Australia – Gas Policy Brief

With the world’s third largest coal reserves and extensive natural gas and oil reserves, Australia historically has depended on fossil fuels for its energy needs and economic growth. Today, coal, oil, and natural gas account for 94% of its primary energy needs, while the country is the world’s largest exporter of coal and LNG. About two thirds of its energy production is exported.

Its long-term plan is to grow the contribution of renewable energy while increasing the use of natural gas as a stable transition fuel with a lower carbon footprint than coal and oil to meet its commitments under the Paris Agreement.

Australia has a difficult balance to achieve. It needs to safeguard the country’s economic future in the short and medium term, which will depend on fossil fuel exports, while managing strengthening lobbyist pressures to move more swiftly to a carbon neutral future.  The public debate on the value of natural gas as a transition fuel to contain costs and provide a stable, consistent energy source is growing.

The Australian Government’s 2020-21 budget focused on a ‘gas-fired recovery’ from COVID-19 setting new natural gas supply targets with states and territories that will be underpinned by the development of five key gas basins starting with Beetaloo in the Northern Territory and North Bowen, and Galilee in Queensland. The plan also aimed to avoid supply shortfalls with new agreements with the three east coast LNG exporters. A commitment to improving the gas transport network and regulatory structure are part of a National Gas Infrastructure Plan.

Australia is planning a gradual phase-out of coal-fired power plants. A AUD1.9 billion investment package in future technologies includes an AUD50 million investment in a Carbon Capture Use and Storage Development Fund, while an offshore clean energy project development framework is being developed with AUD67 million committed.

A Long-term Emissions Reduction Strategy is being developed that includes a Technology Investment Roadmap to develop and commercialise emerging low emissions technologies; a National Hydrogen Strategy; emissions abatement strategies; and a regulatory framework to facilitate the full economic lifecycle of offshore renewable energy projects. The government has already committed over AUD146 million to hydrogen projects.

Australia has achieved its 2020 Renewable Energy Target to provide at least 33,000 gigawatt-hours (GWh) of its electricity annually from renewable sources and the annual target will remain the same until 2030 with incentives in place.

Under the Paris Agreement, Australia has committed to reduce greenhouse gas emissions by between 26-28% on 2005 levels by 2030. This is supported by a AUD3.5 billion Climate Solutions Package with a range of programs that include an emissions reduction fund; new energy efficiency measures for homes, businesses and community groups; and the development of a national electric vehicle strategy. Australia’s post-2030 target will be submitted in the next United Nations Framework Convention on Climate Change (UNFCCC) in 2025.