APA
Gas
Energy transition
5 min read
How does Australia meet its emissions reduction targets? Look to South Australia.
Written by
Ross Gersbach (2024)
Ross Gersbach
Published on
06 December 2023
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Australia’s energy transition is stalling. There are lots of reasons for this, including global delays for equipment and resources, and social licence issues associated with electricity transmission and renewable energy projects.

These delays put at risk the achievement of national and state emissions reduction targets. Compounding the problem is that governments are now looking to keep coal power stations in the energy system – like Loy Yang A in Victoria, which will now stay open until 2035, and Eraring in NSW, which the NSW Government is considering extending.

We know that the fastest way for our economy to decarbonise is to accelerate the ramp-up of renewable power and to prioritise the exit of coal generation above all else. And while Australia’s emissions from coal power stations are reducing, they continue to represent a significant proportion of our total emissions. It makes sense, therefore, that if we want to meet our emissions reduction targets, we should focus on how to remove coal from the system.

Removing large, coal power stations from the energy system is not without its challenges, however it is far from an impossible feat, as demonstrated in South Australia.

Since the state’s last coal power station closed in 2016, South Australia has positioned itself as a world leader in renewable energy. In fact, there are times when renewables meet 100 per cent of the state’s power needs.

However, the experience in South Australia has also shown that when the sun isn’t shining and the wind isn’t blowing, significant volumes of dispatchable energy are required to support the reliability and security of the energy system. This is where gas comes in.

Gas is critical to providing reliability and long duration firming. For example, from 28 April 2023 to 2 May 2023, gas powered generation provided over 65 per cent of peak electricity consumption at 7.00pm in three out of five days, due to periods of low wind and solar generation.

Gas Powered Generation Chart

The Australian Government is currently consulting on a Future Gas Strategy to provide a medium (to 2035) and long term (to 2050) plan for gas production and consumption in Australia.

The Government recognises that gas is expected to play a key role in navigating the transition and helping Australia meet its net zero ambition targets as the electricity sector moves to renewable energy sources.1

As the Federal Minister for Climate Change and Energy, Chris Bowen, noted recently:

“Domestically, the Government has a target of 82 per cent renewable energy in our energy mix by 2030. As big and ambitious as this lift is, it will leave 18 per cent of our electricity mix as non-renewable.

“And as aging coal-fired power stations leave the grid, that 18 per cent will increasingly be focussed on gas. Gas is a flexible fuel necessary for peaking and firming as we undertake this transformation.

“Unlike coal fired power stations (or, for that matter nuclear power stations), gas fired power stations can be turned on and off at very short notice, making them vital for peaking and firming. This is before we get to the needs of industrial manufacturers for gas as feedstock and direct energy.”2

However, both the Australian Energy Market Operator and the Australian Competition and Consumer Commission have recently flagged the risk of East Coast supply shortfalls this decade.3 This puts at risk the vital role gas will play in ‘unlocking’ renewables and supporting the decarbonisation of other states beyond South Australia.

Our recent submission to the Future Gas Strategy made several recommendations to ensure this risk doesn’t eventuate.

First and foremost, it is vitally important that we bring new gas supplies to market as soon as possible. Governments have a role to play in expediting approval processes to ensure that frontier basins can be established and connected to the interconnected gas grid. We need to fast-track the development of new gas resources, such as Beetaloo, to avoid potential gas shortfalls.

Second, over the medium to long-term, we must continue to explore the role renewable gases can play in decarbonising industry sectors that currently rely on natural gas. We’re already seeing this play out elsewhere globally, including in the Netherlands where the construction of the first section of a national hydrogen network has recently commenced.

Australia’s gas sector is well placed to accelerate the rollout of new, low emissions technologies thanks to decades of knowledge, capability, and existing critical infrastructure.

And that is exactly what APA is seeking to do through our landmark Parmelia Green Hydrogen Project in Western Australia, which is exploring the potential to produce and transport cost-effective green hydrogen to WesCEF’s production facilities in Kwinana via APA’s existing Parmelia Gas Pipeline (PGP).

The development of renewable energy hubs, such as the South Australian hydrogen hub near Whyalla and the Northern Territory’s Middle Arm Sustainable Development Precinct will also provide the infrastructure necessary to produce and transport hydrogen for both domestic use and export.

But until these technologies develop at a scale to be commercially viable, our focus as a nation needs to be on decarbonising in the most efficient and cost-effective way. This means prioritising new renewable energy generation and ensuring we have the gas available to firm it.

Read more in APA’s submission to the Future Gas Strategy.

1 Commonwealth Government, Future Gas Strategy Consultation Paper, September 2023, p7.
2 https://minister.dcceew.gov.au/bowen/speeches/speech-ceda-wa-energy-transition-summit
3 AEMO, Gas Statement of Opportunities (Report, March 2023); ACCC, Gas Inquiry 2017-2030 Interim update, (Report, September 2023) p9.