It’s a gas gas gas

The latest in a series of reports from Australia’s peak gas industry bodies makes the case for low and zero carbon gas playing a key role in decarbonising the Australian energy sector. The gas collective commissioned Frontier Economics to model three ways to decarbonise: full electrification; renewable fuels (hydrogen and biogas) and zero-carbon fuels (as the renewable fuels but with CCS as an alternative way to avoid emissions).

Figure 1 Cost-benefit analysis summary by components ($2020)

Source: Frontier Economics

Unsurprisingly, electrification comes out as the most expensive of the three options. The Zero carbon fuels option is slightly cheaper than renewable fuels, though of course this is dependent on assumptions about how cost-effectively CCS infrastructure can be rolled out across Australia. There are some key advantages in continuing to use gas as an energy vector. From a resilience perspective it avoids complete reliance on a single network as full electrification would entail. From a cost perspective, providing existing gas networks can be easily converted to run on hydrogen then we can continue to use existing infrastructure, whereas in full electrification, the large increase in capacity requirements would necessitate a large build out of electricity networks. Gas networks also have a valuable physical advantage over electric networks in that they have built in storage. By adjusting the pressure, more gas can be accommodated at times in gas pipelines, which is known as “linepack”. This technique has a big role to play in managing daily fluctuations in gas demand as figure 2 shows:

Figure 2: Injections, withdrawals and system linepack of gas infrastructure

There is no equivalent in the electric grid, where supply and demand must be balanced instantaneously.

In practice, which of these futures we end up with will depend on a range of factors, including the levels and type of government support for the enabling technologies of CCS, green hydrogen electrolysis, gas network upgrades as required for hydrogen, biogas plants and batteries or other storage (if we end up going down the electrification route – Frontier assume this will also require concentrated solar thermal to replace gas-fired industrial heat processes). For gas networks in particular it will be a race to prove up their ability to source and transport zero carbon alternatives to natural gas before their customer base dwindles. This is most acute in the ACT where the Greens are targeting bans on new gas connections and incentives for households to go all-electric. The current schedule for transitioning gas networks is roughly: 2020-2025 trial the new enabling technologies, 2025-2030 widespread blending of hydrogen and/or biogas with natural gas, 2030 onwards full conversion to zero emission gas sources. The clock is ticking…