Morrison unveils $2bn energy deal

The deal includes commitments from the NSW Government to facilitate investment opportunities to produce an additional 70 PJ of gas per year for Australia’s east coast market, as well as support for new generation projects in NSW through the Federal Government’s $1 billion Underwriting New Generation Investment program.

NSW-based emissions reduction initiatives well receive $960 million in federal funding via grants and loans, while the NSW Government will provide $1.01 billion in direct funding.

Prime Minister Scott Morrison said gas was crucial in the fight to lower emissions.

“There is no credible plan to lower emissions and keep electricity price down that does not involve the greater use of gas as an important transition fuel,” said Mr Morrison.

“This plan is about getting greater access to that gas, as a vital accompaniment to our record investment in renewables.

“Our agreement also outlines a responsible transition of the NSW electricity sector to lower emissions technologies, while recognising the critical contribution that energy dependent manufacturing jobs make to the economy.”

NSW Premier Gladys Berejiklian said her government was “extremely pleased” about the agreement.

“If you do want to use more renewables, you need more gas, because when you’re moving from peak to off-peak, you actually need gas to facilitate that,” she said.

“We don’t need to change our policy position [on onshore gas exploration bans] at all.

“We already have a number of projects in the pipeline, which we’re hoping will satisfy these arrangements.”

Ms Berejiklian pointed to the Narrabri Gas Project as one such upcoming gas development, which she said the government was in the final stages of proposal consideration.

When asked whether Santos promising 70 PJ of production from Narrabri, the same amount offered in this deal, meant the deal on the projects was done, Ms Berejiklian said NSW had several gas options at its disposal.

“It may very well be [a done deal], but we have to go through the last stages of the planning process,” she said.

“So if that project is successful, we’ve met our arrangements. If not, we have other options through Port Kembla and Newcastle without imposing any additional policy paradigms on our citizens.”

APGA CEO Steve Davies said the government was right to highlight the vital role gas will play in future energy generation.

“Gas plays a key role across the National Electricity Market (NEM),” said Mr Davies.

“As investment continues to deliver increasing renewable capacity into the NEM, it is vital that we have increased investment in gas supply and generation capacity to ensure the electricity system can cope during the periods of greatest stress.”

The Federal Government said this was the first in a series of bilateral energy agreement between the federal and state and territory governments.

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