Australia must rethink gas strategy: Grattan

: Electricity, Natural gas
25/03/20

Australian think-tank Grattan's Orange Book 2025: Policy priorities for the federal government report suggests redesigning Canberra's future gas strategy, coordinating a shift away from gas for households and some industries while changing market control mechanisms.

Australia's next federal government must act to address a shortfall of gas in the country's southeastern states by creating a demand response mechanism for the national gas market and bringing together stakeholders to permit initial LNG imports in mid-2026, according to Grattan.

Australia has always been both an exporter and importer of LPG, proving it is possible to build infrastructure to ship gas to the nation's south for the next 3-4 years in line with expected shortfalls, director of Grattan's energy program Tony Wood told a Sydney forum on 19 March.

Building or expanding gas pipelines would be expensive and inefficient as the nation decarbonises, Wood said, with less gas forecast to be used as Australia targets net zero emissions by 2050.

Canberra should institute a working group involving producers, users, traders, terminal owners, governments and the Australian Competition and Consumer Commission — which reports on market supply — to achieve seasonal imports of LNG in winter months, according to the Grattan report. A rule change to create a demand response mechanism akin to that under national electricity market rules would assist in meeting small shortfalls, such as during severe weather or unexpected supply outages.

Demand is expected to rise on the back the closure of coal-fired power stations in the 2030s, according to Canberra's future gas strategy released in 2024. Gas-fired power demand may double in the decade to 2043 because of the need to support a solar and wind-heavy grid.

This requires a reworking of the future gas strategy to specify plans to reduce demand and clarify future gas requirements outside of power generation, Grattan's report said. Assistance for households and industries to electrify processes is also needed, together with optimising infrastructure to ensure residual users in power generation and industry can access gas supply.

The main controls on east coast gas grids, the Australian Domestic Gas Security Mechanism (ADGSM) and code of conduct, should be revised to allow for interstate transfers of gas, Grattan said, likely from Queensland's Gladstone-based LNG projects to the southern states. The code of conduct, which mandates an A$12/GJ ($8/GJ) price on domestic gas, came into effect in 2023 amid booming global gas prices but must be reviewed in 2025.

Australia's energy and climate change ministerial council met on 14 March but declined to decide on expanding the Australian Energy Market Operator's powers, to enable it to address the gas shortage possibly through underwriting LNG import terminals. More analysis will be commissioned ahead of a decision at the next meeting in mid-2025.

By Tom Major

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25/04/30

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France to review role of renewables in energy plan

25/04/30

France to review role of renewables in energy plan

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Japan’s Sojitz to enter biomethane production in India

25/04/30

Japan’s Sojitz to enter biomethane production in India

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Woodside’s Louisiana LNG signs gas supply deal with BP

25/04/30

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Indonesia secures $60mn JETP funding for solar power

25/04/30

Indonesia secures $60mn JETP funding for solar power

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