New gas supply needed to ensure reliable and affordable energy in 2050, report says

457
Image credit: Australian Energy Producers

An EY report commissioned by Australian Energy Producers indicates that Australia will require substantial gas production 26 years from now to ensure reliable and affordable energy by 2050, even under net zero scenario.

The report assesses the future role of natural gas in Australia and the region, guiding Australia’s Future Gas Strategy.

EY assessed around 350 net zero pathways around the world and recommended that Australia prepare for multiple gas production scenarios due to uncertainties of the transition.

The report noted that gas is expected to play a significant role in the global transition to net zero.

Adertisement

“Ongoing investment in gas supply is required to maintain production levels from operating fields. As these fields begin to decline, investment in new supply options will be required to meet projected demand,” the report said.

“To manage the risks associated with the transition to net zero Australia’s energy and climate mitigation policy needs to prepare for all three future scenarios, with policy and regulatory actions that keep as many pathways to net zero viable for as long as possible.”

The report warns that focusing on a single pathway makes Australia susceptible to external developments.

The Electrify Scenario predicts domestic and regional Australian gas demand will reach 56% of current production levels by 2050, doubling renewable rollout levels.

The Blended Scenario predicts a rise in Australian gas demand by 2040, followed by a decrease to 86% by 2050 due to increased renewable energy production.

The Capture Scenario predicts a 30% increase in Australian gas demand by 2050, with renewable rollout limited to 10 times current levels.

Australian Energy Producers Chief Executive Samantha McCulloch said the report reveals that gas is a crucial safety net for Australia’s energy transition, offering affordable and reliable energy for households and businesses.

“The inclusion of natural gas as a core pillar of Australia’s energy and climate policies will speed up the transformation and secure economic benefits from net zero,” McCulloch stated.

According to the report, Australia’s unique position supplying expanding Asian demand required it to forge its own path, capturing more of the global market while cutting emissions by promoting renewable roll-out and coal-to-gas conversion.

Additionally, the report highlighted Australia’s significant export revenue opportunity from LNG, even with low-carbon hydrogen exports complemented over time.

McCulloch emphasised the need for Australia to anticipate significant domestic and international gas demand to ensure emissions reduction and economic growth.

“As well as keeping the lights on across Australia and the region, Australia’s gas industry delivered over $16 billion of government revenues last financial year and spent another $45 billion with Australian businesses, all the while supporting tens of thousands of jobs across the economy.”

According to the report, Australia’s gas industry is crucial in implementing net zero technologies and fuels such as carbon capture, utilisation, and storage (CCUS) and low-carbon hydrogen.

“CCUS and hydrogen are key complements to natural gas in a zero emissions future — all plausible net zero pathways involve CCUS and hydrogen at different scales,” the report said.