IEEFA Australia Insights: Declining Gas Demand in Eastern Australia

Welcome to the tenth edition of IEEFA Asia Pacific Insights LinkedIn #newsletter and our first of the year 2024, featuring some quick insights on key issues related to energy markets, trends and policies. As we usher in the new year, we are delighted to present you our latest research and commentary on the ever-evolving energy transition landscape.??

In this edition, we bring you our latest releases:??

• Kevin Morrison (Gas Energy Finance Lead Analyst, Australia) on the declining gas demand in Eastern Australia.?
• IEEFA’s submission to the Australian Treasury's pre-budget consultation for 2024-25, supporting strategic interventions in energy performance and electrification to deliver strong emissions reductions and help alleviate the cost-of-living crisis. Our submission included input from Amandine Denis-Ryan – Chief Executive Australia, Kevin Morrison – Energy Finance Analyst, Australian Gas, Joshua Runciman – Lead Analyst, Australian Gas, Jay Gordon – Energy Finance Analyst, Australian Electricity, Johanna Bowyer – Lead Analyst, Australian Electricity, and Dr Gabrielle Kuiper – IEEFA Guest Contributor?

The Australian government recently signed a new gas deal designed to head off looming supply shortages at the end of the decade, but gas consumption fell in the final quarter of 2023.?

“It’s time to say goodbye to gas connections in new homes.”?

In Q4 2023, Eastern Australia witnessed a 16% drop in #gas consumption, challenging the pervading narrative of impending shortages. IEEFA Australia Gas Analyst, Kevin Morrison reveals key trends and dispels longstanding misconceptions:?

“The trend of falling gas demand is one that we at the Institute for Energy Economics and Financial Analysis (IEEFA) expect to continue as more of the energy system electrifies, and as batteries provide more competition to gas-fired power plants for providing firming power to the increasing share of renewable energy providing electricity. “?

Reasons for Decline:?

• Warmer temperatures in Victoria.?
• Reduced commercial and industrial demand.?

Shifting Narratives:?

• Gas surplus predicted in Eastern Australia by ACCC.?
• Gas feedstock for LNG export plants dominating demand, at 83%.?

Impact on Power Generation:?

• 5% decline in gas used for power generation, countering the perception of gas as a renewables backup.?

The Real Issue:?

• Not a shortage of gas, but inadequate provisions for secure domestic supply.?

Future Considerations:?

• Governments, like VIC and ACT, focusing on demand-side initiatives.?

IEEFA expects gas demand to continue to fall as more of the energy system electrifies, and as batteries provide more competition to gas-fired power plants.?

IEEFA's View:?

• Emphasis on demand-side measures.?
• Victorian Gas Substitution Roadmap as a model for transition.?
• Conversion of household gas appliances to electric can significantly reduce supply shortages.?

?? Eastern Australia gas demand fell in the last quarter of 2023, with further declines to come

IEEFA Advocacy: Shaping a Sustainable Energy Future??

IEEFA Australia, including Amandine Denis-Ryan – Chief Executive Australia, Kevin Morrison – Energy Finance Analyst Australian Gas, Joshua Runciman – Lead Analyst, Australian Gas, Jay Gordon – Energy Finance Analyst Australian Electricity, Johanna Bowyer – Lead Analyst Australian Electricity, and Dr Gabrielle Kuiper – IEEFA Guest Contributor, have submitted recommendations to the Treasury's pre-budget consultation for 2024-25.??

The key proposals call for:

1?? Prioritising Energy Performance and #Electrification:?

• Aimed at reducing energy bills.?
• Focusing on initiatives that enhance #energyefficiency.??

2?? Strategic Funding for #Hydrogen:?

• Emphasising valuable and energy-efficient use cases.?
• Steering #investment towards impactful hydrogen solutions.?

?3?? Redirecting Funding for Gas Demand Reduction:?

• Urging the redirection of funds from #Beetaloo and #MiddleArm gas ventures.?
• Prioritising investments in #gasdemand reduction projects.?

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IEEFA believes some strategic interventions in energy performance and electrification could deliver strong emissions reductions and help alleviate the cost-of-living crisis. IEEFA also believes that some government expenditure could be redirected to programs that will be more effective in delivering a net zero emissions economy by 2050.?

?? Access the full submission

See also latest IEEFA Australia commentaries

• Australia's CCS Expansion Risks: "Sea dumping" bill sets the stage for ambitious CCS projects, raising concerns about the unproven technology.?
• Competing for Green Steel: Examining national advantages and location challenges in the first wave of green iron and steel initiatives.?
• No Such Thing as "Clean Coal": A reminder that South Africa's draft Integrated Resource Plan may not align with global power sector trends.?

See all Australia research???

IEEFA Asia-Pacific In The News?

Eastern Australia gas demand fell in 2023 Q4, more declines to come?

SIMON NICHOLAS: New year, same reminder: there’s no such thing as ‘clean coal’?

Biden Administration Faces Pushback on Another Gas Project, This Time Overseas?

#IEEFA #IEEFAAustralia #IEEFAInsights #GasDemand #EnergyTransition #AustraliaEnergy #RenewableEnergy #GasSupplyShortage?

IEEFA Impact?

Our work has helped change the rules of the game on capital investment in both the public and private sectors, and is increasingly influencing the measures by which investors assess the benefits and risks of their energy holdings.?

www.ieefa.org??

? 2024 Institute for Energy Economics & Financial Analysis.?

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