Sensible policy will drive growth of renewables

The Australian Financial Review | James Sherbon

For renewable gas to play a significant role in Australia’s energy future, it’s vital for the regulatory framework surrounding it to provide both direction and support.

Participants in the AFR roundtable discussion agreed the Australian Government needs to clearly map out how renewable gas will become an increasing source of energy and the steps those in the industry need to take to get there.

Boardroom Energy principal Matthew Warren says while well-thought-out regulation is important, care must be taken to ensure that it doesn’t end up being an impediment to progress. He emphasises that any regulatory framework needs to be as “light touch” as possible.

Warren points to the rapid increase in rooftop solar capacity in Australia which far exceeded initial government projections. He says a similar growth curve is possible for renewable gas given the right policy settings.

“Our predictive ability is weak, but what worked was the industry policy,” he says. “It enabled capacity and now we have a really world-class renewables installation industry because we’ve gone up at scale and we’ve driven down cost.”

Scott Turner, head of energy markets, strategy and regulatory affairs at EDL Energy, says there is strong understanding within governments that renewable gas has a future but there is work to be done to get there.

“There’s not a report done by any government body in the world that doesn’t show biomethane having a role in the long term,” he says. “We’ve got waste products we’ve got to use, so why not use them effectively? We just need the right policy settings.”

Turner points to the US state of Oregon where gas distribution operators have been set a procurement target for renewable gas.

“Each year they need to progressively increase the amount of renewable gas they have in their system,” he says. “They’re allowed some headroom in the revenue cap to go and buy it and they can go and invest in the connection infrastructure that’s required.”

Shahana McKenzie, Bioenergy Australia chief executive officer, says regulatory guidelines need to cover three distinct areas. The first is a clear recognition of the products that are available for use.

“For biomethane, there needs to be certificates of origin to give recognition to the product so that it can be effectively utilised by businesses to show that they’re decarbonising.”

She says the second area of focus is driving uptake and this can be achieved through the introduction of a recognised green gas target.

“With biomethane, our industry target is 5 per cent by 2025 and 20 per cent by 2030. This is what we could deliver within the right policy framework. We need government to latch onto that and say, ‘We’re going to facilitate the environment to help that.’ ”

McKenzie says the third area of focus is the need to drive collaboration with government. She says a platform needs to be created where state governments are working with the federal government to create a regulatory environment that is harmonised and works for all parties.

Kristin Raman, Australian Gas Infrastructure group acting executive general manager, says it’s not a matter of reinventing the wheel as many of the regulatory elements required already exist. She points to feed-in tariffs that have worked well to encourage investment in solar power generation.

“We need some sort of incentive for these things to get up, but it’s not ground-breaking stuff,” she says.

When it comes to the wider introduction of green hydrogen into the mix, Raman says there will also be a need for government guidance and regulation when it comes to household appliances.

“Having hydrogen-ready appliances is going to be important,” she says. “That’s not to say the future is definitely going to be 100 per cent renewable hydrogen. It’s saying we recognise that is an option and we should be making sure that appliances that are sold today can take the fuels of today and the potential fuels of tomorrow.”

Jemena’s general manager for renewable gas, Gabrielle Sycamore, says it’s vital that regulation be undertaken consistently across Australia rather than on a state-by-state basis. This will give certainty for suppliers and distributors and encourage long-term investments in infrastructure.

She says governments also have a role to play when it comes to maintaining the pace of rollouts and the adoption of green gas by both industry and consumers.

“If we think we can just let it happen at its own pace, it won’t happen fast enough and it will be too small,” she says. “To scale up, the government really needs to help us get some acceleration.”

Bioenergy Australia’s McKenzie points to work being carried out by the Renewable Gas Alliance. This group includes more than 80 organisations across Australia that are working together to promote renewable gas usage.

“It’s looking at policy, it’s looking at profile, and it’s looking at the regulatory (environment) and also driving commercial outcomes through enabling the industry to work together.”

She expects the challenge of creating a solid regulatory framework for the sector will be something completed gradually as both awareness and usage of renewable gas increases.

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