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Gas revival key to renewables push, Energy Minister says

“The lower cost of gas as a stimulus is very, very important. It can help to reduce emissions, can help to encourage investment in manufacturing, and obviously has direct benefits for households and small businesses who use gas.”

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While not as big as Australia’s traditional fleet of ageing, large scale baseload power generators, fast-start gas plants can rapidly rev up and provide so-called dispatchable power supply when large scale wind and solar generators lack their natural inputs.

East Coast wholesale gas sold for $4.30 a gigajoule on the spot market this week, down from contract prices that ranged up to $12 a gigajoule earlier this year.

“Gas-related projects look much more attractive at a lower price. So whether it’s an electricity generator or an ammonia plant, ethanol or petrochemicals, it creates great opportunity,” Mr Taylor said.

“More gas means more capacity to absorb renewables [into the grid] because gas is flexible, dispatchable generation.”

Mr Taylor said Australia has to “remain competitive in upstream gas”, but that doesn’t necessarily mean more onshore drilling.

Victoria has removed its ban on onshore conventional gas extraction in a bid to increase supply and Santos is forging ahead with a gas project at Narrabri, NSW.

Meanwhile, AGL is developing plans for an import terminal at Crib Point in Victoria, and a consortium backed by Andrew Forrest has been approved by NSW government to double the size of its planned import terminal at Port Kembla.

Former BP Australasia president and Climate Council councillor Greg Bourne expects one of the proposed gas import terminals for the East Coast, which can be built more quickly and cheaply than an onshore or offshore gas field, to be developed in the near future, to capitalise on the low oil price.

“I think that would completely remove the need for Australia to worry about its onshore production capacity,” Mr Bourne said.

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Mr Taylor expected growth in gas supply to “come from natural competitiveness rather than from a huge government subsidies” which requires “the government to make sure that the right regulatory frameworks and reforms are in place”.

Experts say for Australia to meet its commitment to the Paris Agreement, fossil fuel use must start to decline immediately, and that the contribution to global warming from gas as industrial fuel has been underestimated.

Australia’s export royalties could take a big hit in the fuel price crunch. Earlier this week EnergyQuest chief executive Graeme Bethune said LNG export revenue could fall by as much as $20 billion.

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