Blackout warnings lifted for weekend as national cabinet weighs up energy solutions
In a statement issued after national cabinet met, state and federal leaders said they would continue to work together on energy policy.
With the energy regulator forecasting peak winter demand for gas may exceed supply in the long-term, federal and state political leaders have been unable to reach a consensus on whether Australia should develop Narrabri or other gas fields.
Gas is used to fuel fast-start power plants, which some experts argue is a perfect complement to increasing volumes of renewable energy coming into the grid. However, some environmental advocates warn more reliance on fossil fuels will slow the shift away from polluting energy sources.
Perrottet said the Narrabri gas project in northern NSW would be key to future energy security.
“We are completely committed to Narrabri and are working with Santos to get that project off the ground,” he said. “A key component of that agreement, and the work we have committed with Santos, has been that there be a reservation policy attached to that project, of which they have supported and agreed to.”
Santos is seeking approval to start production at Narrabri in 2026 to deliver gas through a pipeline that will connect to Sydney and Newcastle, with a pledge that all the gas will go to the domestic market.
Narrabri is forecast to supply 70 petajoules every year over 25 years. AEMO said in March there was a “growing gas supply scarcity challenge in the south-east from 2023” even though it forecast demand would fall from about 125 petajoules in 2023 to less than 100 petajoules in 2024.
Federal Resources Minister Madeleine King backed the Narrabri project this week but was criticized for doing so by the Labor Environment Action Network, Greens leader Adam Bandt, Greenpeace and others. King also said the Victorian restrictions on gas were a barrier to future supply.
Andrews stood by his policy, which bans coal seam gas extraction, but said it was up to gas explorers to make the case for new projects outside that prohibition.
“I would say that there are processes to be gone through and if gas is found and if someone comes forward with a proposal then there is nothing ruling that out,” he said.
“But we don’t apologize for doing exactly what we said we would do. We sought a mandate, we don’t have fracking in a state and we are very, very proud of that.”
The rapid onset of cold weather has highlighted the nation’s need for gas. Over the past year, about 60 per cent of the power in the national electricity market came from coal, compared with 7 per cent from gas-fired power stations and 33 per cent from renewables, according to the AEMO.
But over the 24 hours to Friday afternoon, gas supplied 16.2 per cent of the electricity, reflecting outages at coal-fired power stations. A further 57.4 per cent came from coal and 25.8 from renewables.
With gas production declining in Bass Strait, the federal government wants to hasten the shift to renewables but acknowledges the need for more gas and is considering a reservation policy to force exporters to ship more gas to the local market.
One option is to cut exports from Queensland by breaking long-term contracts, allowing supplies to go south by pipeline. There is no terminal in NSW or Victoria to take gas from Western Australia. Andrew Forrest’s LNG import venture in Port Kembla has said it could start imports in 2023. The Victorian government opposes an import terminal at Western Port.
Federal Energy Minister Chris Bowen has agreed with state counterparts to develop a gas storage facility but is yet to say how big it would be, where it would be or how quickly it could be built.
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