Gas and energy policy

By Jordan McCollum, National Policy Manager, APGA

A net-zero carbon gaseous energy system by 2050 is possible and a report delivered by APGA and Energy Networks Australia shows how we can do it – and that we’re already well on our way.

The gas infrastructure industry has been at the forefront of demonstrating that there is a pathway to decarbonising gas use in Australia. In the report Gas Vision 2050: Delivering the pathway to net-zero for Australia – 2022 Outlook, APGA and Energy Networks Australia draw on work produced by DNV-GL to detail the necessary steps to deliver this possible future.

The report notes that both gas networks and pipelines are readying to deliver renewable and decarbonised gases and lays out a number of actions that the industry and governments need to take to achieve gas decarbonisation. Biomethane offers early emission reduction opportunities, but all pathways require hydrogen or a similar renewable fuel in the mix to fully replace natural gas.

Blending at least ten per cent renewable gas into gas networks can help build supply, contributing to the production cost reductions that could lead to100 per cent renewable or decarbonised gas uptake being economically achievable in years to come. Importantly, customer choice is at the centre of all gas use decarbonisation pathways, protecting the rights of energy customers to choose whether gaseous or electrical energy sources are best suited to their individual needs.

An orderly transition is seen to require three key steps to occur. For each step, DVN-GL considered the actions in its plan using for each step the tenets of customer focus; safety; security of supply; market development; and supply chain development.

The first of the stages enables blending of at least 10 per cent renewable and decarbonised gases by 2030. This will help get the carbon neutral gas production industry on its feet. In fact, with a blend of both renewable hydrogen and renewable methane, this percentage could be even higher, as only the percentage of hydrogen in gas networks is limited for use in gas appliances.

Developing 100 per cent hydrogen suburbs is the next step in enabling a net-zero gas system. Creating isolated suburbs where hydrogen can be used in household hydrogen appliances will help develop the market for hydrogen appliances while network operators can build the business case for 100 per cent renewable and decarbonised gas adoption. The same can occur with renewable forms of methane but on a per household basis and without the need for bespoke infrastructure and appliances. That is because renewable methane can be designed to match current natural gas specifications, requiring no changes in infrastructure or appliances.

These hydrogen suburbs can then be used to build outwards, converting adjacent natural gas networks to hydrogen once supplies can be bolstered. This leads into the third step which encompasses the ultimate goal: enabling 100 per cent renewable and decarbonised gas adoption. While we do not yet know whether the ultimate solution will be zero carbon hydrogen or methane, in either case the necessary changes to networks and appliances will be delivered in a staged manner ensuring safety and reliability is maintained at each step of the process.

The above pathway for renewable and decarbonised sources of methane is much simpler, as these gases can be produced to the same composition of natural gas today. While some progress has been made, remaining actions to enable 100 per cent net-zero methane are identified as requiring increased focus. This is in part due to the significant focus that hydrogen has received despite the relative simplicity of the net-zero methane pathway.

The pathway to enable 100 per cent renewable or decarbonised hydrogen on the other hand has many more actions required to achieve each of the three goals to enable industry development. While the industry has made significant progress and is on track to deliver with a solid work plan under way, other aspects require increased focus. Importantly, the development of 100 per cent hydrogen appliances in Australia is identified as an action which has received limited attention and requires major focus for successful delivery. Surprising, considering the existence of an international hydrogen appliance industry, a lack of attention in this area could jeopardise a future domestic hydrogen industry in Australia.

There is also a range of cross-cutting activities, including customer engagement and government regulatory activity, which require focus to enable either gas pathway to eventuate. From market access and certification to environmental and technical regulation, more work needs to be done to enable this industry to achieve its 2030 goals.

Most notable cross-cutting actions yet to be addressed are the development of a renewable gas target and other market incentives to develop net-zero gases in Australia. As a nation which has benefited greatly from a renewable electricity target, it is surprising that a renewable gas target is not yet on the emissions reduction policy agenda.

The gas industry is about to enter a period of significant change. Between the risk of natural gas shortfall, the spectre of gas use decarbonisation through electrification of gas demand, and the opportunity of renewable and decarbonised gases, the industry has a choice to make about which pathway it will support for the future. This report shows that the industry is already choosing to develop a net-zero gas industry, but more work needs to be done. It is hoped that by detailing the actions required through this report, the gas industry will act on the tangible actions which are outstanding, and both politicians and customers see a clear pathway to carbon neutrality through the uptake of renewable and decarbonised gases.

"The report notes that both gas networks and pipelines are readying to deliver renewable and decarbonised gases and lays out a number of actions that the industry and governments need to take to achieve gas decarbonisation. Biomethane offers early emission reduction opportunities, but all pathways require hydrogen or a similar renewable fuel in the mix to fully replace natural gas."