Bad governance can lead to blackouts in cold winters

As attention focuses on the cost benefits of Peter Dutton’s nuclear plan as opposed to the government’s renewables strategy, a more immediate problem has surfaced. The Australian Energy Market Operator called an emergency meeting of the gas industry for Thursday.

Depleted by an unusually early winter cold snap, gas supplies are running short, which without urgent action could leave insufficient reserves for the rest of winter. In the medium to longer term, the crisis could send electricity bills soaring, and supplies at times of peak demand in summer could also be in jeopardy. The situation also heightens concerns around the viability of the manufacturing sector, which relies heavily on gas but is often not well suited to electricity.

The gas industry, energy reporter Colin Packham writes, says the AEMO’s warning should be a catalyst for immediate action. But approvals for new drilling developments remain on the sidelines. If Australia cannot unlock new supplies, it could be forced to import gas to the east coast. While politicians and regulators in pursuit of the net-zero holy grail have dithered, that danger has loomed for years.

In one of the world’s most energy-rich nations, importing gas would be a costly absurdity representing a failure of policy and governance. On Thursday, the AEMO told gas companies the east coast was dependent on the maximum amount of supplies being sent south from Queensland for the rest of winter.

The practical approach needed to avert the crisis was canvassed at The Australian’s Energy Nation Forum on Wednesday, as government policies and regulation came under the blowtorch. Australia’s biggest gas pipeline operator, APA Group, was forced to put a major Queensland gas ­expansion on hold due to a regulatory clampdown, the forum heard. The real challenge, APA chief executive Adam Watson said, was policies and regulations that were “potentially going to have a chilling effect on investment”.

Green lawfare is also a problem. Santos in March suffered a further blow to its $3.5bn Narrabri gas project when the Federal Court ruled in favour of an appeal against the project by traditional owners.

The tactics deployed were a variation on well-worn themes. Green groups and activist lawyers have harnessed Indigenous interests to claim insufficient regard to climate change in making decisions. The usual result is delays to projects and an increased risk profile for doing business in Australia. Santos’ Narrabri project, announced in 2013, could supply NSW homes, small businesses, major industries and electricity generators with up to half the state’s natural gas needs. Leaving it untapped defies reason.

After years of wrongheaded policies from some states, which have rushed to ban new gas appliances and forbid development of new reserves located close to where industry most needs gas, the Albanese government recognised reality last month when Resources Minister Madeleine King announced its Future Gas Strategy.

Regardless of the outcome of the next election, which the Opposition Leader has drawn as a contest between nuclear power and renewables, gas is the only affordable and practical midterm pathway to energy security in the transition away from coal.

Mr Dutton’s plan would not see the first two generators producing electricity until 2037. Nor will it come cheaply. He is proposing public ownership of the seven new plants and will release costings before the election.

How those costings compare with Labor’s renewables plan – wind and solar power and an extensive network of transmission lines, which will meet stiff opposition in farming areas and regions – is yet to be seen. Reliability of supply when the sun does not shine nor the wind blow will be crucial.

According to the Net Zero Australia group, comprising Melbourne University, University of Queensland, Princeton and Nous Group experts, Australia will need $1.5 trillion by 2030 for renewables to be on track to meet the 2050 net-zero target. That will include about 10,000km of high-voltage transmission lines to connect renewable energy generation to replace coal power. But transmission lines are already years behind the timetable, Nexa Advisory analysis reported earlier this month.

The overall predicament underlines why the best use must be made of the nation’s abundant gas reserves. Political will is needed, Australian Energy Producers CEO Samantha McCulloch says, “to restore investment confidence and ensure timely approvals for much-needed new gas supply’’. Regulatory certainty to support investment from exploration to production is needed.