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Gas Infrastructure’s Key Role in Australia’s Energy Transition

Jemena, APA, Australian Gas Infrastructure Group (AGIG) 3 mins read

Tuesday, 15 August 2023

Gas pipeline infrastructure will continue to play an important role in Australia’s energy transition by supporting the ‘renewification’ of the energy system, delivering emissions reductions sooner and at lower cost, according to a report by the Boston Consulting Group (BCG).

The report, The Role of Gas Infrastructure in Australia’s Energy Transition, was commissioned by AGIG, APA Group, and Jemena and was authored by BCG. It considers the potential role for gas infrastructure in supporting the transition of the Australian energy system to net-zero emissions. The work is framed around three timeframes: today’s energy system, the system in transition phase, and the system at net-zero emissions.

The report found that until the renewable electricity pipeline has enough capacity to electrify all potential applications, ‘renewifying’ the electricity grid by prioritising the removal of coal and electrifying liquid fuels used in light transport would have the greater impact across emissions reduction and system costs. Additionally, while electrification is the economic alternative for some customers, accelerating the electrification of all end-uses could result in a period of fossil-fuelled electrification.

Natural gas and gas pipeline infrastructure will therefore play an important role in making the transition more robust by continuing to support applications that are hard or expensive-to-electrify while also helping to manage the risk of a disorderly exit of coal-fired generation.

The report also finds that this approach allows for the preservation of existing gas infrastructure, which could be repurposed to deliver low carbon gases – such as biomethane, synthetic methane, or hydrogen – as part of an integrated clean energy system. This system could provide a total-cost competitive option to some consumers and minimise the overall system cost of the transition.

Key findings from the report are available overleaf.

A full copy of the report is available here.


For media comment contact:

Australian Gas Infrastructure Group

Rachel Cameron
0425 199 184


Michael Cox
0429 465 227


Michael Pintabona
0403 380 316


Key findings of the report:

Today’s Energy System

  • Natural gas is a cornerstone of our energy system today, representing 27% of primary energy, serving industrial customers, commercial, residential and electricity generation.
  • Natural gas is particularly suitable for applications that need rapid response and high-energy delivery rates including high-grade heat, peaking generation, and space-heating
  • The role of natural gas in our system will change as we reduce emissions (production, and use of natural gas for Australian purposes represents ~18% of Australia’s emissions) and as efficient electric appliances become more widely available

The Energy System in Transition

  • Natural gas will continue to play an important role while our energy system is transitioning – with various reports estimating between 40 and 90% of current domestic consumption in 2040.
  • Some gas customers have an economic incentive to electrify their usage (e.g. low grade industrial heat, new build residential customers)
  • However, natural gas will remain critical for hard or expensive-to-electrify energy uses, including: industrial heat, feedstock, peaking power generation, and household space heating – especially in cold climates.
  • This would allow the key resource - grid connected renewable electricity - to be deployed with greatest emission reduction and lowest system cost impact, that is: displacing coal fired generation and electrifying light vehicle transport.
  • Beyond customer choice, if end uses of natural gas are electrified before renewable primary energy sources are deployed, there is potential for a period of fossil-fuelled electrification.

A Net Zero Energy System

  • Existing gas infrastructure could be repurposed to accommodate low carbon gases. At future low carbon gas costs this could provide a total-cost competitive option to some customers
  • An integrated clean energy system, combining both electric and low carbon gas networks, could be the least-cost approach to net zero emissions in the overall energy system.
  • The optimal system will differ by location based on a number of factors, including climate, the existing electricity system and the prevalence of resource for low carbon gases
  • An integrated clean energy system will not develop automatically but will require action to:
  • maintain current reliable natural gas supply
  • minimise fugitive methane emissions
  • integrate planning - across electricity and gas; and across transmission, distribution and the end-user
  • manage cost-recovery in regulated networks for reduced and peakier flows.

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