The role of gas

In a January 2025 media release, the Australian Competition and Consumer Commission (ACCC) warned its gas inquiry report found “New Gas production and supporting infrastructure is not being brought online fast enough despite natural gas playing a critical role in the energy transition”.*

The ACCC warned Australia’s east coast domestic gas supply “is in structural decline” with Commissioner Anna Brakey noting current projections “indicate the potential for structural gas shortfalls on the east coast from 2027 unless supply increases or demand decreases.”¹

In December 2024, Nicole Falcon, the executive general manager (WA) of the independent Australian Energy Market Operator (AEMO) spoke about the WA gas market saying, “The period from 2028 is subject to the most uncertainty.”²

She added, “A supply gap in the domestic gas market could materialise if projects are unable to be accelerated to match consumption, or consumption is greater than forecast”.³ AEMO found that from 2030, “new gas supply developments will be required to support domestic gas use [in WA] as reserves in existing gas fields decline."⁴

The same month, Australia’s Resources Minister, Madeleine King, authored an opinion piece titled ’Why net zero will only be possible with natural gas’.⁵ Minister Kind said:

It is the variable and flexible nature of gas coupled with its important role in supporting high-heat manufacturing that makes gas a vital insurance policy for Australia as we move to decarbonise our economy.

Australia and the world needs gas not only to heat homes and businesses, but increasingly we will need gas to back up our renewable energy networks as we phase out of coal [sic].

In July 2024, the International Energy Agency’s ‘Gas Market Report, Q3 2024’ forecast global demand for natural gas to increase by 2.5% that same calendar year.⁶

The same month, the ACCC released a report into the east coast gas market. The report found, “Gas shortfalls are projected to emerge from 2027 unless new sources of supply are made available".⁷

In June 2024, AEMO released the ‘Integrated System Plan (ISP)’, a 25-year roadmap on the energy transition. An AEMO media release announcing the roadmap confirmed the role of gas:

… renewable energy connected with transmission and distribution, firmed with storage, and backed up by gas-powered generation is the lowest-cost way to supply electricity to homes and businesses as Australia transitions to a net zero economy.⁸

In April 2024, the Australian Financial Review reported Energy Minister Chris Bowen “believes Australia has no option but to seek new supplies of gas”.⁹ In May 2024, Minister Bowen said, "with current supplies of gas dwindling, new supply will be needed – even as we electrify at pace".¹⁰

The same month, the Australian Government released its Future Gas Strategy, its plan for the role gas will play in supporting the economy’s transition to net zero. The strategy makes clear: "New sources of gas supply are needed to meet demand during the economy-wide transition”.¹¹

A media release from AEMO in March 2024 announcing the release of its ‘Gas Statement of Opportunities’ for Australia’s East Coast Gas Market was also cautionary, forecasting a future deficit in gas supply in Australia’s southern states beginning in 2028.¹²

The release identified the need to deliver new infrastructure by 2026 and noted an urgent need for new investment if gas supply is to meet demand from homes and businesses and for electricity generation from 2028.¹³

In December 2023, AEMO’s ‘Western Australian Gas Statement of Opportunities’ report forecast demand for domestic natural gas in WA would increase by an average of 2.2% each year from 2024 to 2033.¹⁴ At the same time, the report indicated supply is expected to decline by almost 1% on average each year over the same period.¹⁵

The messages are clear: Gas projects have a role to play in Australia’s energy future.

_{* www.accc.gov.au/media-release/east-coast-gas-surplus-on-the-immediate-horizon-but-longer-term-regulatory-certainty-needed-to-avoid-future-shortfalls (media release); www.accc.gov.au/system/files/accc-gas-inquiry-interim-report-december-2024.pdf (full report).}

_{^ aemo.com.au/en/newsroom/media-release/demand-for-gas-to-exceed-supply-in-wa-domestic-market-over-next-decade.}

_{** aemo.com.au/newsroom/media-release/investment-needed-to-fill-forecast-gas-supply-gaps-aemo.}

_{^^ www.parliament.wa.gov.au/Parliament/commit.nsf/(Report+Lookup+by+Com+ID)/27F837EAB987BD9548258B790020F885/$file/20240814%20-%20RPT%20-%20DOMGAS%20FINAL%20updated%20for%20web.pdf.}

_{1 www.accc.gov.au/media-release/east-coast-gas-surplus-on-the-immediate-horizon-but-longer-term-regulatory-certainty-needed-to-avoid-future-shortfalls (media release); www.accc.gov.au/system/files/accc-gas-inquiry-interim-report-december-2024.pdf (full report).}

_{2 aemo.com.au/newsroom/media-release/near-term-outlook-strengthens-for-wa-domestic-gas-supply.}

_{3 Ibid.}

_{4 Ibid.}

_{5 ‘Why net zero will only be possible with natural gas’, www.minister.industry.gov.au/ministers/king/opinion-piece/why-net-zero-will-only-be-possible-natural-gas.}

_{6 www.iea.org/reports/gas-market-report-q3-2024.}

_{7 www.accc.gov.au/system/files/gas-inquiry-june-interim-gas-inquiry-report_1.pdf.}

_{8 aemo.com.au/en/newsroom/media-release/energy-roadmap-lights-the-way-to-net-zero.}

_{9 www.afr.com/policy/energy-and-climate/new-gas-supplies-needed-says-bowen-as-gippsland-wind-takes-off-20240430-p5fnra.}

_{10 www.minister.dcceew.gov.au/bowen/speeches/speech-energy-users-association-australia.}

_{11 www.industry.gov.au/publications/future-gas-strategy.}

_{12 aemo.com.au/en/newsroom/media-release/gas-market-outlook-signals-need-for-new-investment (media release); aemo.com.au/-/media/files/gas/national_planning_and_forecasting/gsoo/2024/aemo-2024-gas-statement-of-opportunities-gsoo-report.pdf?la=en&hash=4180AD3B977743D028C19254B75997DA (full statement).}

_{13 aemo.com.au/en/newsroom/media-release/gas-market-outlook-signals-need-for-new-investment (media release).}

_{14 aemo.com.au/newsroom/media-release/demand-for-gas-to-exceed-supply-in-wa-domestic-market-over-next-decade.}

_{15 Ibid.}