Networks lobby pushes for RET-style scheme for hydrogen gas in pipelines

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Two new reports have highlighted the potential of “renewable gas” in Australia, if the Federal Government can put in place the right policy mechanisms to support its use.

The reports, one from by Energy Networks Australia and another by Bioenergy Australia were launched at the Renewable Gas in Australia Symposium held in Sydney, have recommended the establishment of a Renewable Energy Target style incentive for the use of renewable gas.

While there has been strong investment in recent years in transitioning the electricity supply from fossils fuels to renewable electricity generation, there has been slower progress in transitioning other sources of energy consumption, such as gas used for thermal processes, to lower emissions or renewable sources.

A report examining the potential for the use of biogas energy, prepared by ENEA consulting for Bioenergy Australia found that biogas represented a multi-billion dollar investment opportunity for Australia, with the potential to offset natural gas use in transport and could be used for injection into the existing gas network.

“We hope the Biogas Opportunities for Australia report can be used to inform policy and industry decisions into the future. As with any new industry, Government needs to play a crucial role in its development, and we look forward to working with the Government to drive this forward” Bioenergy Australia CEO Shahana McKenzie said.

The Energy Networks Australia report, prepared by Energetics, echoed the call for Federal policy intervention, outlining how “renewable gas” should be supported by inclusion in a Renewable Energy Target style policy mechanism, along with the setting of annual targets, and the potential for inclusion for eligibility to claim carbon offsets.

The Renewable Energy Target mechanism has underpinned investment in renewable electricity generation over the last decade, with a surge of investment in the last couple of years to ensure the current 20% by 2020 target will be met.

However, as currently designed, the RET mechanism only provides support for electricity generation, and does not cover gas consumption for thermal use.

Energetics pointed to the 93 million tonne gap between Australia’s current set of emissions reduction policies and the level of abatement required to meet Australia’s commitment under the Paris Agreement. Energetics saw the replacement of natural gas as a viable means of contributing to bridging this gap.

“Approximately 45% of the natural gas used in Australia is used for heating in the manufacturing industry, in buildings and in homes” the Energetics report noted.

Energetics has suggested eligibility for Australian Carbon Credit Units (ACCUs) for the injection of renewable gas into the mains electricity grid, would be an effective means of supporting an emerging industry, while reducing emissions in a sector that doesn’t receive much attention from policymakers.

Gas networks are facing significant pressures from growing calls for the decarbonisation of the economy, and falling demand for gas. Gas network owners face threats to sunk investments in infrastructure as gas prices rise, with both domestic and industrial gas users turn away from gas, looking for ways to electrify appliances and industrial, allowing for a transition of processes to renewable electricity.

Industry groups have provided recommendations, including a joint report from the CEFC, AI Group and the Energy Efficiency Council, on fuel switching, recognising the opportunities that exist for reducing energy costs through fuel switching between expensive sources of gas and increasingly cheaper sources of renewable electricity.

Last year, the ACT announced that it would support the development of its first ‘gas-free’ suburb, that will see new homes packaged with electric appliances, allowing the development to be completely powered by renewable electricity.

Energetics highlighted in its report the potential for renewable gas to provide a degree of diversity to the energy mix, as the electricity sector continues its process of decarbonisation. Energetics saw the potential for hydrogen to be used as a medium for storing excess electricity generated from renewable energy sources.

“Hydrogen can play an important role in not only helping Australia’s gas networks decarbonise but as energy storage,” Dillon said.

“Flexible hydrogen production can help soak up excess renewable electricity on sunny and windy days, then fuel cells can generate emissions-free power on still evenings.”

The findings follow those from experts at the ANU, CSIRO and Monash University who have suggested Australia has the potential to lead a growing global market for renewable hydrogen, being well placed due to falling technology costs and an abundance of good solar and wind resources across the country.

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