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Extending the national gas regulatory framework to hydrogen blends and renewable gases

Publication date

On 20 August 2021, Energy Ministers agreed to reform the national gas regulatory framework to bring hydrogen blends, biomethane and other renewable gases within its scope.

Energy Ministers also agreed that the amendments should initially focus on gases that are suitable for consumption in existing natural gas appliances and consider any required changes to the National Gas Law (NGL), National Energy Retail Law (NERL) and subordinate instruments.

The reforms aim to provide regulatory certainty to support investment in innovative projects that will reduce emissions in our gas networks. The reforms will also ensure existing regulatory provisions and consumer protections will work as intended when hydrogen and renewable gases are incorporated into the gas network.

Energy Ministers agreed to accelerate this reform process to meet the needs of a transitioning energy market.

What are hydrogen blends and renewable gases?

Biomethane and other synthetic methane products can be processed to have the same specifications as natural gas, with the potential to have net-zero emissions. After this processing, they can be used safely in existing gas infrastructure and current appliances.

While hydrogen has different properties to natural gas, work completed under the National Hydrogen Strategy found that blends of around 10 per cent hydrogen could be used in most existing appliances.

It will take time before existing infrastructure and appliances can safely handle 100% hydrogen gas supply. Where possible, the reforms will be ‘future proofed’ so when other gases such as higher percentage blends of hydrogen can be safely injected into the network, the regulatory framework will allow for these to be supplied.

Work streams

Under the accelerated approach, Ministers have tasked:

  1. Jurisdictional officials to lead work to identify and develop amendments to the NGL, the NERL and Regulations.
  2. The Australian Energy Market Commission (AEMC) to lead work to identify and develop amendments to the National Gas Rules (NGR) and the National Energy Retail Rules (NERR). Further details on the AEMC’s process can be found on their website.
  3. The Australian Energy Market Operator (AEMO) to lead work to amend the Procedures and other AEMO-made instruments required for settlement and metering in the facilitated and regulated retail gas markets. Further details on the AEMO’s process can be found on their website.

Consultation

March – May 2022 consultations

Consultation on all three work streams closed on 19 May 2022.

Officials’ consultation paper and draft Bill

Jurisdictional officials sought feedback on the draft regulatory package, which included:

  • An Officials’ consultation paper on amendments to the NGL, the NERL and Regulations, including:
    • proposed changes to the NGL advised by the AEMC, and;
    • proposed changes to the pipeline-related ring-fencing and associated contract arrangements advised by the AER.
  • The consultation draft National Energy Laws Amendment (Other Gases) Bill 2022 to amend the NGL, National Gas Regulations, NERL and National Energy Retail Regulations.
  • To assist stakeholders in providing feedback, Officials released a Q&A document responding to questions asked by stakeholders during consultation.

The following submissions were received:

AER
AGIG
Alinta Energy
APA
APGA
ATCO
AusNet
Beyond Gas Network
ENA
EUAA
Jemena
Origin Energy
Individual – Alan Pears
Individual – Jim Crosthwaite
Individual – John Godfrey
Individual – Lesley Walker
Individual – Michael Nolan

AEMC paper

The AEMC has published submissions received in response to their draft report on amendments to the NGR and the NERR on the AEMC website.

AEMO paper

The AEMO will publish submissions received in response to their draft report on amendments to the Procedures and other AEMO-made instruments required for settlement and metering in the facilitated and regulated retail gas markets.

October – December 2021 consultation

Officials’ paper 

The initial Officials' paper on amendments to the NGL, the NERL and Regulations received the following submissions:

AGL Energy
APA
APGA
ATCO
AusNet Services
Australian Energy Council
Australian Gas Infrastructure Group
Australian Hydrogen Council
Bioenergy Australia
EnergyAustralia
Energy Networks Australia
ENGIE Australia & New Zealand (Document 1)
ENGIE Australia & New Zealand (Document 2)
Evoenergy
Fortescue Future Industries (AEMC’s website under ‘Documentation – Initiation’)
Gas Appliance Manufacturers Association of Australia
Jemena
Origin
Public Interest Advocacy Centre
Shell Energy

AEMC and AEMO consultations

Between October and November 2021, the AEMC conducted consultation on related amendments to the NGR and NERR, and AEMO consulted on Procedures and other AEMO-made instruments required for settlement and metering in the facilitated and regulated retail gas markets.

Details can be found on the AEMC and AEMO websites.

Timeframes

19 May 2022: Consultation on all three work streams papers closed

Mid 2022: After consideration of the feedback received to the consultation package, present draft legislative amendments to Energy Ministers for consideration

Late 2022: Consultation on proposed initial Rules, Procedures and other subordinate instruments

By 2023: New measures intend to take effect subject to agreement by Energy Ministers and subsequent passage through the South Australian Parliament

Read more

Information sheet October 2021: Extending the national gas regulatory framework to hydrogen blends and renewable gases

Infographic October 2021: Natural gas equivalents in the natural gas supply chain

Australia's National Hydrogen Strategy

Australian Energy Market Commission (AEMC) 

Australian Energy Market Operator (AEMO)

Australian Energy Regulator (AER)

 

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