Published in The Sydney Morning Herald - 16 September 2020
Australia’s competitive advantage has always been based on affordable, reliable energy. As we turn to our economic recovery from COVID-19, affordable gas will play a central role in re-establishing the strong economy we need for jobs growth, funding government services and opportunities for all.
Reliable and affordable power is more important now than ever.
Wholesale energy prices across eastern Australia have continued to fall, with September bringing 12 straight months of wholesale price reductions in the national electricity market, with price reductions of up to 46% over that time.
In 2019, we saw for the first time in history four consecutive quarters of CPI price reductions.
We are working to keep these prices low and gas generation will be key to this plan.
Despite the pandemic having a profound impact on the global economy, Australia's exports of liquefied natural gas (LNG) are holding at near-record levels, firming our status as a world-leader in this field.
Australia is a trusted energy supplier to more than 17 countries and these exports are reducing our trading partners’ emissions by displacing more emissions-intensive fuels.
Australians should be proud of our strong resources sector. Our energy reserves are among the most diverse on the planet, delivering wealth, jobs, and energy security.
The Morrison Government is committed to making sure Australian gas works for Australians.
Our energy plan will reset the east coast gas market and create a more competitive and transparent Australian gas hub. This will unlock supply, deliver an efficient pipeline network and empower gas consumers.
Increased supply of gas will push down prices for residential and business consumers, create jobs and speed up our economic recovery. These initiatives have been welcomed by businesses and other energy users, with Chemistry Australia confirming it would underpin 212,00 jobs in the chemistry industry alone.
It will also deliver important environmental outcomes.
The International Energy Agency (IEA) has estimated that coal-to-gas switching has avoided more than half a billion tonnes of emissions between 2010 and 2018. A separate CSIRO assessment of Queensland LNG production found that gas alone can reduce emissions from electricity production by up to 50 per cent.
When gas backs up solar and wind, the emissions savings are even greater.
Far from being a competitor, gas is complementary to renewable energy.
Last year was a record year for new renewable capacity installed in Australia. The Clean Energy Regulator reports that 6.3 gigawatts (GW) of new renewable capacity was installed in 2019. This is 24 per cent above the previous record of 5.1 GW installed in 2018 and more than double the National Electricity Market’s largest coal generator, Eraring in NSW.
The Clean Energy Regulator has recently reported that Australia’s uptake of renewable energy looks set to remain at record levels in 2020, demonstrating the resilience of the energy sector in the face of COVID-19.
Australia’s rooftop solar sector is delivering increased capacity of 33 per cent year-on-year, with the CER not detecting a slowdown due to the pandemic – an extraordinary achievement.
With industry analysis confirming investment confidence is at its highest levels, even more renewable capacity is expected to enter the market.
We need to be prepared to back-up this intermittent growth to ensure the lights stay on when the sun isn’t shining or the wind isn’t blowing.
Intermittent renewables need a partner and, in the words of our Chief Scientist Dr Alan Finkel, “gas is effectively the perfect complement to solar and wind”.
The South Australian grid provides a great example for this partnership.
As gas generation has increased in South Australia to support the increasing renewables capacity, emissions have continued to fall. They are now less than half of the National Electricity Market average.
Fast-start gas generation can help to quickly fill the gap in drops in renewable output – some as quickly as 5 minutes.
With one in four Australian homes now choosing to install solar panels, we will need more of this gas generation – along with pumped hydro and batteries - to ensure the lights remain on and prices remain low.
Indeed, gas is not just important for reliable power.
The role of gas extends well beyond this - it provides chemical feedstock and energy for crucial manufacturing like plastics for PPE and crucial fertiliser for farmers. And until we can reduce the cost of low emissions hydrogen to our target of under $2 per kilogramme, there are few commercially viable alternatives.
Gas is part of our plan to reduce emissions without imposing new costs on households, while at the same time creating jobs, growing businesses and the economy.
The pandemic has hit Australians and our economy hard. Gas will help us bounce back better and stronger, support our growing renewable capacity, and deliver the reliable and affordable energy Australians deserve.
Minister Taylor's office: 02 6277 7120