Gas to be Australia’s energy transition ‘safety net’ as world aims for net zero emissions by 2050

The Greens are threatening to block a deal Labor struck with energy giants to prevent a widespread east coast gas shortfall later this decade.

International demand for Australia’s Liquefied Natural Gas (LNG) is expected to remain strong over the next 26 years, according to a new EY study. Picture: Patrick Hamilton/Bloomberg via Getty Images

The Greens are threatening to block a deal Labor struck with energy giants to prevent a widespread east coast gas shortfall later this decade.

Energy and Climate Change Minister Chris Bowen confirmed two agreements struck under the federal government’s new Mandatory Gas Market Code of Conduct, which the Greens will try to scupper by moving a disallowance motion to block the deals.

The two new agreements with energy producers APLNG and Senex would supply the east coast with up to 300 petajoules of gas to 2030, and almost 140 PJ to the end of 2027.

The commitments follow warnings from the Australian Energy Market Operator and ACCC that the nation would not have enough ​gas to power factories, generate power, cook and heat homes in 2027.

Mr Bowen said the supply agreements “help guard against that outcome” and were “crucial” for avoiding serious problems in the next three years.

Climate Change and Energy Minister Chris Bowen says the government’s expanded scheme to underwrite green energy projects will secure supply in Australia. Picture: NCA NewsWire / David Swift

The Coalition has said it is awaiting the detail of the agreements before deciding a position, while the Greens have confirmed the party will vote to disallow the Code and therefor kill the deals.

“If the Greens and Liberals team up and disallow the code and scrap these commitments, it will threaten energy security for millions of households and thousands of manufacturing jobs across the country,” Mr Bowen said. ​

“That kind of reckless and pointless peacocking risks domestic gas supply, higher prices, as well as manufacturing jobs and the energy transition.”

The agreements are the first of several applications expected to be made under the new Code.

Report reveals Australian gas still needed in all ‘net zero’ scenarios

Australia will still need new gas supply in 2050 to ensure reliable and affordable energy in any net zero emissions scenario, new research shows.

Additional investment in current projects and expansion into other sources will be required to meet the domestic and global demand for Australia’s liquefied natural gas (LNG) over the next 26 years, according to new analysis by EY commissioned by Australian Energy Producers.

In a report released on Monday, EY analysed more than 350 potential net zero pathways and recommended the federal government prepare for three potential scenarios where domestic and regional demand for Australian LNG would range between 56 per cent of current levels up to an increase of 30 per cent on today’s demand.

Uncertainty about the ultimate take up of renewable energy and the role of capture and storage to trap harmful greenhouse gases were key factors in the wide-ranging scenarios.

Australian Energy Producers chief executive Samantha McCulloch said gas was still a “safety net” for Australia’s energy transition, providing affordable and reliable energy for households and businesses.

A new report says demand for gas will remain as the world transitions to net zero by 2050.

“The inclusion of natural gas as a core pillar of Australia’s energy and climate policies will speed up the transformation and secure substantial economic benefits from net zero,” she said.

Ms McColluch said the report found Australia’s unique position serving growing Asian demand meant it had to “chart its own course”, capturing more of the global market and lowering emissions through supporting renewable rollout and “coal-to-gas” switching.

Many of Australia’s major LNG customers like Taiwan, South Korea and Japan, have pledged to reach net zero emissions by 2050, but the report found gas “can be expected” to support manufacturing and industry in these countries as coal is phased out.

Gas demand for “industrial processes” in hard-to-abate sectors like steelmaking, the aluminium supply chain and chemical production is expected to remain stable over the next two decades.

In these scenarios, the report found carbon capture utilisation and storage played an “important role” in reducing emissions.

Climate Change and Energy Minister Chris Bowen on Sunday defended Labor’s massive expansion of a scheme to underwrite green energy projects, though he declined to reveal government’s upper limit spending cap on the auction-style system.

“In any corporate negotiations, commercial negotiations, you do not signal to bidders what your red lines are,” he said.

Mr Bowen said the government was supplying a “reliable and secure” investment environment for Australia’s power needs.

He also described the Opposition’s nuclear power ambitions as a “fantasy wrapped in a delusions accompanied by a pipe dream”.

But Coalition Attorney-General spokeswoman Michaelia Cash accused Mr Bowen of having a “completely, totally and utterly out of date” view of nuclear power, and said Labor had an “obsessions with renewable-only ideology”.

“You need to have everything on the table if you really do want, over the longer term, reduce emissions, to keep the lights on and to keep

Originally published as Gas to be Australia’s energy transition ‘safety net’ as world aims for net zero emissions by 2050