“Impossible” to predict: The role of gas in balancing renewables

In the absence of a crystal ball, the future of gas in the energy transition remains a hotly contested topic. While its continued use will undoubtedly require substantial investment in carbon sinks, without it, the grid risks collapsing into a “house of cards.”

The federal government’s Future Gas Strategy places gas at the heart of this transition, with the Minister for Resources Madeleine King stating "gas will remain an important source of energy through to 2050 and beyond”.

It is the government’s position that gas supports the economy, especially sectors like manufacturing and minerals processing, and plays an important role in firming renewable power generation.

Industry support for gas

Industry experts back Canberra's stance on the enduring role of gas.

A report by EY, commissioned by Australian Energy Producers, said gas will be essential to maintain reliable and affordable energy to 2050.

“Gas is expected to play a major role in the global net zero transition," the report said. “Ongoing investment in gas supply is required to maintain production levels from operating fields.”

However, the findings pointed to technologies like carbon capture and storage (CCS) and hydrogen as key to driving down emissions.

Activist opposition

Environmental groups criticise the use of gas in the energy transition.

Greenpeace slammed the government's plans for new offshore gas exploration permits, arguing reliance on gas and CCS will extend the use of fossil fuels and hinder emission reduction efforts.

“Fossil fuels are slowing us down in the race to cut emissions at the speed and scale demanded by science, and future-proof our economy,” said Greenpeace APAC CEO David Ritter.

“If Australia wants to be taken seriously as a climate leader, it simply cannot greenlight more fossil fuels.”

The future of gas

Speaking with Professor David Close, director of the Gas and Energy Transition Research Centre, it seems this debate will not end quietly.

It is “impossible” to forecast whether gas will become obsolete, retain its current role, or increase its importance as a decarbonisation vector, Close told Energy Insights.

“A successful energy transition for the climate is one where emissions are minimised, but for the broader environment it is not as singularly simple,” Close explained.

“Gas plays an important role in backing-up renewable energy sources for electricity generation, but it is not emissions free.”

In order to achieve net zero with gas in the energy mix, further investment will need to be made in carbon sinks and means of unimpeachable offsets.

The Australian Energy Market Operator (AEMO) anticipates that from around 2035 gas will contribute 5-10 per cent of total power generation as coal-powered-generation is retired and wind and solar generation increases.

While biofuels or green hydrogen may replace natural gas, it is unlikely that either of these technologies will have lower overall environmental impact than using natural gas.

“One of Australia’s many transition challenges, particularly for the eastern states, will be maintaining the capacity to deliver very high volumes (relative to historical maxima) intermittently and likely infrequently,” Close said.

While the Queensland export industry remains this challenge will likely be manageable, notwithstanding difficulties in moving more than around 500 terajoules per day to the southern states; but if Queensland doesn’t maintain an export industry the problem becomes almost intractable.

In addition to its role as a grid-scale electricity-generation source, gas will likely continue to be needed in a number of hard-to-replace industrial processes where very high heat is needed, and as a feedstock for fertilisers and chemicals.

It is, however, very likely that gas will be used much less in domestic and residential settings for home and water heating and cooking.

Striking the right balance

A reliable and affordable electricity grid requires balance.

Australia has almost unique challenges amongst OECD countries in having no existing nuclear, relatively little hydro, and a historically high-dependency on coal-fired generation.

This means there is limited dispatchable zero carbon electricity.

Given this history, getting a balance of low- or zero-carbon electricity sources is difficult.

However, Australia is fortunate to have abundant solar and wind resources.

We will need to use a combination of hydro (including pumped-hydro) and batteries to firm extensive solar and wind generation assets, Close told Energy Insights.

During the transition, system security and congestion challenges will be an issue, but these should largely be short- to medium-term challenges as more batteries, pumped-hydro and major interconnectors come online.

If domestic or imported gas supply and transmission cannot deliver to the fleet of gas peakers required, an otherwise well-constructed grid will become “a house of cards” with an unacceptable amount of unmet demand, Close said.

“The importance of Australia’s gas export industry to local energy security is an often-overlooked aspect of the energy transition.”

As Australia continues on the transition to net zero, the role of gas in balancing renewables will likely remain a hotly contested topic.

But there’s little doubt that gas remains critical to back up the burgeoning wind and solar electricity grid and keep storage costs to a minimum.