A new report from leading international research firm Wood Mackenzie has identified a number of barriers that could impact Australia’s role as a key global player in reaching the world’s new clean energy aims.
In a report titled “Making Australia an energy transition leader”, authors Simon Flowers, a chief analyst, and Gavin Thompson, vice chairman, energy – Asia Pacific, said that Asia’s economic transformation would not have been possible without Australian energy and metals.
However, while it is noted Australia’s world class gas, coal and iron ore resources have positioned the country as a trusted supplier to Asia’s booming economies there are concerns looming with the region’s future decarbonisation plans now rely on major investment in Australian low-carbon LNG, renewables, green hydrogen and carbon capture potential.
Policy and investment gaps
The authors identified a lack of policy support and key investments have put Australia’s progress towards fulfilling its central role in Asia’s energy transition at risk.
They also pointed to growing rifts with LNG producers and buyers, issues with the Australian grid causing congestion, leading to an impact on investment in the renewable energy sector.
The report also identified the delay in Australia reaching its ambitions in the areas of carbon capture and storage (CCS) and green hydrogen are also a concern.
Gas industry woes
Mr Thompson says policy uncertainty has stalled much-needed gas investment.
He says the Australian gas industry in particular has been hard hit over the past 12 months.
He identified declining coal-fired generation and insufficient renewable growth as putting increasing pressure on the east coast energy industry which is forecast to be facing a major gas supply crunch.
Government policy and under-investment
The report identified government policy such as changes to Australia’s Safeguard Mechanism as having a negative impact and instead may not be providing the necessary answers the government and industry need.
The WoodMac study has agreed with local petroleum industry concerns that there has been a notable under-investment in gas resources – which it says could impact both local and Asian markets.
The report also noted that while Australia has made significant progress with its renewable developments, there are a number of continuing issues such as grid congestion, connection queues, revenue uncertainty and public opposition that are hindering further growth.
It noted that no new large-scale renewable projects have made progress so far this year.
The authors said that developing more gas to supply the market would actually support Australia’s growth in wind and solar and avoid the nation from heading towards having an increasingly unreliable power system.
Future strategies and recommendations
The report also noted that additional gas pumped into the domestic power market, combined with major public-private partnerships could help ensure increasing grid capacity and reliability, while positioning Australia as a global leader in green hydrogen.
It concluded that strong initiatives by the federal government are needed to bring together the broad coalition of stakeholders on which Australia’s transition relies, including state and local government, energy companies, utilities, importers, finance and local communities.
