The federal opposition will include gas projects in an incentive scheme designed to facilitate $52 billion of investment in the nation’s energy capacity, if elected next year.
The federal opposition will include gas projects in an incentive scheme designed to facilitate $52 billion of investment in the nation’s energy capacity, if elected next year.
Opposition spokesperson for climate change and energy, Ted O’Brien, earmarked changes to the Capacity Investment Scheme at a gas industry conference in Adelaide, according to Sky News coverage.
Under the proposal, the CIS would be opened to allow the use of public funds earmarked for renewables to instead support and underwrite investments in gas projects.
The scheme was dramatically expanded late last year to support a target of 32 gigawatts of new capacity delivered nationally by the end of the decade.
But the CIS is currently limited to renewable capacity, including wind and solar, along with battery storage. Energy Minister Chris Bowen has previously rejected calls to include the fossil fuel.
The Liberal commitment is a departure from that stance.
Speaking on today’s pledge, oil and gas lobby group Australian Energy Producers said the proposed change would help secure urgently needed investment, particularly on the east coast, in the National Electricity Market (NES).
“The energy market operator recently highlighted that the National Electricity Market will need an additional thirteen gigawatts of new gas power generation to be built by 2050 as part of the least-cost transition, underscoring the increasingly important role of gas for Australia’s energy security,” AEP chief executive Samantha McCulloch said.
“Australia urgently needs investment in new gas supply and infrastructure, and the CIS is an important lever to support this necessary investment.
“Amid an increasingly difficult regulatory and investment environment in Australia, the Coalition has recognised the critical role of gas and the need for more supply to ensure reliable and affordable energy for households and businesses.”
Western Australia's grid is separate to that of the NES. The state is the second-largest producer of natural gas in the country, behind Queensland.
The WA gas market does not currently face the same constraints as those on the eastern seaboard, but the role of gas as a firming fuel in the local market has been recognised by state and federal governments through to at least 2050.
The retirement of coal-fired power generation from the end of 2030 is expected to coincide with an uptick in the reliance on gas to keep the lights on in WA.
AEP said enabling gas investment through the CIS would address some of the regulatory barriers facing new projects and reinstate acreage releases on an annual basis.
“Australia needs energy policies that provide certainty around project approvals and regulatory stability to restore investor confidence,” Ms McCulloch said.
“The deliberate exclusion of gas from the current CIS was a mistake that needs correcting to incentivise the significant investment needed to ensure Australians have reliable and affordable energy.
“This is not a measure that needs to wait until the next federal election; it is a conversation that state and federal energy ministers should be having today.”
The federal government’s Future Gas Strategy announced in May found that, while pushing to decarbonise, the nation would need natural gas supply through to the middle of the century.