Australia's energy landscape is set for significant changes as the federal government and opposition develop plans to address the nation's growing demand for gas. The requirement for more gas to back up newly acquired, intermittent wind and solar generation is a key focus of the new Labor government’s energy strategy. The nation is moving to clean energy. Gas will continue to serve a critical backup role to keep the energy grid stable. Constitutional limitations limit the scope of federal gas reservation policies. These settings disproportionately affect offshore jurisdictions such as Northern Territory, Western Australia, and Bass Strait, Gippsland and Otway zones.
In response, the Coalition is criminally overdue to release our flagship offshore policy aimed squarely at these gas projects. Opposition Leader Peter Dutton is expected to flesh out this policy in his budget reply in the coming weeks. He could very well make that announcement as early as this Thursday. As the Coalition itself puts it, they want to “flood” the market with gas by 2028. This strategy addresses the Australian Competition and Consumer Commission’s (ACCC) warnings regarding potential supply shortages.
Labor's Energy Strategy
The new Labor government has doubled down on the role of gas for providing baseload power, as well as supporting renewable energy. Because wind and solar are strongly intermittent by their nature, gas serves as a strong reliable counterpoint to all this new, clean, energy stability. Sure enough, the new found demand for gas is helping the government pay for its energy transition aspirations. These aims are related to moving away from coal-fired power stations and keeping energy reliable.
There are constitutional constraints that limit federal intervention in state gas reservation policies, confining them to offshore areas. This limitation excludes any onshore gas projects, making it extremely difficult for the federal government to deliver a domestic gas supply when it’s needed. Even with these challenges in mind, state-level gas reservation policies are already bearing fruit in Western Australia and Queensland. Such policies reserve a portion of the gas produced for domestic use. Nationally, their progress provides a model for how the federal government might follow their lead and go even further.
Coalition's Comprehensive Gas Policy
The Coalition's forthcoming policy aims to address Australia's gas needs comprehensively. With the ACCC forecasting a domestic gas shortfall as early as 2028, the opposition’s plan to boost availability would be a substantial step. David Littleproud, Nationals leader and shadow minister for agriculture, emphasized the real need for this strategy. He compared the rapid ability for gas to plug into the grid with the years-long processes needed to construct coal-fired or nuclear power plants.
"Whereas gas, you can get into the grid in 12 to 18 months and put that downward pressure on energy prices, and that'll put downward pressure on your grocery bill and the entire economy." – David Littleproud
Significantly, the Coalition’s policy would ban the construction of any new gas projects in ecologically and economically significant offshore areas. This stretches across the Northern Territory, Western Australia, Bass Strait and Gippsland. The policy focuses on these zones to ensure a stable domestic supply. It rolls back environmental and carbon emissions requirements for developers.
Market Implications and Industry Response
The Coalition’s successful initiative was remarkable in including a pre-approved list of voter-cities’ projects that could be up and running by 2028. This list comprises Narrabri, Gippsland's Lake Blue Energy Wombat project, and GB Energy's Golden Beach Gas Field. These projects will increase domestic supply and address short term shortage risks.
David Littleproud equally underlined the economic benefits of increasing domestic gas supply. He showcased how this expansion brings energy price stability, which is a win for families and enterprises alike.
"The others, in building a coal-fired power station, a nuclear power plant, or even a wind or solar farm of industrial scale, take too long," – David Littleproud
According to some proponents in the industry, shifting the focus away from supply and towards exports is the root of the problem. Here’s what Senator David Pocock said about Australia’s current plan for gas exports.
"We don't have a gas supply shortage, we have a gas export problem," – David Pocock
"We prioritise exporting gas ahead of actually looking after Australian households and businesses." – David Pocock
The current discussions in Australia’s energy sector highlight contrasting views on prioritizing domestic requirements or leveraging export markets. These multiple perspectives showcase the multifaceted nature of identifying the ideal solution.
