Gas will be needed for decades to come, APA Group CEO Adam Watson says
Victoria has moved to curtail the use of gas, but APA boss Adam Watson said the fuel source has a long-term future and Australia should embrace its use to hasten the exit of coal.
Gas will be needed for decades to come and Australia should embrace the fuel source to displace coal, the chief executive of the country’s largest listed infrastructure company says.
The role of gas in Australia’s energy transition remains contentious. Victoria last week moved to curtail its use, banning the installation of gas in new builds from 2024, a move that is widely seen as an illustration of Australia’s second most populous state’s attitude towards the fuel source.
The move has won favour with environmentalists, who claim the use of gas will slow Australia’s energy transition to renewable energy sources. But APA CEO Adam Watson said Australia does not yet have alternatives to gas to support renewable energy generation, and the country should embrace the comparative advantages of gas.
“Gas has a critical role to play in ensuring the decarbonisation of our electricity system. When the sun doesn’t shine or the wind doesn’t blow, you need firming generation,” said Mr Watson.
“We encourage all governments to do all they can to accelerate the development of renewables, but we don’t want to keep coal in the system because we aren’t prepared to bring gas to market, especially when it is reliable and affordable. You can turn it on within minutes. In an ideal world, we will get to a point when renewable energy minimises the role of gas, but that is a long way away, decades away.”
Mr Watson joins a chorus of energy industry executives calling for Australia to embrace gas. Anthony Albanese has said his government understands and supports the fuel source to hasten Australia’s energy transition, but developers have highlighted recent market intervention and struggles to secure government approvals for new projects as evidence of lukewarm backing.
Gas developers insist Australia has little time to waste. Australia has set an ambitious target of having renewable energy generate more than 80 per cent of the country’s electricity by 2030. Coal currently provides more than 60 per cent of the country’s electricity, demonstrating the scale of the challenge.
But Australia is struggling to build renewable energy generation sources quickly enough to compensate for the retirement of coal power stations, and as a result, the country is struggling to develop sufficient dispatchable capacity.
The federal Labor government has rolled out its capacity investment scheme, which sees the government underwrite much-needed new generation.
Australia’s east coast gas market is facing a material shortfall in the next few years as traditional supplies run dry and proposed new developments struggle to secure regulatory and social licences.
Illustrating ever-growing tight supplies, the Australian Consumer and Competition Commission said the east coast had sufficient supplies for the next 18 months, but it would be tight and likely dependent on favourable weather conditions.
But Australia’s gas industry remains frustrated by ongoing delays in regulatory permissions for projects, which executives say is indicative of the lukewarm attitude of the government towards gas.
The difficulty is not replicated in Western Australia, where gas has been highlighted as a catalyst in the state moving to having renewable energy provide about a third of its electricity generation.
WA is poised to see another gas region developed, with the Perth Basin the centre of a frenzy of activity. Mr Watson said APA’s new pipeline will unlock the region, connecting the supply source with emerging demand as WA and the federal government prioritise growing critical mineral processing.
Mr Watson said the pipeline will likely be utilised to its full capacity immediately, but spending $460m demonstrates its belief the region will soon be a success.
“We are investing ahead of demand. It will bring gas fields to market, particularly along the Perth Basin,” Mr Watson said.
“We are big believers in the mineral resources in the state, and we are investing ahead of our customer requirements to make sure we can attract investment into the region.”
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