South Australia agrees A$1bn for hydrogen, CCS and more gas

SOUTH Australia has agreed a A$1bn (US$770m) investment with the Federal Government that includes funds for hydrogen, CCS, and exporting gas to the east coast.

The deal includes A$400m in funding for CCS, hydrogen, electric vehicles and other emissions reduction projects in South Australia. The state has a target for net zero emissions by 2050, and last year announced an interim goal of a 50% reduction on 2005 emissions by 2030.

The investment also includes funding for an electricity interconnector between South Australia and New South Wales, and for South Australia to produce an additional 50 PJ/y of gas by end of 2023 and possibly 80 PJ/y by 2030. This would increase supplies to the state and exports to the east coast markets.  

Angus Taylor, Minister for Energy and Emissions Reduction, said: “The focus on gas will help South Australia meet its own gas needs and assist efforts to prevent forecast shortfalls in the broader east coast gas market from 2023, as part of our gas-fired recovery.”

In September, the Government outlined plans to produce more gas to help Australia recover from the economic impacts of Covid-19. It said more gas would boost industry, create jobs, reduce energy costs, and improve energy security.

There are conflicts of opinion over whether Australia needs more gas to bridge its shift from coal to renewables. Australia’s Chief Scientist Alan Finkel has supported producing more. Yet projections made by the Australian Energy Market Operator (Aemo) last year are more agnostic, noting that tightening gas supplies require additional production of 120–285 PJ each year between 2025–2037 to meet domestic, industry and export demand. But it also noted that variables including a decline in battery costs could shift the advantage away from gas.

South Australia has steadily moved away from fossil fuels to renewables. In 2019, around 56% of its electricity was generated from renewable sources. Last year, it published a climate change action plan that includes scaling up renewable hydrogen production for export and domestic use.

Commenting on the new funding initiative, Dan van Holst Pellekaan, Minister for Energy and Mining, said: “The joint commitment to develop hydrogen hubs in South Australia is a strong sign to our global partners in Asia and Europe that South Australia can lead the nation in this new industry.”