Policy roadmap to net zero: the role of gas in decarbonising the National Energy Market

Abstract

As the National Energy Market (NEM) changes to a more diverse grid with emissions reduction targets, the way we value technologies must also change (Boston et al. 2017). This change in value is fundamental as the future low emissions grid will require careful planning and implementation to guarantee the lowest total system cost is maintained, particularly as a net zero grid will be drastically larger than the current system. This planning must include system strength. The Australian Energy Market Operator Integrated System Plan states that the current market mechanisms cannot facilitate achieving a low emissions grid (Australian Energy Market Operator (AEMO) 2020a). Policy and market mechanisms will need to be designed for this changing system. If net zero is to be met, Modelling of Energy and Grid Services by Red Vector and Gamma Energy technology has shown that this future grid needs to contain: approximately 100GW of variable renewable energy; almost 20GW of firm, low emissions generation, such as gas or coal with carbon capture and storage (CCS), bioenergy with CCS and hydroelectric power. If CCS is not available, nuclear power will be required; more than 10GW of storage, including pumped hydro energy storage and other energy storage technologies and over 30GW of firm, dispatchable peaking plant, including coal- and gas-fired power generation. This study sets out the role for gas in a policy road map to net zero for the NEM, harnessing and reforming existing policies, as well as introducing new mechanisms to achieve net zero emissions while retaining a reliable grid at the lowest total system cost.