Energy Minister Chris Bowen, addressing the National Press Club last year, has launched a review into Australia’s gas market regulations. Photo: Region.
The Federal Government has launched a review into gas market regulations, suggesting gas companies could be forced to redirect future supplies from international markets to the domestic one.
Energy Minister Chris Bowen said the government was acting to ensure Australia’s long-term access to affordable gas alongside renewables.
At the same time, Australia’s reputation as a “solid and reliable export partner” supporting the region’s energy security must be maintained.
“Gas has an important role to play in our energy system as we transition towards 82 per cent renewables,” Mr Bowen said.
“Unlike coal, gas power generators can be turned on and off in a couple of minutes, providing the ultimate backstop in our energy grid.
“It’s critical that we use this review to get the settings right in our gas market, ensuring we are securing affordable Australian gas for Australian use, while remaining a reliable energy exporter and delivering lasting energy security in our region.”
The review comes as the Australian Competition and Consumer Commission (ACCC) flags a potentially grim outlook for east coast gas supplies.
The ACCC’s latest Gas Inquiry report, says while short term gas supply is sufficient, there is a need for further investment in the longer term.
“An efficient and well-functioning east coast gas market is critical to support Australia’s long-term energy security and an orderly transition to net zero,” the report states.
“It will be best achieved where there is sufficient and competitive supply underpinned by market depth and transparency.
“The east coast has sufficient gas reserves and resources to meet projected domestic demand for at least the next decade.
“However, a combination of policy, technical and commercial factors over the past 15 years has impeded their development.
“Gas production is not being brought online fast enough to meet demand and we now expect ongoing shortfalls in southern states as local reserves reach the end of their economic life.
“The market is now in the position of having to rely on uncontracted gas from Queensland and transporting it large distances across the east coast.”
The report notes how the 2022 energy crisis highlighted the increasing interrelationship and susceptibility of the domestic gas market to volatile international and electricity market conditions.
“It has demonstrated that to support energy reliability and affordability and an orderly transition to a lower emissions environment, the gas market needs to be well supplied,” it says.
The government will now take a “comprehensive and methodical look” at key measures introduced by successive governments which have safeguarded Australia’s energy supplies and prices.
The Minister said the review would also help deliver on Labor’s Future Gas Strategy, released in 2024, which spelt out the role gas would play alongside renewables, batteries and pumped hydro in securing Australia’s energy future.
“Using this review, we’re working towards ensuring our gas market and the regulations which govern it are fit for purpose and deliver in the national interest,” Mr Bowen said.
The government will consult with industry, stakeholders and the public on the Australian Domestic Gas Security Mechanism, the Gas Market Code and the Heads of Agreement with major east coast gas exporters.
“As is good policy practice and a requirement of the regulations, the government is examining whether these instruments can be improved and strengthened to ensure sufficient affordable gas supply in the longer term,” Mr Bowen said.
“A key objective will be to consolidate and streamline these instruments and create a long-term stable regulatory environment while supporting domestic energy security and affordability.
“We will also consider the role of the various market bodies and how best to encourage sustainable investment that improves the supply outlook and puts downwards pressure on prices.”
Resources Minister Madeleine King said the review would also examine potential ways to attract more sustainable investment into the Australian industry to support jobs and the nation’s economic wellbeing.
“Our gas market settings have evolved over time and in response to a crisis of supply or price, or both, so the intent of this review is to carefully examine how our gas policies work for our economy as part of our energy transition,” she said.
“The Gas Market Review aligns with implementation of the Future Gas Strategy and underpins the government’s commitment to ensure householders and businesses can continue to have access to adequate supplies of affordable energy.
“At the same time, Australia has an important reputation as a global supplier of energy and a key partner in ensuring energy security in our region, helping our trading partners to achieve their net zero commitments.”
