Leaders unveil $2bn green energy package

Scott Morrison and Gladys Berejiklian will unlock gas reserves and fund climate-friendly projects under a $2bn energy deal.

NSW Premier Gladys Berejiklian. Picture: AAP

Scott Morrison and Gladys Berejiklian will unlock gas reserves, fund climate-friendly projects and boost supply for coal-fired plants under a $2bn energy deal aimed at reducing carbon emissions and strengthening the power grid.

The federal and NSW governments will unveil the energy package on Friday, headlined by a commitment from the NSW Premier to support investment in gas, pumping an extra 70 petajoules into the domestic market each year.

The commitment would match the potential of the Santos Narrabri gas project, which is yet to pass all environmental approvals.

It has been estimated the Narrabri site could supply up to 50 per cent of NSW’s gas needs. NSW currently consumes about 119 petajoules of gas each year.

The Morrison government, which has pledged to “meet and beat” its Paris climate target, will provide almost $1bn for NSW-based emissions-reduction initi­atives and will also support the establishment of a renewable energy zone in the state’s central west to help large-scale generators pump power into the grid.

A key feature of the green projects will be carbon capture storage and methane reduction from landfills, which would complement the emissions potential of the clean energy sector. The NSW government will provide $1bn, matching the federal funding, to support new emissions-reduction projects.

With gas and coal viewed as crucial interim power sources ahead of Snowy Hydro 2.0 and other pumped hydro and gas-fired power stations coming on line, the Berejiklian government has made an undertaking to “remove barriers to coal supply to the Mount Piper Power Station”.

The two governments will also jointly underwrite the HumeLink and the Queensland-NSW interconnectors to strengthen the ­reliability of the power grid.

The major energy pact, flagged by the Prime Minister on Wednesday, will be the first in a series of similar deals struck with other states and territories. “I want households and businesses paying less for their electricity and I want to continue to get emissions down — this deal does both,” Mr Morrison said. “There is no credible plan to lower emissions and keep electricity prices down that does not involve the greater use of gas as an important transition fuel. This plan is about getting greater access to that gas, as a vital accompaniment to our record investment in renewables.”

Mr Morrison said the agreement outlined “a responsible transition of the NSW electricity sector to lower emissions technologies, while recognising the critical contribution that energy-dependent manufacturing jobs make to the economy”.

The deal gives ­financial support for a pilot renewable energy zone in the state’s ­central west region. It will also commit the federal government to supporting NSW projects in its $1bn Underwriting New Generation Investment program.

NSW projects shortlisted for government support under the underwriting scheme include a gas project in Port Kembla and a ­renewables project in Armidale.

Senior government sources said the announcement did not ­assure the approval of the Narrabri gas project, which is being reviewed by the NSW Department of Planning, Industry and Environment. If the Narrabri project does not meet the state’s environmental standards, the onus will be on the Berejiklian government to facilitate new gas projects.

NSW can also meet the 70 petajoules agreement by importing extra supply from Queensland through terminals in Newcastle and Port Kembla.

Ms Berejiklian said the agreement would “strengthen and diversify” the NSW energy sector.

A senior government source said there was “no way” the federal government would strike a deal with Victoria unless it released more gas into the system.

Victoria has a ban on fracking and a moratorium on conventional gas exploration.