On the cusp of a $50b renewable gas bonanza
The nation stands at the edge of a renewable gas bonanza, with the potential to provide over half of all Australia’s gas needs and create a $50 billion industry with over 18,000 jobs and a sustainable, abundant energy source from biowaste that presently ends up as landfill, burned in our atmosphere or left in the field.
Renewable gas has the potential to become a $50 billion industry.
Those are the findings by independent CRC Race for 2030’s recent report Anaerobic digestion for electricity, transport, and gas, which highlighted the enormous potential of renewable gas to generate economic growth and provide a low-emission energy source.
The report says that by 2050, biogas and biomethane could represent “more than half” of Australia’s projected gas consumption, due to the nation’s abundant feedstock.
“Adoption of biogas technology for organic waste management might add $50 billion to Australia’s GDP by 2050 and provide 18,100 full-time positions, primarily in regional areas,” the report says.
“In the next decade, direct research investment of at least $10 million per year will be needed to support projects … representing less than 1 per cent of the potential revenue.”
Shaun Reardon, executive general manager for Jemena, one of the nation’s largest gas infrastructure companies, says the storage capacity of gas infrastructure means it can act like a giant underground battery, even dwarfing the storage capacity of Snowy 2.0 according to 2018 estimates by an Energy Networks Australia Energy Insider report.
This infrastructure can store sources of renewable energy including biomethane and green hydrogen, ready to use at any time.
“The CRC report points to the compatibility of upgraded biomethane, derived from organic waste, with Australia’s existing gas infrastructure, as well as this infrastructure’s significant storage capacity,” says Reardon.
“It also specifically calls out that the absence of a renewable gas target is a regulatory barrier to biomethane’s broader use, while highlighting the potential volumes of biomethane which can be produced locally.”
Jemena is calling on the federal government to implement a renewable gas target (RGT) to spur the development of a renewable gas sector and give confidence to industries which are heavily reliant on gas so that they can continue to operate in Australia with a clear way forward to reduce emissions.
The report’s support for an RGT comes in the wake of the federal government’s $2 billion Hydrogen Headstart Program, which recognises the importance of hydrogen to reaching net zero emissions across Australia.
On 28 October 2022, energy ministers agreed to amendments to the National Gas Law and Regulations to bring hydrogen blends, biomethane and other renewable gases under the national gas regulatory framework.
“Internationally we’re seeing governments invest significantly in hydrogen and renewable gases as they consider ways to not only decarbonise their own economies, but spur the development of new jobs and other opportunities in the burgeoning renewable gas sector,” says Reardon.
“The Hydrogen Fund helps keep Australia at the front of the pack globally and is a strong signal to investors that not only does hydrogen have a role to play in Australia’s energy future domestically, but that we are at the precipice of developing a hydrogen export industry.”
Reardon says that coupled with the right policies, such as the establishment of a renewable gas target and a renewable gas certification scheme, these initiatives will be “key building blocks” towards realising the potential of the sector.
“We’re seeing considerable renewable gas sector growth in key parts of Europe, Asia, and the United States, with both green hydrogen - that is hydrogen which is produced using renewable energy - and biomethane being produced at scale and blended with traditional natural gas for use in homes and businesses,” he says.
He says the Australian Renewable Energy Agency (ARENA) “has done a fantastic job” partnering with the private sector to develop and test renewable gas technologies right across the country.
“This is allowing our country’s natural ingenuity to come to the fore, and I am hopeful that we will see Australia develop leading technologies to help make renewable gas a reality for not only homes and businesses locally, but also internationally,” says Reardon.
He says Jemena is at the forefront of biomethane projects in Australia.
Jemena’s Malabar Biomethane Demonstration Project is injecting biomethane directly into the gas distribution network where it is blended with natural gas - a first for Australia.
“Biomethane is sustainable and completely compatible with our existing gas infrastructure and household appliances, and we believe it is an important part of the future energy mix,” says Reardon.
In NSW alone there’s around 30PJs of biomethane available near the Jemena gas network - from sources including agricultural waste and organic waste - which, if developed, is enough biomethane to meet the gas needs of Jemena’s 1.5 million residential customer base.
Managing director for renewable gas for the Optimal Group Michael Davis says that given the right policy settings biomethane will play an essential role in helping to decarbonise hard-to-electrify sectors.
“This is because of its interchangeability with natural or fossil gas as well as providing reliable and responsive energy to support the variability of wind and solar,” says Davis.
“The value for the energy system is that biomethane is a renewable energy in the form of a molecule that can be used on demand by leveraging the inherent storage and capacity of gas infrastructure.”
Davis says Australia is “at least 25 years behind Europe and 15 years behind the US” when it comes to renewable gas technology, such as biomethane.
“We have millions of tonnes of organic waste and residues in Australia, but we utilise less than 1 per cent of this available energy by sending organic waste and residues to landfill, composting (without energy recovery), burning it or leaving it in the field,” he says.
“Currently there is a small amount of biogas captured from sewage, animal slurries and landfill, however, due to a lack of incentives for beneficial use of this form of renewable gas – most of this gas is used to generate non-responsive electricity at relatively low efficiency.
“This means it is just generated as the gas is produced or in many cases the gas is simply flared, or in worst case vented to atmosphere.”
He says Jemena’s Malabar Biomethane Facility with Sydney Water is the first and only biomethane-to-gas network project in Australia so far.
“Beyond Malabar there are at least 20 other near-term projects that can also inject renewable gas into existing gas infrastructure and over the longer term there are over 370PJs that could be supplied to the domestic gas market with the right policy settings.”
Meanwhile, Origin Energy in March signed an agreement with Jemena to offtake the biomethane supply from the Malabar facility and will offer business customers the option to purchase the renewable gas. This is the first agreement of its kind in Australia.
Origin has agreed to purchase up to 110TJ of biomethane per year, through until the end of 2024.
The gas produced at the Malabar Biomethane Demonstration Project, which is upgraded from the biogas from Sydney Water’s wastewater treatment plant, is contributing to the first renewable gas certification pilot currently being trialled by GreenPower, a NSW government renewable energy accreditation body.
The project is a partnership between the Australian Renewable Energy Agency (ARENA), Sydney Water, and Jemena.
Origin’s head of energy supply and operations, Greg Jarvis said in a recent statement: “Origin is pleased to be the first retailer to purchase renewable gas from Jemena’s Malabar Biomethane project. Increasingly, our customers are looking for options to help reduce their carbon emissions, and we believe renewable gas could play a role in the future energy mix.”
This article appeared as part of a commercial partnership in AFR, May 2023