Gas still needed for net zero in 2050, says report

New supplies of Queensland gas will still be needed in 2050 to ensure Australia has reliable and affordable energy in any net-zero emissions scenario, new research shows.

Energy Minister Chris Bowen last week. Picture: David Swift/NCA NewsWire

New supplies of Queensland gas will still be needed in 2050 to ensure Australia has 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 over the next 26 years, according to new analysis by EY, commissioned by Australian Energy Producers.

Queensland gas is a major employer that already plays a major role in the east coast energy market, and is projected to provide about $1.4bn a year in royalties to the state government annually over the next four years.

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 by 2050.

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 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.

“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 such as Taiwan, South Korea and Japan have pledged to reach net zero emissions by 2050, but the report found gas could 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 spending cap limit 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 shadow attorney-general Michaelia Cash accused Mr Bowen of having a “completely, totally and utterly out of date” view of nuclear power, adding that Labor had an obsession with renewable-only ideology.