The Benefits of Gas Infrastructure to Decarbonise Australia

Frontier Economics was engaged by Australian gas industry associations to undertake a study on the benefits of gas infrastructure to decarbonise Australia.

The objectives of the study were to determine and document an estimate of the value of gas infrastructure in 2050, accounting for Australia’s carbon-emission commitments. Specifically, this includes:

• Assessing the challenge in decarbonising Australia for the generation, storage and transport of energy.
• Developing and considering gas infrastructure scenarios for overcoming the challenges of decarbonisation.
• Valuing each gas infrastructure scenario.
• Considering policy implications for realising the value of the optimal gas infrastructure scenario.

The study examined four scenarios: Base Case; Electrification Scenario; Renewable Fuels Scenario; Zero Emissions Scenario.

The major conclusions were:

• Making continued use of existing assets to deliver energy, such as the existing gas transmission and distribution network, where possible, can help avoid the material costs of investing in new assets to deliver energy, such as augmentation of the electricity transmission and distribution network.
• Our finding that both the Renewable Fuels scenario and the Zero-carbon Fuels scenario is lower cost than the Electrification scenario suggests that there is value in continuing to make use of Australia’s gas network and Australia’s natural gas resources to deliver gaseous fuels to end-use customers.
• Our finding that both the Renewable Fuels scenario and the Zero-carbon Fuels scenario is lower cost than the Electrification scenario suggests that policies to achieve net zero emissions should be broad-based and should not focus solely on promoting the electrification of all stationary energy end-use.
• There is significant uncertainty about technological developments and costs over the period to 2050. This means that the actual costs of the scenarios that we have examined will change over time, and new alternative scenarios will emerge over time. Policies to achieve net zero emissions that are broad-based, rather than focused solely on promoting the electrification of all stationary energy end-use, will enable energy sector participants and their customers to respond flexibly to these technology and cost changes to lower costs.