INSIGHT

National Gas Regulatory Reform: introducing hydrogen and renewables

By Tracey Greenaway, Hussein Al Asedy
Energy Hydrogen Oil & Gas Renewables

Bringing renewables into the network 4 min read

Investment in the development of Australia's hydrogen industry has been a tremendous area of focus over the past couple of years.

A variety of early stage development and pilot projects have been announced and federal and state governments are partnering with the private sector to support the development of Australia as a major player in the global hydrogen market. Regulatory change is another key driver of success.

In furtherance of this, the Federal Government recently announced a proactive response to amending the national gas regulatory framework to accommodate hydrogen blends and other renewable gases.

This is an important development as gas blending is one of the few near-term, utility scale use cases for hydrogen and is therefore a key enabler for the wider Australian hydrogen supply chain.

Key takeaways

  • On 20 August 2021, the Energy Ministers agreed that the national gas regulatory framework should be reviewed and amended to incorporate hydrogen and other renewables into the national gas network. This will facilitate the use of hydrogen, biomethane and other renewable gases within existing gas networks and natural gas appliances. The first priority will be on integrating blends and renewable gases that can be used in existing gas appliances into the regulatory framework in order to reduce risk and costs to consumers and the industry.
  • On 23 September 2021, the Australian Energy Market Commission also announced the commencement of its review into extending the energy market rules to hydrogen and renewables gas blends.
  • The formal review process will commence on 21 October 2021 with the release of a public consultation paper. Interested stakeholders are encouraged to participate in the review process.

Changes to the National Gas Regulatory Framework

On 20 August 2021, the Energy Ministers agreed to review the current regulatory framework to investigate how the national gas regulatory framework should be amended to bring hydrogen, biomethane and other renewable gas blends within its scope.

While aspects of the national gas regulatory framework already cover the use of low-level hydrogen blends and other renewable gas, a review of the national gas regulatory framework, completed for the Department of Science, Energy and Resources as an action of the National Hydrogen Strategy, identified a number of gaps.

With a number of trials and projects across the country being announced, the Government is keen to ensure that regulatory barriers do not restrict investment in projects, and that existing regulatory arrangements and consumer protections continue to operate where hydrogen blends and renewable gases are used. Various aspects of the review were allocated by the Energy Ministers to the Australian Energy Market Commission (AEMC), the Australian Energy Market Operator (AEMO) and officials from the various state and territory governments.

In order to accommodate hydrogen and other renewable gases within the existing gas network, it is anticipated that amendments will need to be made to:

  • the National Gas Law (NGL), the National Gas Regulations, the National Gas Rules (NGR), Procedures and other subordinate instruments made under the NGL and/or NGR; and
  • the National Energy Retail Law (NERL), the National Energy Retail Regulations, and the National Energy Retail Rules (NERR).

Next steps of the review

  • Jurisdictional officials are responsible for identifying and developing the amendments to the NGL, NERL and Regulations that are required to accommodate natural gas equivalents and to future-proof the legislative framework by providing for other gas products to be accommodated over time.
  • AEMO is responsible for reviewing and amending the Procedures and other AEMO-made instruments to ensure settlement and metering in the facilitated and regulated retail gas markets can accommodate NG equivalents.
  • AEMC is responsible for identifying and developing the amendments to the NGR and NERR required to accommodate natural gas equivalents. As part of the AEMC's program for this aspect of the review, it is also reviewing a rule change request for the Victorian declared wholesale gas market.

Jurisdictions are also responsible for reviewing and, if necessary, amending local legislation and regulations

Key dates

  • 21 October 2021: the formal review process will commence with the release of a public consultation paper.
  • 22 October 2021: a virtual public stakeholder forum will be held at 1pm (AEST) on Friday, 22 October 2021. This forum will be held jointly by the Department of Industry, Science, Energy and Resources, AEMC and AEMO. If you are interested in hearing more about the review, you can register by emailing renewablegas@industry.gov.au.
  • March – May 2022: consultation on the draft reports and draft legislative amendments will run from March – May 2022.
  • 2022 and 2023: draft legislation on amendments to address any gaps in the national gas regulatory framework will be presented to the Energy Ministers by mid-2022. Any legislative changes are anticipated to take effect from 2023.

Actions you can take now

  • Once the initial consultation papers on the reform to the national gas regulatory framework are released, consider the papers in detail, as well as any operational issues your organisation is currently having, or foresees to have, and take the opportunity to provide feedback .
  • Attend the public forum on 22 October 2021 and continue to engage with the Department of Industry, Science, Energy and Resources, AEMC and AEMO as further opportunities to consult arise during the course of the review.