The Federal Government has signed a new agreement to improve local gas supply pressures for another four years.
Commercial and industrial gas consumers will receive first preference for the new supply of up to 40PJ of affordable gas. The Federal Government’s Gas Code of Conduct means new supply will be offered at $12/GJ, indexed to CPI.
APLNG will now supply up to 10PJ of gas per year until 2029, having agreed to extend the terms of its existing domestic supply deal under the code, which was originally set to expire at the end of 2025.
This is expected to enable additional contracting for long-term domestic gas supplies. The Federal Government said 10PJ of gas is enough to entirely support heating and cooking use in about 200,000 homes.
Since the mandatory Code of Conduct came into effect in 2023, the Federal Government said it has secured 644PJ of enforceable supply commitments for domestic gas.
Legally enforceable commitments under the code provide more affordable gas to the Australian market in the short- to medium-term – and as more clean, cheap, renewable energy comes into the grid, gas firming is expected to play an important role in ensuring system reliability.
The supply commitment will feed into key demand centres and help ensure sufficient domestic supply to keep downward pressure on gas prices.
For heavy industrial gas users, the Federal Government’s reformed Safeguard Mechanism requires them to meet a continually reducing emissions limit by reducing onsite emissions and offsetting any emissions above those limits.
The Federal Government said combined with its $1.4 billion decarbonisation investments through the Powering the Regions fund, this ensures Australia’s heavy industry sector – which employs hundreds of thousands of people around Australia – is supported to stay strong and competitive as it transitions to net zero.
Compliance with the Code is monitored by the Australian Competition and Consumer Commission.
Federal Minister for Climate Change and Energy, Chris Bowen, said gas has an important role to play in Australia’s energy system as it transitions towards 82 per cent renewables.
“Unlike coal or nuclear, gas power generators can be turned on and off in a couple of minutes. And when it’s off, it’s zero emissions.”
Federal Minister for Resources, Madeleine King, said the Federal Government’s gas policies are working to secure more affordable gas for households and businesses across Australia.
“Gas will continue to play an important role in firming up renewable energy and supporting high-heat manufacturing.”
