Media Release: Chamber policy paper backs gas in energy transition

Published Fri 28 Jun 2024

Media Release from The Victorian Chamber of Commerce and Industry

The Victorian Chamber of Commerce and Industry has released a policy paper that advocates for new gas supply to avoid imminent shortages impacting the east coast of Australia during our energy transition.

Securing Our Energy Future urges the Victorian and Federal Governments to adopt an alternative energy pathway as Victoria’s energy crisis becomes a national issue, with gas supply an urgent priority.

It comes as the Australian Energy Market Operator (AEMO) indicates that the transition to renewables as coal power is phased out is running well behind schedule, endorsing gas-powered generation to contribute to the energy mix.

The Victorian Chamber’s policy paper urges a rethink our energy transition into two separate phases: shoring up both gas and electricity in supply and deliver the lowest price before moving to transition society to a net-zero future.

Victorian Chamber of Commerce and Industry Chief Executive Paul Guerra said: “Our current trajectory is putting Victoria’s prosperity at risk, as energy security and price cannot be guaranteed.

“Gas will be essential for transition to net zero. Equally, we need all our energy options on the table to overcome our current energy crisis.

“We need to shore up existing supply on energy to give us the runway to then move to a renewable environment in a cost-effective way. Supply disruption and price spikes will be dire for business. In the immediate term, we need new gas supplies, as current ones are now at risk.

“New clean energy industries will create enormous economic and environmental benefits, but the transition must ensure an affordable and available supply to power Victoria into this next stage of prosperity.”

Chamber position

Our Policy Paper notes that, with energy prices high, we have seen the impact on business. If supply is threatened, more businesses will make the decision to leave. We need to give business the certainty it needs.

Our eight principles for the energy revolution are:

  1. Energy security
  2. Diverse energy sources
  3. Reliable and affordable energy
  4. Technology neutrality
  5. Commercially realistic policy
  6. International and private-sector investment
  7. New clean energy industries
  8. New clean energy jobs.

To shore up gas supply will require new reserves being unlocked, LNG supplies being planned for, or increased pipeline capacity coming down from Queensland. Electricity has already been underpinned by an agreement to extend coal generators to operate longer.

An efficient and least-cost pathway for Victoria requires streamlining regulatory approvals, upholding technology neutrality, formally recognising emerging energies in pre-existing frameworks and incentivising supply and demand of novel gases and liquid fuels.

Victoria has the opportunity to develop these new clean energy industries and be a leader nationally and internationally. These novel industries in renewable gas, carbon capture and storage and renewable liquid fuels will translate into more jobs that would drive our economy into the net zero future.

We believe collaboration between energy industry producers, retailers, pipeline and infrastructure companies, peak bodies and end-to-end users together with the Victorian Government is essential and urgent to ensure that gas remains in our energy system.

The Federal Government’s Future Gas Strategy is the mechanism for addressing the urgent situation Victorian businesses now face, especially as it is apparent there are few viable and available alternatives to power our State.

AEMO’s Integrated System Plan

The timing of Victorian Chamber’s position was reinforced by AEMO’s recently released 25-year roadmap to transition the National Electricity Market (NEM) to net zero by 2050.

The Integrated System Plan (ISP) notes that while the energy transition is well underway, with renewable energy accounting for 40 per cent of electricity used in the past year, urgency is being driven by the progressive closure of Australia’s remaining coal-fired power stations.

Ten large coal-fired power stations have closed since 2012, and the ISP projects that 90 per cent of today’s capacity will be closed by 2035 and all before 2040.

The ISP confirms that renewable energy connected with transmission and distribution, firmed with storage, and backed up by gas-powered generation is the lowest-cost way to supply electricity to homes and businesses as Australia transitions to a net zero economy.

“Gas plays a crucial energy transition role in back-up electricity generation for sustained periods when renewables are unavailable, and its contribution is integral to the ISP,” AEMO notes.

Read our full policy paper

Our Policy Paper highlights the risks of energy shortfalls, reveals our vision for a pragmatic energy future, and states our recommended policy levers for governments.

The full document can be read via Securing Our Energy Future.