Australia joins global race for green investment, but gas is still key

Australia is developing a new gas strategy to fill supply shortages in the energy grid as it commits to investing billions more to compete for global green investment and respond to a $550 billion US industry stimulus scheme.

Tripling Australia’s renewable energy generation by the decade’s end is a key piece of the government’s plan to shift to a net zero emissions economy. Tuesday’s federal budget revealed that 12,000 new workers are needed within the next 24 months to meet deadlines to expand the electricity transmission network to cope with a huge expansion in wind and solar farms across the country.

Climate Change and Energy Minister Chris Bowen.

Alex Ellinghausen.

Climate Change and Energy Minister Chris Bowen said the government had made a “down payment” with its $2 billion hydrogen strategy and would finalise a broader strategy by the end of the year, including an economic package to respond to US President Joe Biden’s Inflation Reduction Act, which contains about $550 billion to help industry reduce emissions and adopt green technology.

The first element of the government’s response to Biden’s bold play was its Hydrogen Headstart program, which will offer credits per kilogram of production, limited to fuel produced with renewable energy.

“There’s a global race for capital and this $2 billion is basically to keep us in the game,” Bowen said. “We are competing not just with the United States, we’re competing with countries like Saudi Arabia to become renewable energy and green hydrogen superpowers.”

Resources Minister Madeleine King also announced on Tuesday the government would spend $6.7 million developing its Future Gas Strategy, to guide the industry through the transition to net zero emissions by 2050 and ensure adequate supplies to provide back-up power for renewable energy.

The energy market operator has warned that Victoria could face supply shortages this winter, and by 2027, states including Victoria, New South Wales and South Australia would face yearly gas supply deficits unless new gas supplies were made available.

“The flexibility of gas as a firming fuel and a key manufacturing input will be required as the transition accelerates domestically and in our region,” King said.

The gas strategy “balances the security, affordability and decarbonisation of Australia’s oil and gas sector”, she said.

Bowen also said adequate gas supply was key to a smooth transition to clean energy and is confident he can navigate the looming risks in the transition, including the supply chain for solar panels, public support for wind and solar farms, and a skilled migration program for electricians that could cause a clash with the Electrical Trades Union.

“Our first preference will always be training and retraining of Australians,” Bowen said. “Where there are genuine high-skill shortages, the immigration system will then come into play.”

Electrical Trades Union acting national secretary Michael Wright said there had been shortages of electrical workers for 30 years and temporary migration was not a valid solution except for peaks of workforce demand from large-scale projects.

“Temporary migration does not fix this problem. Permanent migration is a different story, but only if there are specific, genuinely temporary surges … then there is a role [for] temporary migration,” Wright said.

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