A$2bn agreement to support Australia’s energy transition

Based on the latest announcement, the governments of Australia and New South Wales have agreed upon A$2bn (US$1.34bn) in order to support the transition to a lower emissions economy.

Sources report, Australia’s Government will provide the NSW Government A$960m in loans and grants in order to fund emissions reductions initiatives. NSW will allegedly contribute A$1.01bn.

Based on the latest announcement, Australian PM Scott Morrison said the money will be used for the projects on “clean technology” including hydrogen research, energy efficiency measures, and coal innovation to reduce emissions from extraction, preparation, and use.

One of the most significant part of the deal the NSW Government has committed to injecting an additional 70 PJ/y of gas into the electricity grid. According to the Australian Financial Review (AFR), Morrison said that “there is no credible plan to lower emissions and keep electricity prices down that does not involve the greater use of gas as an important transition fuel”.

“Sweating our existing coal-fired power generation assets will only take us so far.”

Based on reports the additional gas could be supplied by Santos’ Narrabri gas project. The project is however still awaiting approval, but as reported by AFR the approval is likely. Furthermore, supply options are also available in NSW at Port Kembla and Newcastle.

Furthermore, the deal will also allow NSW to remove barriers to coal supply to the Mount Piper power station, which is facing an acute shortage, according to sources. The station is due to operate until 2042.

In addition, the deal also secures funding for a pilot renewable energy zone in the central west of NSW to enable large-scale renewable energy generators to “pump as much energy as possible into the grid”, reports AFR.

The Australian Government anticipates bilateral agreements to reduce emissions with other states.