"The Federal Government's Future Gas Strategy sensibly acknowledges two truths that sit awkwardly in our political debates. Maintaining reliable and affordable natural gas supply is vital along the way to net zero; and so is cutting demand for natural gas through efficiency, electrification and fuel switching. What is not yet clear is how the Government will follow through on both fronts," Innes Willox, Chief Executive of the national employer association Ai Group said today.
"Gas is a divisive subject.
"Environmentalists don't want to acknowledge just how vital it is to our path to net zero, especially in electricity. Gas producers don't want to acknowledge just how much their market will ultimately shrink.
"Too bad. Industry needs pragmatic solutions. The Gas Strategy shows the right mindset. Now it needs to be put into practical action – on all fronts.
"Gas is an essential industrial input today for heat and feedstock. It heats homes. It firms the electricity grid. Only knuckleheads cannot see that its role in supporting the grid is growing in importance as bulk electricity becomes ever more renewable.
"Australia faces the risk that existing supply runs down faster than demand transitions. The East faces expected shortfalls from around 2028. The Strategy clearly recognises the danger, but the solutions are still taking shape. Pipelines to carry more gas north to south are an option but will take time and commit a lot of capital. LNG import terminals can be fast and capital-light but threaten to import not just gas, but international parity pricing. Which way will we go?
"Meanwhile the projections underlying the Strategy show existing policy and market trends will not see demand side transition at the pace needed for net zero or interim emissions goals. Major capital upgrades in industry are a tall order, and while the Safeguard Mechanism will incentivise upgrades in the largest facilities, most industrial gas users do not yet have any national help. The six sector plans for net zero now under development have big transition gaps to fill," Mr Willox said.
