over green hydrogen.
- Implementing a gas reserve for eastern gas markets.