A new report – The role of Gas Infrastructure in Australia’s Energy Transition – has been released by the Boston Consulting Group (BCG), which says that gas and its pipeline infrastructure will continue to play an important role in Australia’s energy transition by supporting the renewal of the energy system.
The report was commissioned by AGIG, APA Group, and Jemena and was authored by BCG, and is framed around three timeframes: today’s energy system, the system in transition phase, and the system at net zero emissions.
The report found that until the renewable electricity pipeline has enough capacity to electrify all potential applications, renewing the electricity grid by prioritising the removal of coal and electrifying liquid fuels used in light transport would have the greater impact across emissions reduction and system costs.
Additionally, while electrification is the economic alternative for some customers, accelerating the electrification of all end-uses could result in a period of fossil-fuelled electrification.
The report expects that natural gas and gas pipeline infrastructure will therefore play an important role in making the transition more robust by continuing to support applications that are hard or expensive-to-electrify while also helping to manage the risk of a disorderly exit of coal-fired generation.
The report finds that this approach allows for the preservation of existing gas infrastructure, which could be repurposed to deliver low carbon gases – such as biomethane, synthetic methane, or hydrogen – as part of an integrated clean energy system.
This system could provide a total-cost competitive option to some consumers and minimise the overall system cost of the transition.
The report also finds that for every new megawatt of renewable electricity generation that is produced, the greater emission reduction impact comes if it is used to replace power sourced from Australia’s coal-fired generation fleet as well as electrifying liquid fuels used in light transport, rather than displacing energy delivered by Australia’s gas pipelines and networks.
Commenting on the report, Jemena’s Managing Director, Frank Tudor, said that Australia’s gas networks can enable greater amounts of renewable electricity to be brought online without compromising system reliability in the short-term, while in the long-term renewable gases such as biomethane and green hydrogen (produced using renewable electricity) can be deployed for use across homes, businesses, and hard-to-abate sectors.
“Our goal is the same – delivering net zero emissions at lowest cost without compromising security of supply,” Mr Tudor said.
“Our concern is that by pursuing accelerated electrification we will only switch energy use from the gas network to the electricity grid, which currently sources upwards of 65 per cent of its energy from coal.
“If we’re serious about decreasing emissions at the lowest system cost, our focus should be on retiring our coal and liquid fuels first. To do otherwise may have the bizarre outcome of actually increasing Australia’s carbon footprint in the short-term.
“At the same time, our customers are also telling us that they enjoy the benefits of gas and want to continue to be able to access it to cook their food, heat their homes, and for hot water.
“Renewable gases such as biomethane and green hydrogen are demonstrating that gas, like electricity, can be renewable. What we need now is support, such as a Renewable Gas Target – facilitating a minimum required amount of renewable gas production – to help spur the development of a renewable gas sector.”
Mr Tudor said that Australian homes and businesses are best served if they are able to choose how they power their lives.
“We know there are around 30PJs of potential biomethane sources which are in close proximity to our gas distribution network in New South Wales. This is enough gas to meet current residential demand, of circa 27PJs, per annum across our gas network.”
“We also know that there’s no silver bullet; each home and business needs to consider how it will best meet its energy needs, and they should have a choice in how they do this.
“Not only can our gas networks deliver energy system reliability and increasingly renewable gases, but they can maintain customer choice.”
A full copy of the report is available here.
