January 31, 2020 / 2:20 AM / 21 days ago

Australia aims to boost east coast gas supply, clean energy in $1.4 billion deal

SYDNEY/MELBOURNE (Reuters) - Australia’s government began a push to boost natural gas supply and renewable energy as part of a A$2 billion ($1.4 billion) deal with its most populous state, looking to cut carbon emissions in the wake of devastating bushfires.

FILE PHOTO: Australian Prime Minister Scott Morrison speaks during a press conference on the governments' bushfire response at Parliament House in Canberra, Australia, January 5, 2020. AAP Image/Lukas Coch via REUTERS

As part of a joint funding agreement with the state of New South Wales (NSW), Australia will upgrade parts of the east coast power grid, help pay for two new interstate transmission links and back emissions reduction projects.

The NSW government in return has committed to help bring on new supply of 70 petajoules (PJ) per year of gas for the east coast market, which faces a sharp decline in supply from its main gas source in the Bass Strait off Australia’s south coast.

Prime Minister Scott Morrison, who critics say has not done enough to address the impact of climate change, said the deal would stabilize the NSW power grid, cut electricity prices and spur development of more wind, solar and hydro power.

“It is about getting electricity prices down, getting emissions down, getting more power into the system, and getting the gas to make that happen,” Morrison told reporters in Sydney.

The deal is intended to be first in a series with Australian states, all of which have more ambitious carbon reduction and renewable energy targets than the federal government.

Morrison said this week gas would be key to cutting emissions from the power sector, which is 70% dependent on coal, as the country transitions toward cleaner energy.

“Gas can help us bridge the gap while our investments in batteries, hydrogen and pumped hydro energy storage bring these technologies to economic parity with traditional energy sources,” he said in a speech on Wednesday.

New South Wales would be able to meet its gas commitment if the state’s Independent Planning Commission approves Santos Ltd’s (STO.AX) Narrabri project, or if one of two liquefied natural gas (LNG) import terminals in the state go ahead.

“If we can develop Narrabri gas, it will be the most competitively-priced gas for NSW customers,” Santos Chief Executive Kevin Gallagher said in emailed comments.

“It will always be cheaper than LNG imports, especially when gas prices are high in Asia.”

The Australian Industry Group (AiGroup), which represents big and small businesses, on Friday urged the government to go further and consider putting a price on carbon, a contentious issue that has led to the ouster of two prime ministers and an opposition leader over the past decade.

“Carbon price aversion should be rethought,” AiGroup Chief Executive Innes Willox said in an opinion piece in two major newspapers.

“The trauma and tragedy of the bushfire crisis is shaking climate politics and policy out of its rut. Evolution is needed,” he wrote.

Reporting by Colin Packham and Sonali Paul; Editing by Daniel Wallis and Tom Hogue

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