Focus on gas to help hit net zero targets: Jemena chief

One of Australia’s biggest gas ­operators says government policy should prioritise the fossil fuel over coal and oil to deliver the nation’s energy transition and meet green goals.

One of Australia’s biggest gas ­operators says the nation’s renewable energy pipeline is too small to electrify the country’s power grid, arguing government policy should prioritise the fossil fuel over coal and oil to deliver the energy transition and meet green goals.

Australia has pledged to reach net zero emissions by 2050, which has seen the federal Labor government and states push a rapid electrification drive, including ban­ning new gas connections to homes.

But David Gillespie, acting managing director at Jemena, said moves to curtail demand for gas would be counter-productive and dent Australia’s aspiration to reduce emissions. Instead, policy should be focused on that which achieved the greatest emission ­reductions.

“The current pipeline of projects which promise to bring additional megawatts of renewable energy into the grid is simply not sufficient to decarbonise the grid, replace Australia’s reliance on liquid fuels and electrify gas demand,” Mr Gillespie said in a speech in Melbourne.

“It therefore makes sense that we use what limited renewable energy to displace coal and liquid fuels, the highest carbon emitters, as energy sources first and foremost.”

The comments mark an escalation in the pushback by Australia’s gas industry, which says hampering the industry will hurt manufacturers, which cannot easily switch to renewable sources, and damage the nation’s $2.5 trillion economy.

A growing number of industry executives have called for policy to encourage the retirement of coal, while increasing gas supplies.

Samantha McCulloch, head of Australian Energy Producers, said delays in building renewable energy projects would increase the country’s demand for gas. “We are talking about a need for a sub­stantial investment in gas,” Ms McCulloch said.

New investment in gas in Australia has been largely confined to Western Australia and the Northern Territory as developers struggle to secure regulatory approvals, though major projects have also been hampered by legal challenges from environmentalists.

Coal is still the dominant source of electricity in Australia, generating about two-thirds of the country’s power. However, the fuel source is rapidly on the wane and the Australian Energy Market Operator expects the bulk of the country’s coal generators will have exited the system within the next decade.

The federal government and many states insist the nation understands the role of gas, but new developments continue to struggle to secure permission to drill and recent legislative efforts have focused on reducing demand – prompting the country’s industry to suspect it does not have the support of key personnel.

But with delays in building new transmission lines, Australia has been forced to prolong the use of two of the nation’s largest coal generators – Origin Energy’s Era­ring coal power station and AGL Energy’s Loy Yang – to bide sufficient time to replace the capacity with zero emission sources.

Woodside Energy chief executive Meg O’Neill earlier this month said legislative changes were needed to amend regulations to stop a spate of legal challenges to projects.

In September, a federal court said Woodside could not begin seismic work at its $16.5bn Scarborough project – a precursor to the drilling of wells for the project – after concluding the company had inadequately con­sulted a traditional custodian.

Woodside said the ruling would not affect its target for first LNG cargo in 2026, but Ms O’Neill said it damaged the industry.

Broadening his augment for gas, Mr Gillespie said Australia’s existing network of gas pipelines could also be repurposed to significantly increase the country’s energy storage capacity.

Australia’s Energy Market Operator has said rapidly expanding the nation’s storage – to be dispatched when the sun sets or the wind is not blowing – is the most pressing need.

Australia has set the ambitious target of having renewable energy generate more than 80 per cent of its electricity by the end of the decade. While there has been a pick-up in renewable energy, the amount of batteries and pumped hydro remains too low.

Mr Gillespie said the development of hydrogen as a fuel source would be aided by the existing infrastructure.

“If we take Jemena’s gas network in NSW as an example, we know it has the ability to store around 80GW of energy or, to put that in context, the equivalent amount of energy stored in around six million home batteries,” Mr Gillespie said.

“Nationally, that figure increases tenfold to around six billion home batteries, meaning Australia’s gas networks can be used to store gases, and in the ­future renewable gases, which can be dispatched on demand to support electricity reliability as generation from intermittent renewable sources continue to grow.”

Global interest in hydrogen is growing rapidly, but it is some way from commercial viability.

There is also significant division about how hydrogen will be produced. Splitting water into its core elements requires significant amounts of energy, and to make it commercially viable Australia would need a massive expansion in renewable energy. Gas could be used, but producers would then need to abate the carbon emissions created.

The reporter travelled to Melbourne as a guest of Jemena.