The MEI’s report, titled The dash from gas. Could demand in NSW fall to half?, forecasts NSW gas demand to potentially halve within a decade to question the need for gas infrastructure investments.
The MEI even predicted “the possibility of a death spiral emerging in the gas industry where falling gas sales require gas suppliers and distributors to further increase prices to maintain sales revenue, which then further accelerates demand decline”
Only last week, Santos said in its submission to the NSW Legislative Council Select Committee that the state faces higher gas prices unless its CSG reserves are developed.
NSW currently imports 97% of its gas requirements, and companies like Santos have used this as leverage to argue for loosening the state’s restrictive regulations around hydrocarbon-related extractive resources.
A press release from Essential Media Communications, which also does promotional work and polling for environmental groups, stated NSW residents were set to experience “exorbitant gas price rises” caused by the commencement of LNG exports from Queensland, which has opened the NSW market to international prices for the first time.
Launching the report today, The Australia Institute and the Public Interest Advocacy Centre will claim that expanding gas networks and approving new and expanded CSG fields in NSW were likely to increase costs even further, causing unnecessary network costs to be passed onto NSW households and businesses.
“TAI believes the best thing Premier [Mike] Baird and his government can do to avoid increasing gas bills driving up the cost of living is to power the state by renewable energy and protect land and water from risky coal seam gas mining,” the release said.
The MEI bases its premise that the state’s demand will decline on the notion that unnecessary infrastructure is built when demand is overestimated, which then drives up gas consumers’ costs.
As a case in point, the MEI said recent “unprecedented” electricity price increases in NSW were partly due to overinvestment in network infrastructure that, in turn, was partly a result of year-after-year overestimation of demand by planning bodies.
“A present danger is that future gas demand in NSW is now likewise being overestimated,” report said.
The report sees the amount of gas used for electricity generation at particular risk of dramatic fall due to rising gas prices, falling demand and the carbon price repeal.
“Rather than continuously growing over the next 10 years, there are many reasons why NSW gas demand will decline,” the report stated.
“Wholesale gas prices in eastern Australia are forecast to increase at an unprecedented pace – doubling and even tripling – as a result of imminent CSG exports to Asia from Gladstone.”
The MEI said rising prices would dampen domestic gas demand across NSW and the other eastern states, with lower demand driven by the repeal of the carbon tax, ongoing energy efficiency schemes, environmental conservation efforts, warmer winter temperatures, technological advances and the falling costs of alternatives to gas.
It cited a draft study for the Australian Renewable Energy Agency in which IT Power found that electricity-based technologies like heat pumps and induction, resistive and electric car heating, can be powered by renewable or non-renewable energy sources and used to achieve high process temperatures for the manufacturing industry.
MEI also cited Core Energy’s projection that gas demand in the manufacturing sector would decline by about 10 petajoules a year by 2020 compared to 2014 – a decline rate of over 3% a year.
