13 Feb 2025

Media release: Locking gas out of Capacity Investment Scheme risks higher power prices and blackouts

Australians face paying more for their electricity and increased risk of blackouts under the Federal Government’s deal with the Greens to keep gas out of the Capacity Investment Scheme (CIS).

Australian Energy Producers Chief Executive Samantha McCulloch said locking gas out of the CIS was at odds with the Government’s own advice on the critical role of gas in backing up renewables in the National Electricity Market (NEM) and for delivering reliable and affordable electricity.

“Australia needs significant investment in new gas power generation to keep the lights on and power bills down,” Ms McCulloch said.

“Instead of encouraging this investment, the Federal Government has again capitulated to the Greens’ anti-gas agenda and ignored the repeated warnings from experts about the critical role of gas in our power mix.”

The Australian Energy Market Operator (AEMO) has found the NEM needs 13 gigawatts of new gas-powered generation capacity to be built between now and 2050, and that renewables “backed up by gas-powered generation is the lowest-cost way to supply electricity to homes and businesses”.

“AEMO has made clear that gas is ‘the ultimate backstop for our grid’ and estimates that demand for gas power in the NEM will be almost double today’s levels in the early 2040s.

“The Labor-Greens deal today to effectively legislate gas out of the CIS comes just weeks after the ACCC urged governments to fast-track new gas supply and investment by explicitly recognising the critical long-term role of gas in Australia’s energy transition.

“Australia urgently needs investment in new gas supply and infrastructure to avoid structural shortfalls on the east coast from 2027 but mixed signals on the importance of gas only serve to undermine investor confidence.

“State and Federal Governments continue to ignore the warnings, and as a result it is almost inevitable that Victoria and NSW will soon be relying on more expensive imported gas. Ultimately, it’s Australian households and businesses that will pay the price for this policy failure,” Ms McCulloch said.