In late January 2020, the Commonwealth and NSW governments revealed that a $2 billion energy agreement had been made that would help to ‘lower power prices for consumers, reduce emissions and strengthen grid reliability’.
Through the partnership, both governments committed to delivering a number of initiatives that aim to:
- increase gas and electricity supply in NSW by encouraging investment;
- improve grid security by supporting transmission interconnection and network access; and
- support emissions reduction projects that deliver genuine abatement.
The more than $2 billion deal includes:
- NSW-based emissions reductions initiatives utilising $960 million in federal funding, (with a minimum $450 million grants and the remaining $510 million a mix of grants and loans) matched by $1.01 billion in direct funding from NSW.
- Jointly underwriting the delivery of HumeLink and the Queensland-NSW interconnectors to strengthen grid reliability.
- Commitments from the NSW Government to facilitate investment opportunities to inject an additional 70 petajoules of gas per year into the east coast market.
- An undertaking from the NSW Government to remove barriers to coal supply to the Mount Piper Power Station.
- Supporting new generation projects in NSW through the Federal Government’s $1 billion Underwriting New Generation Investment program.
- Financial support for the establishment of a pilot renewable energy zone in the Central West to help large-scale renewable generators pump as much as energy as possible into the grid.
Prime Minister Scott Morrison said the NSW energy deal was the first of many he hoped to sign with state and territory governments across Australia.
“I want households and businesses paying less for their electricity and I want to continue to get emissions down – this deal does both.”
The Prime Minister stated that 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’.
“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.”
The announcement was welcomed by the Australian Petroleum Production & Exploration Association (APPEA).
APPEA Chief Executive Andrew McConville said the economic case for developing local gas resources is irrefutable – well-paid and secure local jobs, state royalties, more secure supply and downward pressure on gas and electricity prices.
“If industry can further explore and develop gas resources with governments allowing proper environmental assessment and approvals processes to occur, Australia can continue its shift to a lower carbon, sustainable energy economy.”
“It’s important for Australia’s oil and gas industry to be recognised for the positive role it can continue to play in the broader energy and emissions reduction debate. Natural gas is the perfect complement to the growing use of renewables and will continue to be so for decades to come,” he said.
Meanwhile, the Lock the Gate Alliance, Climate Council, Beyond Zero Emissions and the Australian Greens Party were among those to oppose the deal.
Greens MP and Energy Spokesperson David Shoebridge commented that ‘this is a dangerous plan which will make the climate crisis worse’.
“We are in the middle of a terrible summer of fires, drought and smoke and this is when the Coalition, State and Federal, commits to more coal and gas projects. This is a reckless and illegitimate plan that will make the climate crisis worse,” he said.
“It’s 2020. We don’t need to be extracting more gas to ‘transition’ to renewable energy, we need to be building solar, wind and renewable storage now.”