Thousands of manufacturing and industrial companies face the challenge of reducing both emissions and operating costs. Renewable gas could provide the energy option they need.

It is the energy solution that could help underpin the Federal Government’s plan for a Future Made in Australia.  Renewable gas is emerging as an important piece in the nation’s future energy puzzle.  Solutions like biomethane are primed to help hard-to-abate sectors in reducing emissions efficiently and affordably. 

But why aren’t renewable gas solutions being proactively offered to industry, given the success of biogas and biomethane in Europe, the UK and USA?  These innovations in gas are already here and now, with biomethane and hydrogen projects moving from pipedream to pipelines across Australia and overseas, demonstrating and providing a low-emissions alternative to natural gas, that can help industry to decarbonise operations efficiently.  Biomethane is also compatible with existing gas network pipelines, infrastructure and appliances, so the pathway to lower emissions could be even more time- and cost-efficient.

Given not only the importance, but the enormity of the challenge of reaching emissions reduction targets, Australia needs all energy and fuel options on the table to decarbonise at pace, while continuing to provide affordable and reliable energy for all customers.  The Federal Government’s Future Gas Strategy, announced in May, reflects this sentiment.

It is clear Australia’s manufacturing and industry sectors will long be reliant on gas to provide the extreme heat required for their smelting, firming or operational processes. It is an unavoidable reality that requires an innovative and open-minded approach.  Transitioning to all-electric technology is simply not a viable option for many businesses. The technology either does not exist for their operational needs or is too expensive or cumbersome for many businesses to implement. 

Renewable gas can be the key that helps to unlock this conundrum, giving industry and manufacturing sectors the ability to remain competitive, and reduce emissions simultaneously, without significant disruption to their operations or bottom line.

The enormity of the challenge to decarbonise Australia’s hard-to-abate industries was best articulated by Australian steel giant BlueScope at the Australian Renewable Fuels Week conference in Canberra in April.  The company currently uses 4 PJs of natural gas per annum up Australia’s east coast. To wean itself off coal in order to meet its emissions targets and its obligations under the Safeguard Mechanism, that figure will increase to a staggering 30-40PJs beyond 2032, resulting in a 60 per cent reduction in emissions.

But in order to fully decarbonise to reach its net zero target, and to remain competitive with its global peers, BlueScope concedes it must eventually transition that increased natural gas feedstock with a blend of green hydrogen and biomethane when there is availability of supply.

There can be no overstating the colossal challenge being embraced by Australian manufacturers to decarbonise while maintaining their competitiveness with many global peers who already have access to renewable fuels, like biomethane.

While renewable gas has experienced phenomenal growth across Europe and North America over the last decade, Australia’s journey towards a renewable gas future has begun in earnest. But while there is a lot of ground to make up, a solid foundation has been laid courtesy of a partnership between Jemena and Sydney Water.  On Sydney’s eastern fringe, Australia’s first biomethane injection plant has begun injecting renewable gas, which has been converted from waste water, directly into the NSW gas network.  Not just an alternative to natural gas, but certified by GreenPower as a low-emission renewable gas.

The Malabar Biomethane Injection Plant exemplifies the emissions and cost-saving potential of renewable gas;  giving industrial gas users a new low emission energy source, delivered through existing pipeline infrastructure with no impact to operations. 

Approximately 70 per cent of industrial gas usage in NSW is from businesses that cannot easily or affordably electrify their process either because of the high heat required in their operations, or because they use gas as a feedstock.  It is crucial that these industrial users not only have access to renewable gas, but have the ability to count its usage towards their emissions reduction targets, to ensure they are meeting their obligations under the Safeguard Mechanism.

There is a clear role here for governments to play, using existing policy frameworks and infrastructure to empower investment and deployment of renewable gas in Australia.  A national certification scheme is required, like the GreenPower Scheme, where producers can create and sell certified renewable gas using existing gas network infrastructure, and where renewable gas users can then claim their emissions reductions under the National Greenhouse and Energy Reporting (NGER) legislation.  It is not a significant ask or task, given the policy framework already exists, but this step is paramount.

To fully reap the benefits of using renewable gas, certificates must be fully recognised under the NGER scheme, enabling businesses to offset scope 1 emissions against their gas consumption, while pursuing electrification where feasible. Ensuring that businesses can count renewable gas use towards emissions targets is crucial for driving adoption across industries.

There is also a “back to the future” policy that governments could employ to generate investment in this space, following on from the success of solar rooftop deployment in Australia. And the economic imperative is clear.

According to a study by ACIL Allen released in April, adopting a Renewable Gas Target (RGT) to increase the availability and utilisation of renewable gas could add $30 billion to Australia’s economy as it moves towards its clean energy future.  The study confirmed that implementing a RGT would be a more cost-effective way to reach net zero emissions than an “electrify-everything” approach, because it would allow the producers to use current infrastructure to deliver an additional type of renewable energy. 

Using the old to deliver the new, to advance Australia’s economy to its renewable energy future.  It just takes some big picture thinking.