Unleash the power of renewable gas

Australian Financial Review

To the uninitiated, it is bound to raise a few eyebrows. A few smirks? Perhaps. But manure and wastewater have become treasured commodities in Denmark. In a nation renowned for its cleanliness and polished propriety, sludgy waste is all the rage.

Denmark is leading the world in the production of renewable gas, biomethane made from such waste. The Danes have replaced a staggering 25 per cent of natural gas supply with biomethane, the majority of which is generated from animal manure and wastewater. It plans to reach 100 per cent biomethane by 2034.

In this world-leading pivot away from fossil fuel equivalents, Denmark is not only slashing emissions in a real and cost-effective way, but it is solving a waste problem and building its own energy security, one flush at a time.

Where nations like Denmark, Italy, the UK and Germany are heading on such transformative renewable energy options, Australia could and should follow.

As the federal government contemplates a 2035 emissions reduction target, it’s imperative that Australia pursue all options to reduce emissions, and not limit ourselves to the perennial favourites of a few.

The task is too immense, too consequential, risky even, to ignore proven technologies and pathways that are not merely fringe, cottage industries in Europe, but now leading lights.

Unfortunately, we are not even on the contents page, let alone the first chapter of what looms as a revolution in clean energy: the transition from natural gas to renewable gas, including biomethane, an energy source derived from organic waste.

For Australia to follow the leadership of nations at the cutting edge of emissions reduction, policy must urgently catch up to innovation, for development and investment to flow. Build the policy framework and they will come, as some say.

While there are lessons from abroad on how to fast-track development of renewable gas through incentives and subsidies, we have to approach this from an Australian perspective. What will work here?

There are three policy building blocks that could provide the foundation of a domestic renewable gas sector in Australia.

Firstly, the adoption of a renewable gas target (RGT) which provides a policy framework that supports investment, by creating market certainty to attract investment, scale-up and accelerate the development of biomethane and green hydrogen renewable gas supply.

This is not foreign to Australia. We have done this at a policy level before. The renewable energy target (RET) demonstrated that you can have enabling policy mechanisms that lead to the development of a market, in this case the renewable electricity market.

According to the 2030 Emissions Reduction Opportunities for Gas Networks paper (by ENEA Consulting for ENA in 2021), an RGT of 20 per cent could achieve a 16 to 30 per cent reduction in emissions from domestic gas use by 2030.

Secondly, renewable gas certification, to underpin government and market confidence, and allow all companies to count their purchase of renewable gas certificates in their emissions profile.

Without this recognition, there is no impetus for high-emitting companies that are reliant on gas for their operations to transition to renewable gas. These tools have long been available to industrial companies abroad, giving them a competitive advantage on the transition to net zero emissions.

National certification of all renewable gases including biomethane, either through NSW’s Greenpower scheme and ultimately the expansion of the federal government’s hydrogen guarantee of origin scheme, is a game-changer.

And thirdly, giving everyone the choice, including households, to buy renewable gas certificates just as they can for renewable electricity.

Australian households and businesses should be offered choices about how they reduce their energy emissions. And one such solution is to offer consumers renewable gases, lowering their emissions by reducing natural gas consumption, through existing natural gas networks. This is a here and now solution.

Earlier this year, Jemena began injecting biomethane (made from wastewater) into its NSW network at the Malabar Biomethane project facility, with the view of scaling up to produce around 200 terajoules of the renewable gas - an amount equivalent to the average annual gas usage of approximately 13,300 homes. While Origin Energy has purchased this gas, showing strong retailer interest.

Europe is aiming to produce 1230PJ of biomethane each year by 2030 or just under 10 per cent of their current total gas consumption. This is more than seven times Australia’s annual household gas use. So this is not an out-of-the-box suggestion. Nor are the policies required to make it happen ground-breaking.

They are proven policies that are driving the development of renewable gas industries across the world; foundational policies that are not uncomfortable requests of government, that are not a burden on taxpayers and offer the consumers real energy choice into the future.

It is time to unleash the future of gas.