The Australian Energy Market Operator (AEMO) has released a Draft Gas Infrastructure Options Report. AEMO has sought feedback on the report which will be used to develop gas development projections for the Integrated System Plan. 

Since 2021, AEMO has engaged CSIRO, supported by Climateworks, to conduct multi-sector modelling to quantify the dynamic influences that would shape electricity demand under different emissions reduction scenarios. The recommendations in this submission draw on insights from that process – and other Climateworks research and analysis – and will contribute to a robust and optimised Gas Infrastructure Options Report. 

Rapidly decarbonising its electricity and energy system is essential for Australia to meet its obligations under the Paris Agreement. As the largest source of greenhouse gas emissions in Australia, energy and electricity represent critical intervention points. The use of fossil fuels to produce electricity and stationary energy for commercial and industrial purposes accounts for 54.9 per cent of Australia’s total emissions (CSIRO 2023). Transitioning to renewable energy will not only reduce these emissions directly but also create powerful ripple effects that drive decarbonisation across other economic sectors.

The energy system in Climateworks’ 1.5°C-aligned decarbonisation scenario

In 2023, Climateworks published least-cost emissions reduction pathways for Australia. Our report shows that to align with the Paris Agreement target of limiting global warming to 1.5°C, Australia reduces emissions by 68 per cent below 2005 levels by 2030 and reaches net zero before 2040 (Climateworks Centre 2023). 

In our 1.5°C-aligned scenario, renewables make up 88 per cent of Australia’s total electricity generation by 2030 and close to 100 per cent by 2034. Clean electricity generation capacity would expand from 55 GW today to around 151 GW by 2030 and 398 GW by 2050. All coal-fired power generation would cease by 2035, and gas-powered generation would be reduced by 61 per cent by 2030, relative to 2024 levels, and near zero by 2050. Economy-wide gas consumption decreases by 47 per cent by 2030 and 84 per cent by 2050 (Climateworks Centre 2023). 

Submission summary 

This submission outlines Climateworks’ perspective on Australia’s future gas infrastructure within the context of the rapid decarbonisation required to meet Australia’s obligations under the Paris Agreement (AEMC 2023). Our analysis emphasises the need to proactively plan gas phase-out, regulatory reform, demand management solutions, and equitable support for vulnerable customers. 

Climateworks suggests AEMO consider the following recommendations as it develops the final 2025 Gas Infrastructure Options Report. The submission body includes specific details on each point. Climateworks recommends AEMO: 

• Plan for a rapid and orderly phase-out of gas in the electricity and energy sectors. Refocus the gas market to prioritise the energy transition and undertake spatial modelling of gas networks to guide the location, pace and priority for orderly closures. 
• Consider how the Gas Infrastructure Options Report could be used as part of a broader effort to design an energy system that will enable Australia to become a ‘renewable energy superpower’, including analysis to forecast and plan the appropriate gas and hydrogen infrastructure through ‘regional ISPs’.
• Ask that the ECMC direct the AEMC, AER and governments to update energy market rules and regulations to reflect the requirements of the future energy system, including planning for the orderly phase-out of gas.
• Consider electricity demand-side measures to reduce the need for gas-peaking generation and gas supply infrastructure aimed at improving electricity reliability during periods when renewables are scarce particularly during winter. These demand-side measures could be developed as part of a comprehensive suite of measures to reduce costs and emissions.  
• Highlight the importance of governments delivering fair and equitable support for priority households, particularly low-income households and renters, to avoid them bearing increased costs that could occur as fewer customers use gas infrastructure.  
• Outline contingency pathways that offer alternate responses where there is low confidence in the pace or characteristics of change.

More details on these recommendations can be found in the submission [PDF 0.3mb].