PERTH (miningweekly.com)  – The Australian Petroleum Production and Exploration Association (Appea) has welcomed the A$1.08-billion emissions reduction agreement between the federal and South Australian governments.

The State Energy and Emissions Reduction Deal is expected to deliver secure, reliable and affordable energy to South Australians and help Australia continue to meet and beat its emissions reduction targets.

Under the agreement, the governments would pursue initiatives that create additional dispatchable generation to help deliver affordable and reliable power, unlock gas supplies to help prevent shortfalls in the market, kick-start works on a new interconnector between South Australia and New South Wales, and invest in key emissions reduction projects.

The Commonwealth government would contribute A$660-million and South Australia would provide A$422-million as part of the agreement.

Key components of the deal include a gas target of an additional 50 PJ/y by the end of 2023 and a stretch target of 80 PJ/y by 2030 to help increase the supply of reliable and affordable gas to users in South Australia and the broader east coast gas market.

Furthermore, A$400-million in Commonwealth funding would go toward investment in priority areas such as carbon capture and storage, electric vehicles, hydrogen and other emissions reduction projects in South Australia to help meet and beat Australia's commitments under the Paris Agreement, while up to A$100-million joint support would be made available for Project EnergyConnect through joint underwriting of key early works on a 50/50 basis to boost the flow of power between South Australia and New South Wales.

A further A$110-million in Commonwealth concessional finance would be made available for solar thermal and other storage projects in South Australia.

Prime Minister Scott Morrison said the bilateral agreement is a key part of delivering on the government’s plan to ensure South Australians get a fair deal on energy, businesses get the affordable energy they need to create jobs and Australia meets its emissions reduction targets to address climate change.

“Families and businesses need affordable, reliable power. That is what reduces prices and creates jobs. Australians also want to ensure we are doing everything we responsibly can to combat climate change,” the Prime Minister said.

“This means getting more gas into the market to support the increase in renewable solar and wind power coming into the electricity system. One works with the other to deliver lower cost, lower emissions and reliable power.

“This deal also makes sure that Australia gets ahead and stays ahead in the new energy economy by supporting the next wave of technologies, with a $400-million commitment for investing in key areas that have the potential to deliver new industries and opportunities for South Australians. This means more jobs and Australia not being left behind.

“This agreement will support investment and more jobs in South Australia and will be a key driver of our economic recovery from Covid-19.”

Premier of South Australia Steven Marshall said this is yet another example of his government working hand in hand with the Commonwealth to lower energy bills for South Australians.

“Importantly, this memorandum of understanding backs the South Australia-New South Wales Interconnector, which will secure the South Australian grid, increase renewable energy, and bring down bills for consumers in South Australia by around A$100,” Marshall said.

“This agreement also coordinates our efforts to deliver a hydrogen export industry in South Australia, deliver carbon capture and storage to reduce emissions, deliver the infrastructure needed for electric cars, and generate new revenue for farmers from carbon reductions. 

“Put simply, this agreement is going to lower power bills for South Australians and create jobs in the fast growing renewables industry.”

Minister for Energy and Emissions Reduction Angus Taylor said through this agreement South Australians could look forward to more secure, reliable and affordable power, with benefits also flowing to the broader National Electricity Market.

“The initiatives we are partnering with South Australia on today will help keep the lights on, deliver lower energy prices, strengthen our economy and create more jobs as we rebuild from the coronavirus pandemic,” Taylor said.

“The focus on gas will help South Australia meet its own gas needs and assist efforts to prevent forecast shortfalls in the broader east coast gas market from 2023, as part of our gas-fired recovery.”

South Australian Minister for Energy and Mining Dan van Holst Pellekaan said this agreement would contribute to South Australia achieving net-100% renewables by 2030, and becoming an exporter of renewables and gas to support the national electricity market.

“By securing this historic A$400-million commitment, South Australia can grow our economy and exceed our emission reduction targets,” Van Holst Pellekaan said.

“The joint commitment to develop hydrogen hubs in South Australia is a strong sign to our global partners in Asia and Europe that South Australia can lead the nation in this new industry.”

Meanwhile, both governments have vowed to continue to address regulatory barriers to investment, share National Greenhouse Accounts data and work cooperatively through existing national governance frameworks to achieve national policy objectives in energy affordability, energy security and emissions reduction.

Appea CEO Andrew McConville welcomed the deal between the federal and state governments, saying natural gas would be at the forefront of reducing emissions and providing energy security.

“Natural gas plays an important role in balancing renewable energy, ramping up and down to match supply and demand. Gas is affordable, reliable and good for the environment,” he said.