Executive Summary

Renewable gases delivered through gas infrastructure represent the lowest cost, most reliable pathway to decarbonise gas demand for Victorian citizens, households and businesses. The Australian Pipelines and Gas Association (APGA) emphasizes the importance of the VGSR focusing on the needs of Victorian citizens, households and businesses as decarbonisation is not simple. Victorian’s must be put first when charting the path to Victorian gas use decarbonisation.

APGA welcomes the opportunity to contribute to the Victorian Gas Substitution Roadmap (VGSR) via this submission to the VGSR Consultation Paper (the Consultation Paper) and commends the Victorian Government on the robust process undertaken to date.

APGA represents the owners, operators, designers, constructors and service providers of Australia’s pipeline infrastructure, with a focus on high-pressure gas transmission. APGA’s members build, own and operate the gas transmission infrastructure connecting the disparate gas supply basins and demand centres of Australia, offering a wide range of services to gas producers, retailers and users.

As proponents of Gas Vision 2050 (attached), APGA sees renewable gases such as hydrogen and biogas playing a critical role in decarbonising energy in homes, buildings, industry, transport and electricity generation in the future energy mix. APGA has sought to support this future as the largest industry contributor to the $30M, 80+ research project strong Future Fuels CRC, as well as the facilitation of industry-based research and analysis of the decarbonisation of gas demand.

Across the past half-decade of targeted decarbonisation research, nine key understandings have risen to the surface. While the specific details vary slightly from jurisdiction to jurisdiction, these nine key understandings are most prominent in understanding Victoria’s gas decarbonisation pathways.

The best possible outcome for Victorian households and businesses is the lowest cost most reliable energy system that delivers net zero emissions by 2050
(Section 2.1)

The technical and societal changes required for Victoria’s equitable transition to a net-zero emissions future will be extensive and challenging. The potential impacts on people and their livelihoods means the energy transition must be about more than just a battle between different energy providers. The energy trilemma in part holds the key to achieving this end.

Gaseous energy is high-quality, affordable energy (Section 2.2)

Gaseous energy has innate qualities that make gaseous energy a highly usable, transportable and storable form of energy, which in turn lead to gaseous energy being highly affordable for a wide range of energy customers.

These innate qualities are not unique to natural gas, with renewable gases having all of these innate qualities without the carbon emissions of natural gas.

Renewable gas is viable and being developed around the globe (Section 2.3)

Key renewable gas technologies across both the hydrogen and biogas pathways are technologically mature and are currently undergoing commercial scale uplift at a faster pace than solar PV. The Viability renewable gas is supported by the IEA who forecast renewable gases as contributing 13% of total global energy consumption in their net-zero 2050 scenario, as well as being their backup plan if Carbon Capture and Storage (CCS) fails.

A decarbonised gas system is a huge opportunity for Victoria (Section 2.4)

Victorian gas infrastructure delivers more energy at lower cost, lower emissions intensity and greater reliability today than Victoria’s electricity infrastructure. Victoria’s existing gas infrastructure represents a greater opportunity than existing electricity infrastructure to deliver lower cost renewable energy to Victorian households and businesses. The Australian gas industry sees its contribution to energy affordability and reliability in a net zero Victoria as key to delivering the lowest cost, most reliable decarbonisation outcome for Victorian households and businesses.

Table E1: Scale and Context of Victorian Gas Decarbonisation Opportunity

Gas infrastructure provides cost-effective energy delivery (Section 2.5)

New gas infrastructure cost less to transport and store energy than electricity infrastructure. This is why existing Victorian gas infrastructure can deliver energy six times more cost effectively than Victorian electricity infrastructure and can support peak demand ten times more cost effectively than Victorian electricity infrastructure. Every dollar spent on new gas infrastructure today will continue to deliver energy cheaper than new electricity infrastructure.

Table E2: Costs and deliveries of Victoria’s energy infrastructure (2019)

Decarbonised gas is a lower-cost option to achieve net-zero in 2050 (Section 2.6)

Combining the innate qualities of gaseous energy with the viability of renewable gases and the cost effectiveness of gas infrastructure, the opportunity to decarbonise gas via the renewable gas pathway stands out as a lower cost option to achieve net zero emissions by 2050 in Victoria. This stands out in research undertaken by Frontier Economics which demonstrates that a 100% green hydrogen pathway will cost Australians less in 2050 than the 100% electrification pathway.

Figure E1: Cost Benefit Analysis Summary by Components ($2020)

The renewable gas pathway offers more reliable renewable energy (Section 2.7)

Both acting alone and in concert with renewable electricity, the renewable gas pathway will result in a more secure and reliable renewable energy system for Victorian citizens and businesses. Parallel and complimentary renewable gas and renewable systems operating in tandem can minimise the impact of outages in either system on Victorian households and businesses. Sector coupling opportunities such as gas power generation and electrolysis can even lead cross network support in managing minimum and maximum demand.

The gas system offers superior emission outcomes in the short-term (Section 2.8)

Future Fuel CRC research has demonstrated that switching natural gas demand to electricity in 2021 will increase Victoria’s emissions, and indicates that appliance switching from gas to electricity will not deliver emissions reduction in Victoria before 2035 through forecasts emission intensity of Victoria’s electricity supply. Gaseous energy is not only the lowest cost pathway to net zero emissions in 2050, it is also the lowest emission pathway to 2030.

Gas is a key contributor to a net-zero electricity sector (Section 2.9)

In addition to the direct role gas plays in Victorian energy supply, gas power generation has a key role to play in supporting the electricity sector achieve net-zero affordably and reliably.

The Gratton Institute identifies that gas also plays a critical backstop function in electricity generation as its ability to quickly ramp production up and down can balance variations in supply from other sources. This ‘firming’, or stabilising, role is likely to become more important as the proportion of electricity supplied from renewable energy sources grows.

Ensuring that Victoria’s electricity system can decarbonise in the lowest cost, most reliable manner is also dependant on a gaseous energy supply for gas power generation.

Through an understanding of these nine points, APGA is confident that the Victorian Gas Substitution Roadmap will propose technology neutral recommendations that enable the lowest cost, most reliable decarbonisation pathway for Victorian citizens, households and businesses.. In desiring an accelerated outcome by 2030, it is hoped that the Victorian Government learns from the policies which successfully enabled the renewable electricity revolution, repurposing these to enable a renewable gas revolution in the decade to come.

To discuss any of the details within this submission further, please contact APGA’s National Policy Manager, Jordan McCollum, on +61 422 057 856 or jmccollum@apga.org.au.

Yours Sincerely

STEVE DAVIES
Chief Executive Officer
Australian Pipelines and Gas Association