By David Crowe and Mike Foley
New gas projects will gain stronger federal support in a Labor pledge to deliver affordable gas to customers for decades to come, as it warns of shortages within four years unless the nation boosts supply.
The federal government will back the case for new gas fields and import terminals to secure the supplies despite calls to phase out the use of fossil fuels, setting up a clash with the Greens and environmental groups over the new plan.
The Albanese government says new gas supply is crucial to transition to net zero emissions. Credit: AP
The future gas strategy, to be released by Resources Minister Madeleine King on Thursday, says the new supplies are fundamental to the economic transition to net zero emissions and the industries in the government’s “made in Australia” agenda for next week’s federal budget.
An official report to support the strategy says Australia could fill the future shortfalls by opening new gas fields such as Scarborough, being developed by Woodside off the Western Australian coast, and Narrabri, being developed by Santos in northern NSW.
“Ensuring Australia continues to have adequate access to reasonably priced gas will be key to delivering an 82 per cent renewable energy grid by 2030, and to achieve our commitment to net zero emissions by 2050,” King said.
While Labor often rubbished the Coalition’s support for fossil fuels with its talk of a “gas-fired recovery” three years ago, the new plan names gas supply as crucial to the nation’s economic fortunes.
“New sources of gas supply are needed to meet demand during the economy-wide transition,” the strategy says.
Former prime minister Scott Morrison outlined a “gas-fired recovery” policy during the pandemic with a vow to open up new gas fields, including the Beetaloo Basin in the Northern Territory, but no new gas field has been developed in recent years.
Prime Minister Anthony Albanese questioned the Coalition claims when he was opposition leader but broadly endorsed the use of gas, saying in November 2020: “The truth is that gas will play a role and should play a role in terms of firming up renewables and in other areas.”
Energy Minister Chris Bowen dismissed the Coalition gas plan as a “fraud” at the time.
Australia relies on gas for 27 per cent of its existing energy needs, as well as 14 per cent of its export income, but some Labor supporters as well as the Greens want the fossil fuel to be phased out by 2030.
The strategy mirrors the gas industry’s calls for new projects and endorses warnings from the energy market operator that new supplies are needed to avert supply shortfalls.
The government documents say NSW and Victoria will face shortages by 2028, along with other east coast states, while the shortage on the west coast will begin from 2030.
While the new plan does not force any change on state governments, it clashes with Victorian Energy Minister Lily D’Ambrosio because of her criticism of east coast gas producers, whom she has argued continue to export large volumes to international buyers.
“Gas companies in Queensland are putting their export profits ahead of domestic supplies. That has been the case now for a number of years,” D’Ambrosio said.
Victoria lifted its moratorium on conventional gas projects in 2021 but at the same time banned the practice of onshore fracking for gas.
The federal plan matches calls from NSW Premier Chris Minns and others in the Labor government for more domestic gas supplies, such as from the Narrabri field being developed by Santos.
The Future Gas Strategy will contain analysis of the future gas supply balance, which it is understood will reflect the Australian Energy Market Operator’s (AEMO) current forecasts.
ExxonMobil and Woodside’s 50-year-old Gippsland Basin gas fields in Bass Strait have historically provided up to two-thirds of southern states’ gas demand, but are rapidly drying up. AEMO forecasts gas production in NSW and Victoria will drop from 363 petajoules in 2023 to 236 petajoules in 2028.
AEMO said in March that the entire east coast gas market would be in annual deficit by 2028 unless new supplies are tapped, forecasting an annual shortfall of around 50 petajoules until 2032. The supply gap is expected to increase to between 100 petajoules and 200 petajoules from 2033.
Victoria, NSW, South Australia and Tasmania are at risk of domestic shortages on days of extreme winter demand by 2025 without more supply.
A combination of solutions is needed to plug the gap, AEMO said, including drilling new gas fields in Narrabri and offshore from Victoria, upgrading pipeline infrastructure or build special shipping terminals in NSW or Victoria to import liquefied gas (LNG) from other parts of Australia or overseas.
Fast-start gas plants will also be needed to back up renewables under the Albanese government’s cornerstone climate policy.
To reach its target to cut emissions 43 per cent by 2030, the government is aiming to replace coal-fired power and more than double the proportion of renewables in the grid to 82 per cent in the same time.
The massive rollout of wind and solar farms will be backed up by batteries and pumped hydro.
The government’s budget agenda will also include tax incentives to encourage investment into renewable energy projects and the production of critical minerals needed for batteries and advanced technology under its Future Made in Australia plan.
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