"The Victorian Government's approval for Beach Energy's near-shore Enterprise field to start supplying gas to the State is welcome but just a small part of the solution to the shortfall energy users face," Innes Willox, Chief Executive of national employer association Ai Group, said today.
"It has been ten years since the Victorian Government last approved a gas extraction project, having spent much of that decade demonising gas as a legitimate energy source.
"Gas is neither inherently bad nor good. It's a resource with costs and benefits. In some use cases the costs now outweigh the benefits given available alternatives – though transition is a far from simple exercise. In other applications, like high grade industrial heat and feedstock or flexible backup power, gas remains essential.
"Households use less than a quarter of Australia's domestic gas – the rest is used by industry and in power generation. Without adequate supply industry would have a very difficult future. Victoria and NSW have just seen the demise of the gas reliant plastics manufacturer, Qenos, and with it hundreds of jobs. The impacts of that closure are now starting to be felt with its customer base making hard calls about their futures.
"We will need adequate natural gas supply for many years to come, even as overall demand falls with greater uptake of electrification, efficiency, biogas and hydrogen. Sustaining that supply with the Bass Strait fields rapidly depleting takes new investment in new places with significant costs. That nuanced reality is equally unsuited to ideological intransigence on gas or simple cheerleading for it.
"Victoria won't be able to wait another ten years to approve its next gas project. Without further action supply will fall below demand in just four years' time. Sadly, the Enterprise field is already built into that forecast. Possible pieces of the solution all have drawbacks but decisions are urgent.
"Further local gas field development is possible, though the viable options are increasingly limited.
"Large new pipelines could bring more gas from Queensland or the Northern Territory, albeit with significant costs and the likelihood of stranded assets.
"LNG import terminals could bring gas from Queensland, WA or overseas, but with high emissions and the risk of importing even higher international gas prices.
"More gas storages are certain to be needed given the increasing importance of backup peaking gas generation as a bridge to fill energy gaps as our grid becomes increasingly renewable.
"Boosting efficiency and electrification will be a huge exercise and a slow grind, as the State Government's proposed rental property energy standards make clear.
"There are no easy options, and the stakes are incredibly high. Electricity supply security is also under pressure as we race – all too slowly so far – to replace closing coal plants.
"Reliability will be that much harder to maintain if gas peakers cannot find enough fuel. Victoria, and all the other governments involved, will need to be pragmatic, constructive and consultative.
"Industry supports the transition but we can't run on ideology – we need energy that is available, affordable and clean," Mr Willox said.
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