As Australia accelerates efforts to decarbonise its economy, renewable gas is emerging as a potentially critical energy solution for key industry sectors.
While natural gas remains vitally important to the production of many essential products, the need to reduce emissions from their manufacturing processes is becoming increasingly urgent.
Australia’s manufacturing sector, valued at over $100 billion, supports hundreds of thousands of jobs and relies heavily on natural gas to fuel high-temperature industrial processes. These include the production of cement, bricks, fertilisers, glass, steel, and pharmaceuticals – production processes for which electrification is currently either technically and logistically challenging or financially prohibitive.
The Federal Government has acknowledged the continued role of gas in the clean energy transition and beyond, particularly in hard-to-abate sectors. As a result, industry participants want access to low-carbon energy sources – including renewable gases like biomethane – to support decarbonisation efforts without impacts to productivity or international competitiveness.
Playing a role in Europe
Energy distributor and infrastructure company Jemena, which owns and operates major gas and electricity networks and assets across Australia’s eastern states, is advancing a series of renewable gas initiatives, focused primarily on biomethane, a low emission renewable gas and energy source derived from organic waste. With applications particularly relevant to manufacturing and industrial sectors, biomethane offers a direct or ‘drop-in’ substitute for natural gas and is compatible with existing equipment, pipelines and infrastructure.
The technology is being applied through Jemena’s Malabar Biomethane Injection Plant in Sydney. Operational since 2023, the facility is injecting the equivalent of the average annual gas consumption of approximately 6300 homes into the NSW gas distribution network. The company states that the plant has demonstrated the technical and commercial feasibility of incorporating biomethane into the gas grid.
Biomethane is already being used with great success in Europe, where countries such as Germany, France, Italy and UK are scaling up production, according to the European Biogas Association. Denmark is Europe’s poster child for biomethane application, with around 40 per cent of its gas network made-up of the renewable gas. Energinet, Denmark’s energy network operator, estimates that they will reach 100 per cent biomethane in the gas grid by 2030-2034, helping to eradicate any reliance on imported fossil gas.
The broader aim here in Australia is to support hard-to-abate sectors – such as steel, cement, and food production – in meeting emissions reduction targets under the Federal Government’s Safeguard Mechanism and other decarbonisation frameworks. Many of these industries rely on high-temperature processes not easily or affordably converted to electricity, making low-emission gas alternatives essential to a balanced energy transition.
In the past year, Jemena has entered into a number of agreements with renewable gas producers including Valorify, Optimal Renewable Gas, Sojitz, and GCE. These arrangements aim to evaluate additional biomethane supply opportunities, particularly in regional communities where agricultural waste can be converted into energy, contributing to both local economic activity and emissions reduction.
A 2022 study by Enea Consulting estimated that up to 137 petajoules (PJ) of biomethane could be produced annually in NSW alone – more than the state’s current gas demand. Moreover, the Australian Renewable Energy Agency’s (ARENA) Bioenergy Roadmap projects that bioenergy could contribute up to $10 billion to GDP per year, create more than 26,000 jobs, and reduce emissions by nine per cent by 2030.
Supportive policy critical to realising potential
To help scale production, additional policy signals are needed, including the recognition of renewable gas under the National Greenhouse and Energy Reporting (NGER) Scheme and inclusion in schemes such as the NSW Renewable Fuels Scheme. The establishment of a National Renewable Gas Target, mirroring the approach taken with renewable electricity, could also help to stimulate investment and develop the market for renewable gas.
According to Suzie Jakobovits, Jemena’s General Manager of Renewable Gas, supportive government policy will be essential to unlocking the sector’s full potential.
“Renewable electricity has benefited from targeted support over the past 25 years,” Jakobovits said.
“For renewable gas to complement the energy transition and help decarbonise industry as well as other hard-to-abate sectors, we need a similar level of focus on enabling both supply and demand.”
Biomethane’s chemical similarity to natural gas allows industrial users to transition to the low-emission renewable gas without major capital outlay for new equipment, infrastructure and operational upgrades.
Jemena’s renewable gas push also aligns with recent signals from government. Earlier this year a communiqué from the Energy and Climate Change Ministerial Council in mid-March, confirmed Federal and state energy ministers are exploring policy pathways to support renewable gas, particularly in sectors where electrification is not feasible.
Jemena’s Malabar facility received GreenPower certification last year, providing a mechanism to verify and track renewable gas supply, similar to renewable electricity certificates. This was an important development for the nascent renewable gas industry in Australia.
Local government opportunities
For councils and regional development bodies, the expansion of renewable gas projects could present new opportunities for waste-to-energy partnerships, improved waste and FOGO (Food Organics and Garden Organics) management opportunities, regional job creation, and increased energy security. With many of the proposed biomethane facilities located near agricultural centres, local government could play a key role in project development, community engagement, and attracting new commercial opportunities to the regions.
