Why is gas important for our energy future?

Natural gas will continue to be an important energy source for our future

1. Supporting global decarbonisation – Our trade partners rely on Australia to supply LNG to support their energy security and decarbonisation needs.
2. Grid Reliability – Gas helps keep the lights on by providing firm electricity supply when renewable or coal generation is low.
3. Avoiding Supply Shocks – We cannot turn off Australia’s gas without significant adverse impacts on Australians and our region.

The Department of Industry, Science and Resources and the Australian Energy Market Operator illustrate these facts:

Gas in Australia

• As Australia transitions to a net zero emissions future, gas will remain essential for households, businesses and industry, and to support the operation of the electricity sector. Source: Australian Energy Market Operator (2026), Gas Statement of Opportunities, p. 3.
• We cannot turn off Australia’s gas without significant adverse impacts on Australians and our region. Reducing supply without also reducing demand would put upward pressure on prices across the economy. This could lead to business closures and shortages of consumer goods and services. The food processing industry, for instance, relies heavily on gas. Manufacturing cement, bricks, glass products, nitrogen-based fertiliser and electric vehicle batteries all depend on a reliable and affordable supply of gas. Steel production is looking to gas to transition away from higher-emissions coal while developing new, net zero technology. Without GPG, the electricity grid would be unable to cope with peak electricity demand. Source: Department of Industry, Science and Resources (2024), Future Gas Strategy, p. 15.
• The electricity sector is a major source of domestic gas demand. In 2021-22, gas-powered generation (GPG) consumed 520 PJ, or 33% of total Australian gas demand, producing around 5.7% of Australia’s greenhouse gas emissions. GPG is important for grid security and reliability as it can start up quickly. This means it can complement variable wind and solar generation and provide extra power supply during periods of peak electricity demand. Source: Department of Industry, Science and Resources (2024), Future Gas Strategy, p. 10.

Gas in our Asia-Pacific region

•  Australian gas, exported as LNG, plays a central role in energy security and supports living standards in our region. It supports a reliable electricity supply and provides gas for cooking and cooling or heating homes in cities like Tokyo, Beijing, Seoul, Singapore, and Taipei. It will also support regional electricity grids as they transition from coal-fired power generation towards renewables. We have seen large scale investment from regional partners in Australia’s LNG industry over recent decades. This has benefits both to our trade partners, who rely on LNG for energy and as an input to many basic goods and services, and to Australia’s economy. During the transition to net zero, our trade partners’ economies will change and the pathways they take to get there will differ. Ultimately, many of our trade partners will have a harder task compared to Australia because of their limited availability of cheap, reliable energy. Source: Department of Industry, Science and Resources (2024), Future Gas Strategy, p. 47.