More gas ‘critical’ for Australia’s energy security while CCS fortifies its net-zero role

A new report from the Australian Energy Market Operator (AEMO) puts emphasis on the need for new gas supply as potential blackouts loom on the horizon while the Australian Petroleum Production & Exploration Association (APPEA) perceives the opening of bids for the next round of Commonwealth offshore greenhouse gas storage acreage as an important step, furthering the growing momentum to deploy carbon capture, utilisation and storage (CCUS) technology in Australia.

AEMO outlines in its 2023 Electricity Statement of Opportunities (ESOO) that the “ongoing availability” of energy sources such as gas “will be critical to the reliability” of the National Electricity Market (NEM). Bearing this in mind, APPEA points out that this report has laid bare the urgent need for new gas supply, warning of a “material risk” to Australia’s power supplies because of future gas shortfalls and a lack of investment in gas generation.

While explaining that the report underscored the critical need for new gas supply and gas generation capacity to ensure energy security as part of the net-zero energy transformation, Samantha McCulloch, APPEA’s Chief Executive, stated: “Gas is one of the main sources of electricity generation in Australia and is crucial to keeping the nation running. AEMO has highlighted that gas will play an increasingly important role in our electricity mix, as a reliable partner to renewables and as coal generation is phased out.

“Gas is the safety net we need as we transform our electricity system and governments must start listening to the repeated warnings from independent authorities of the need for new gas supply. The report shows how illogical Victoria’s new home gas connection ban is by pushing households onto an electricity grid that is already struggling to meet demand. Within a few years, Victoria will fail to meet minimum reliability standards set by AEMO, increasing the risk of rolling blackouts.”

Furthermore, AEMO estimates that over 1.5 GW of new gas power generation capacity is needed in New South Wales and Victoria by 2026/27 in order to meet current reliability standards. The report singles out Victoria, as its retiring coal generation and underinvestment in new gas supply is putting pressure on the electricity system and contributing to a significantly increased risk of “inadequate and unreliable” electricity for Victorian homes and businesses compared to the 2022 ESOO report, underlines APPEA.

In NSW, AEMO said there were “significantly increased risks if thermal fuels are more scarce, highlighting the importance of maintaining the availability of coal, gas and distillate fuels, and the effective management of their supply chains.”

Following the opening of bids for the next round of Commonwealth offshore greenhouse gas storage acreage, Australia’s oil and gas industry highlighted that it would help accelerate the country’s path to net-zero and support the creation of a new carbon management industry in Australia. APPEA also believes that this will boost CCS’s net-zero role.

McCulloch pointed out: “There is an enormous opportunity for Australia to create new jobs and attract new investment through the development of carbon capture technology. CCUS should be part of this nation’s DNA just like gas production has been for decades because it is basically the gas extraction process in reverse – trapping the emissions in deep geological formations, often in former gas fields.

“With places like the U.S. and the UK announcing major cleaner energy packages focused on this technology, Australia needs to ensure it is not missing out on securing emissions reductions and the economic benefits that will come with these new industries.

“There is growing momentum for CCUS globally as well as increasing recognition of the opportunity of the technology to attract new investment, create new jobs, build a major new industry for Australia, and support emissions reductions across the economy and the region.”

Moreover, CCUS has gained worldwide recognition as an important decarbonisation tool for net-zero aspirations as confirmed by independent authorities including the International Energy Agency (IEA), the Intergovernmental Panel on Climate Change (IPCC), Australia’s Climate Change Authority (CCA) and the country’s own science body, the Commonwealth Scientific and Industrial Research Organisation (CSIRO).

‘’CCUS will be particularly important to address emissions in hard-to-abate industries like cement, iron and steel and chemical production where few alternatives exist, as well as in scaling up low-carbon hydrogen, where natural gas with CCUS is the lowest cost production method today,” concluded McCulloch.

Woodside is among the Australian energy players, which have recognised CCS’s contribution to GHG emission reduction targets. As a result, the company inked MoUs with Japanese firms – Kansai Electric Power Co. (KEPCO), Sumitomo, Toho Gas, Kawasaki Kisen Kaisha (K Line) – to enable studies of a potential carbon, capture and storage (CCS) value chain between Japan and Australia.