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Creating clarity during the energy transition

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      Events

      June 11, 2024 | Melbourne Convention and Exhibition Centre

      Australian Energy Week 2024

      June 12, 2024 | Melbourne Convention and Exhibition Centre

      Machines2024

      September 3, 2024 | Aerial UTS Function Centre | Sydney

      Industrial Net Zero Conference 2024

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      Australian Hydrogen Forum
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      Gas, Hydrogen, Policy & Regulation — 5 mins read

      7 key takeaways from ADGO 2024

      With the 2024 Gas Statement of Opportunities (GSOO) released a few days earlier (a blessing for the event, but a curveball for the speakers), the Australian Domestic Gas Outlook conference was set up to be a relevant, up-to-date and insightful series of discussions. Here are my key takeaways:

      “There is no energy transition without gas”

      The energy transition is a long-term endeavor with a complex series of problems to solve to ensure a reliable energy supply so that the light turns on when the switch is pressed. Gas has a crucial role to play, not only in ensuring the lights stay on but also as a feedstock in various industries. In Victoria alone, over 75% of fuel usage caters to purposes beyond electricity use. It is essential to recognize the role of gas in the journey to Net Zero, as neglecting it could lead to a prolonged reliance on coal-fired power.

      The industry has not properly communicated the role of natural gas to the public

      Gas continues to face scrutiny and negative perceptions, with both the public and policymakers often perceiving it as a polluting fuel. Better communication from the industry is needed to highlight the role gas can play in Australia’s energy transition by supporting renewables through firming capacity. Messaging needs to be simple and easily understandable for the public, using language that resonates with them. During the conference, one speaker shared an anecdote: “If all the planned CCS projects in the US came online, they could remove as many emissions as replacing every internal combustion engine (ICE) vehicle with an electric vehicle.” Similar messaging illustrating the benefits of gas in Australia’s energy transition could help shift perceptions positively

      The ‘long foreseen’ gas supply shortage is here

      Industry experts, both presenting and on the sidelines of the conference, unanimously acknowledged the supply gap in the southeastern states, leading to both volatile and high prices. However, the general mood of the room was that there was no clear pathway on how the gap between supply and demand would be met. The imminent closure of the Eraring coal-fired power station in New South Wales could add further volatility to an already pressured market. If the shutdown proceeds on schedule in the next 500 days, the reality of the supply shortage, especially in winter, could lead to significant fuel and power shortage events.

      The argument for LNG import terminals divided the room

      As expected, the topic of the LNG import terminals divided delegates. On the one hand, it seems challenging to explain to the public that the gas produced at home is sent overseas, while overseas gas, potentially even from fracking operations, is shipped in to meet domestic demand. On the other hand, others acknowledged import terminals can help mitigate price fluctuations, by allowing for the import of cheaper LNG when domestic prices peak, and provide security, even if that means shipping domestic gas from the country’s west to east coasts (if it’s paid for). Despite the difference of opinion in the room, terminals are on the near-term horizon, suggesting they are likely to become part of Australia’s future energy landscape, whether loved or not.

      “Leave the regulations alone and let us get on with things”

      The call for regulatory certainty and stability was clear and echoed through speaker after speaker. While the room expressed there were not many ‘carrots’ to incentivize the gas industry, it was generally agreed that there were, in fact, plenty of ‘sticks.’

      There were requests for streamlining of the Environment Protection and Biodiversity Conservation Act 1999 (EPBC Act) reforms and addressing delays in environmental approvals if the supply gap is to be lessened. Perhaps a more stable regulatory environment would offer a solution to appease the masses. However, it was also suggested that challenging existing regulations required root cause analysis and an understanding of why the regulations exist. Only if there has been a material change in conditions since its inception will there be cause to challenge.

      Carbon Capture and Storage (CCS) has a role to play in the transition

      Towards the latter part of day two, the position of Australia’s attitude towards CCS was labelled as ‘7+ years behind the US and Europe’. Real-world examples of active CCS projects (albeit small) showcased that the technology can and does work. One speaker noted that Australia failed to get its messaging right early, which allowed others to take control of the narrative. This has allowed them to paint a picture which hasn’t been a fair reflection of the impact of CCS technology in reducing emissions from gas and other fuels.

      The future of renewable gases and hydrogen is unclear, but the infrastructure is ‘somewhat’ prepared

      Looking to the future of the transition, some of the infrastructure players remarked that over 95% of their network was able to deliver renewable gas to their customers. While the future gas mix remains unclear, having bi-directional pipelines and dual-fuel ready assets ensures the infrastructure will be in place. At the very least, it appears the risk of stranded assets in the form of the pipelines themselves may be lower than typically imagined.

      Perry Wilson, Head of Advisory – Australia, Rystad Energy

      Energy Monthly

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      June 11, 2024 | Melbourne Convention and Exhibition Centre

      Australian Energy Week 2024

      June 12, 2024 | Melbourne Convention and Exhibition Centre

      Machines2024

      September 3, 2024 | Aerial UTS Function Centre | Sydney

      Industrial Net Zero Conference 2024

      New call-to-action