How the domestic gas market will support Australia’s COVID-19 recovery
With Australia’s success at flattening the Coronavirus curve, and restrictions lifting gradually across states and territories, thoughts are now turning to how Australia will repair the economic damage caused by the pandemic. Working with the newly formed National COVID-19 Coordination Commission (NCCC), the Federal Government is looking at the role that gas will play in the pandemic recovery, with a leaked report from the NCCC recommending a massive expansion of the domestic gas industry.
Australia is now officially in a recession, with Federal Treasurer Josh Frydenberg confirming this in early June. The newly formed NCCC, which has the directorate to minimise and mitigate the impact of the COVID-19 on jobs and businesses, and to facilitate the fastest economic recovery, has stated that a critical part of the path forward should be investing in and expanding the domestic gas industry.
The statements have been made in a leaked draft report, which suggests that expanding the gas industry could support a manufacturing-led economic recovery, with around 85,000-170,000 direct jobs, and hundreds of thousands of indirect jobs, created across the country from the expansion.
To achieve this, the report focuses on two main areas: growing advanced manufacturing, and creating a competitive domestic gas market. The NCCC suggests that the Federal Government approach the development of the gas industry in three phases.
The first phase recommends removing barriers by lifting the moratorium on coal seam gas in NSW and the remaining gas exploration moratoria in Victoria; reducing red and green tape; enforcing a use it or lose it arrangement on exploration areas; and looking at the accelerated development of the Beetaloo, Bowen and Perth basins.
Phase two explores how the government can create the market for domestic gas by lowering the cost of pipelines, underwriting new gas supply ventures, and considering tax incentives for priority infrastructure, among other suggestions. Stage two also sets the target of reducing gas prices to $6 a gigajoule.
And in stage three, the report suggests a $4/gigajoule gas price target, by establishing an ‘evergreen’ taskforce with the Australian Energy Market Operator and the Australian Competition and Consumer Commission, to manage and send clear information on prioritised basins and pipelines. It also sets a clear focus on proactively attracting foreign investment, opening up opportunities for overseas providers to do business in Australia.
The suggestions that the NCCC has made in the report show that the Federal Government is keen to back domestic gas in Australia, as a key tool to fight against the economic recession.
Accelerating the gas market in Australia is also great news for renewables, with gas acting as the perfect gateway fuel to renewable sources such as solar and wind. It also provides a platform for Australia to invest and become world leaders in green and blue hydrogen.
With the Federal Government and the NCCC looking closely at the domestic gas market, and actively considering significant investment in expansion, Australia has the potential and untapped resources to support the country through the current economic difficulties. It also makes it the ideal time for overseas product and equipment suppliers to start to establish a presence in Australia and be part of the amplified gas market.
For more information about how your business could potentially become involved in the energy market in Australia, contact Powered Australia for a confidential discussion about the opportunities down under.
