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. In 2021, coal, oil, and natural gas accounted for 93% of its primary energy needs, while the country was 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. At the same time the government is investing in new technology and efficiency to drive down emissions and develop new low-carbon energy sources such as hydrogen.

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 activist pressures to move more swiftly to a carbon neutral future. The country has adopted a target of net zero carbon emissions by 2050,  outlined in Australia’s Long Term Emissions Reduction Plan. Prime Minister Scott Morrison said that the target would not be legislated, but instead would rely on consumers, companies and technology to drive emission reductions, with oil and gas continuing to have a significant role in Australia’s energy future.

The government’s 2020-21 and 2021-22 budgets 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.

Australia is planning a gradual phase-out of coal-fired power plants. The government has committed at least AUD20 billion for low emissions technologies in the decade to 2030, building on AUD21 billion invested over the last two decades. The roadmap’s Low Emissions Technology Statement 2021 saw an AUD1.7 billion investment package in future technologies including AUD464 million in clean hydrogen industrial hubs, AUD250 million in Carbon Capture Use and Storage hubs and technologies, and an AUD2.5 billion investment committed to projects through various government agencies.

A National Hydrogen Strategy aims at developing a world leading hydrogen industry, and the Australian government is investing AUD 1.4 billion to grow this industry and position Australia as a major player by 2030.

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 with stretch goals to exceed the plan by 9%. 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.