The BGA Australia Team, led by Managing Director Michael “Mick” McNeill, wrote an update on Australia’s Future Gas Strategy.

Context

  • The Labor government has confirmed the role of gas and carbon capture and storage in Australia’s energy mix for at least the next 25 years as it seeks to keep Australian industry viable and meet the needs of key overseas trading partners and investors such as Japan.
  • The Future Gas Strategy, which Resources Minister Madeleine King released May 9, represents a key juncture in the government’s energy policy journey. It is becoming increasingly clear that the rollout of renewables will not cover the retirement of coal-fired power in the next 15 years as Australia pursues its ambitious emissions and renewable energy targets.Attracting foreign investment (see BGA’s May 1 memo | password: G9MaL1R4xJ4s) will be vital to the strategy’s success.

Significance

  • The strategy commits to keeping gas affordable for Australian users in the transition to net-zero emissions by 2050 and identifying new sources of gas supply for timely development. The government will work with industry players and state and territory governments to encourage the timelier development of existing gas discoveries in gas-producing regions. Officials will also work with industry stakeholders and regulators to minimize venting and flaring of methane from operations.
  • The government will promote the geological storage of carbon dioxide and release acreage for offshore carbon capture and storage. Canberra will establish a new initiative to promote regional cooperation on transboundary carbon capture and storage, which will provide options for energy security and carbon management solutions for regional partners.
  • Prime Minister Anthony Albanese’s Cabinet remains committed to reducing greenhouse gas emissions by 43 percent below 2005 levels by 2030 and achieving net-zero emissions by 2050. The government will accelerate the reduction of gas-related emissions through the Safeguard Mechanism, which obligates Australia’s largest emitters, including gas and liquefied natural gas (LNG) producers, to reduce emissions.
  • The strategy commits Australia to remain a reliable trading partner for energy, including LNG and low-emission gases. Japanese gas giant Inpex last year warned that the Safeguard Mechanism could stifle investment in new gas fields, expressed concern about intervention in the domestic gas market and criticized the lack of government support for carbon capture and storage. Since 2022, the Australian government has introduced the mandatory Gas Code of Conduct, a renewed heads of agreement with LNG exporters and strengthened the Australian Domestic Gas Security Mechanism to ensure that Australian households and businesses have affordable gas supplies.
  • The government sees gas as crucial for A Future Made in Australia (see BGA’s April 12 memo | password: APR12#MadeinAustralia) to power manufacturing, food processing and the refining of critical minerals. Gas supplies 27 percent of Australia’s energy needs and represents 14 percent of Australia’s export income. The government wants to connect Australia to new clean energy supply chains through the Hydrogen Headstart and Regional Hydrogen Hubs programs.

Implications

  • With an election to be held in the next 12 months, the strategy will become a totemic political issue, putting Labor in conflict with the socially progressive Left, represented somewhat by its own left faction, some Labor state governments and the Greens and “Teal” independents in the federal Parliament.
  • Although no changes were made to the Safeguard Mechanism, industry groups believe the strategy sends a strong signal to trading partners and international investors. The Asia Natural Gas and Energy Association said LNG remains vital for customers in Japan, Korea, Singapore, Taiwan, Thailand and China along with developing markets such as India, Vietnam and the Philippines. It also noted the importance of carbon capture and storage to achieve net-zero goals in the Indo-Pacific.

We will continue to keep you updated on developments in Australia as they occur. If you have any questions or comments, please contact BGA Australia Managing Director Michael “Mick” McNeill at mmcneill@bowergroupasia.com.

Best regards,

BGA Australia Team

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Managing Director

Mick is a highly-experienced government relations expert and trusted advisor on consensus building, conflict resolution and legislative developments. He has played an integral role in helping parties achieve desired outcomes in areas of national security, health policy, foreign policy and reputational crisis management, as well as media relations, communications campaigns, immigration and human rights. Mick has two decades’ experience working with government as a media analyst, political adviser and NGO advocacy manager. After a stint serving as an adviser to an Australian senator, Mick took on the role of the locally engaged senior political specialist at the U.S. Embassy in ... Read More