Accelerated lights out for gas urged to hit net zero
Australia needs to start preparing for life after rises in gas or hazard bills, missed climate targets and manufacturers closing shop, a leading think tank warns.
The Grattan Institute’s comprehensive report covers bans on new home gas connections, revised green hydrogen incentives and a windfall profit tax on the export industry. report It’s about Australia’s deteriorating relationship with fuel.
The think tank says demand for liquefied natural gas (LNG) product, both domestic and exported, is expected to decrease.
It argues a faster reduction than implied in the federal government’s gas strategy forecasts will be needed to meet Australia’s international climate commitments, including net-zero emissions by 2050.
Burning gas to cook food, produce goods and generate electricity causes greenhouse gas emissions, but extracting and processing gas from the ground also accounts for around 20 per cent of Australia’s carbon pollution.
of Australia Gas Strategy of the Future It means net zero could be reached while gas production and use remain high beyond 2050.
Such a scenario would rely on much more renewable gas, widespread use of carbon capture and storage, and removal of large amounts of carbon, solutions that are “unlikely to be available in the required volumes at prices people would be willing to pay.”
Households are already moving away from gas, with demand peaking in 2020 and falling 16 percent since then.
To ensure electrification continues, careful management of the network “death spiral” is recommended, along with a ban on new gas connections and incentives for homeowners to swap in electrical appliances.
Recognizing that electrification is shrinking the pool of customers who cover the cost of the pipes circulating the gas, it makes a case for cutting new spending and dividing the costs of network decommissioning fairly.
Governments, unsettled by strong gas phase-out signals, have been warned that consumers without realistic opportunities for electrification will have to pay more to the benefit of a diehard few.
Consumers who really want to use gas should be directed to use Liquid Petroleum Gas (LPG), as is currently used in some regional and rural areas.
“This will mean that they take full responsibility for their choices by managing their own supply rather than relying on a network where their choices are cross-subsidized by those who can least afford it,” the report said.
This is also making the case for a reset of renewable fuel industry policy, including repurposing hydrogen production tax incentives for smaller grants and loans, given that the sector is still just getting started and lacks scale demand.
Australia also needs to get the market settings right to ensure it has sufficient gas-fired generation capacity and maximize the benefits of the LNG export sector, including a tighter tax regime and an effective domestic booking scheme.
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