In late 2024, the Australian Pipelines and Gas Association (APGA) Convention found itself in the news, and for good reason, as shadow Energy Minister Ted O’Brien announced one of the Opposition’s key energy policies ahead of the next election – including gas in the Capacity Investment Scheme (CIS).
Since then, there has been some alarm and just a dash of misinformation about what this means.
Let’s be clear: this isn’t a subsidy paid to producers, nor does it directly impact the economics of pipelines. But what it does do is simple – it provides a fail-safe on the necessary journey to net zero.
The energy transition is not unlike navigating uncharted waters. We know the destination, net zero emissions by 2050, but the route is full of unknowns and quickly changing conditions.
Under such circumstances, it’s imprudent to disregard a technology that has repeatedly proven its worth in times of crisis – including on multiple occasions so far in 2024 alone.
Excluding gas from the CIS ignores not only its reliability but also its ability to complement renewables in a way that minimises risks to both the grid and consumers.
The purpose of including gas in the CIS isn’t to sideline renewables, as some critics have claimed.
Instead, it’s about recognising the limitations of the current energy system. Batteries and pumped hydro will play a significant role in the future, but their development is still ongoing, and their capabilities, while improving, are not yet sufficient to meet the demands of a decarbonised grid.
A transition without an appropriate safety net is not a plan – it’s a gamble.
This announcement comes at a critical time. Reports of brownouts, industry disruptions, and skyrocketing prices continue to dominate headlines. Families are feeling the pressure of rising energy costs, and businesses, particularly in manufacturing, are grappling with uncertainty about their future operations.
The reality is that the transition to a low-carbon economy must be managed in a way that maintains energy security and affordability. Gas, when integrated into the CIS, can serve as that buffer against potential shortfalls while working to unlock more renewables and less coal generation.
It’s also important to recognise the evolving landscape of global energy markets.
Countries around the world, including Australia’s key trading partners, are all working through their own challenges in transitioning to lower-emission energy systems. As O’Brien pointed out, nations such as the UK and France have implemented capacity markets to secure dispatchable power, recognising the importance of having a balanced mix of energy sources.
In fact, even some Australian states, including South Australia, recognise this reality, and are in the midst of developing their own state-based capacity investment scheme to safeguard the grid.
The CIS should be viewed as a form of insurance – an assurance to investors, consumers, and our trading partners that Australia is serious about its transition and committed to doing it right.
The inclusion of gas in this mechanism doesn’t undermine the broader goal of increasing renewable energy capacity; rather, it supports that goal by ensuring the grid remains reliable during this period of significant change.
We know gas is not the complete answer for achieving net zero. No one is suggesting it is.
However, in the immediate and medium term, gas remains the only viable technology capable of providing the flexibility and stability needed to support the rapid expansion of renewables.
As we navigate these uncertain times, a clear-headed approach to energy policy is crucial.
It’s not just about ideological commitments; it’s about making decisions based on facts and realities on the ground. The transition to net zero will require a suite of solutions, and while gas may not be the only answer, it is the necessary answer for the next phase of Australia’s energy journey. As industry experts are almost unanimous in pointing out, ignoring this fact in favour of an all-or-nothing approach risks creating a more expensive and unreliable energy system.
O’Brien’s message to our convention was clear: gas is here to stay, not because it’s a perfect solution, but because it’s the pragmatic one. Australia’s secure energy future cannot be built on wishful thinking or political rhetoric alone. It requires a commitment to flexibility, security, and reliability – a commitment that can only be achieved with a balanced energy mix.
Ultimately, the debate about including gas in the CIS comes down to a question: Do we want a resilient energy system that is capable of supporting the transition to net zero at the lowest cost?
If the answer is yes, then the path forward must include gas as part of the solution. There’s no time for ideological purity in this conversation.
Instead, we need a clear-eyed focus on what works, what’s proven, and what’s necessary to keep the lights on while we build the renewable future that we all aspire to.
Australia’s energy journey is at a crossroads, and the decisions made now will determine the path we take for decades to come. The inclusion of gas in the CIS is a crucial step toward navigating that journey, ensuring that we arrive at our destination with a stable and secure energy system intact.
It’s not about clinging to the past; it’s about laying a solid foundation for the future. As Ted O’Brien stated: “Gas is here to stay” – and for good reason.
This feature also appears in the November edition of The Australian Pipeliner.