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In today's edition:

Who will pay for stranded gas networks?
Laying a foundation for COP30
Queensland's biofuels inquiry

Evaporating pool for gas network costs

Proposed rule changes could require gas distribution networks in danger of being “stranded” to charge new and departing customers the full cost of connecting and disconnecting, so as not to impose too high a burden on remaining customers.

The process opened by the Australian Energy Market Commission comes after the Australian Energy Regulator has let Jemena in NSW charge $115 million and the three gas networks in Victoria charge about $330 million in "accelerated depreciation".

The rule requests touch on the vexed question of how to pay for investment in gas networks as their customer base shrinks under electrification policies. Accelerated depreciation recognises the commercial life of assets has been shortened.

Regulatory expert Ron Ben-David has proposed the costs be partly shared by electricity networks, as a way of opening the discussion to broader solutions that don't just sting network owners and their customers.

Expert view

"There are a number of decisions that can only be settled politically in the sense that you can model them economically and financially till the cows come home, it won't give us the answer. The answer is a judgment, and someone has to make that judgment.

"So let me just give you maybe two or three examples. Should investors be 100% indemnified or compensated for the full RAB [Regulatory Asset Base]. I think there are good arguments that they should not be fully compensated, but there's no magic number.

“Second would be whether taxpayer funds are used in some way to offset this cost. It could be paid directly to the gas investors. It could be paid to consumers. If my model is adopted, it's going to add to electricity prices. So there could be some compensation.

"If you read the AER's Jemena decision, they make it clear that they're worried about the availability of future investor funds, because the gas network has to operate one way or another for quite some time. And if investors get spooked, there is a risk that those funds won't materialise, and then ... you get a showdown. What does the regulator do? What does the government do if investors basically refuse to keep maintaining or investing in a gas network?"

Ron Ben-David
Regulatory expert, former Chair, Victorian Essential Services Commission

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Meanwhile, Victoria is chewing through its annual budget for gas powered generation at an alarming rate as a cold, windless patch grips the state. (AFR) The wind drought should end on the weekend.

Laying a foundation for COP30

Ambitious climate targets supported by solid implementation and investment plans can bolster economic growth, increase investment flows and support a low-emission transition, according to a joint report by the OECD and UNDP.

“The economic case for more ambitious, investable, and implementable climate strategies is clear.” — OECD Secretary-General and former Finance Minister Mathias Cormann

With countries preparing for COP30 in Brazil in November, and policy wonks covering the pre-meeting meetings, the report was presented at the Global NDC conference underway in Berlin.

"This report shows that the transition towards cleaner, greener economies can actually spur GDP growth, not hinder it … As we look to the future, it is clear that green economies will drive industry, mobility, energy systems, and more. Enhanced NDCs, helped along by UNDP’s Climate Promise, are therefore a resounding commitment to the Paris Agreement and the Climate Convention to raise ambition and a smart investment in driving development, growth, and progress.”

UNDP Administrator Achim Steiner

Australia is yet to declare its updated Nationally Determined Contribution (NDC) for 2035. The existing NDC target – a reduction of 43% by 2030 – is not aligned with restricting global warming to 1.5°C, according to Climate Tracker, and would require a significant jolt.

The Climate Change Authority last year signalled a 65-75% range could be “ambitious and achievable”, which was before the Trump-led US exit from the Paris Agreement, tariff self-harm and recession fears.

Sugar hit for biofuel

The Queensland government opened a parliamentary inquiry into biofuel and alternative power made from sugar cane. The terms of reference include:

Sugar cogeneration in the state’s electricity generation mix, including existing capacity and potential for expansion
Market, regulatory, and infrastructure barriers to increased bioenergy production from sugar
Aligning sugar biofuel production with national security and Defence liquid fuel needs
Policy and funding mechanisms to de-risk investment in cogeneration and biofuels
R&D to underpin a world-leading sugar-led bioenergy industry
Land use and regional development considerations, benefits for growers, and the “food versus fuel” dilemma.

Developing a commercially viable base ingredient for new aviation fuels, biodiesel and biomethane is part of a push for growing the state’s agri-economy, creating regional jobs and the additional tagline of achieving sovereign fuel security in Queensland.

Catch up

Capital

AGL Energy (ASX: AGL) disclosed a “routine review” of its 20% stake in Tilt Renewables was underway, after another round of media speculation it would be offloaded. “At this stage, AGL is not involved in any discussions with potential buyers,” AGL said.

Projects

The NSW Government will allocate $115.5 million in the 2025/26 State Budget to build a Newcastle Logistics Precinct. To be developed next to the Port of Newcastle at a former BHP Steelwork’s site, it will provide portside storage for equipment, including wind turbines and transformers. The precinct is subject to planning and environmental approvals and will require an Environmental Impact Statement and a public exhibition period.

“With solar and wind projects being developed across the state, there’ll be many large components arriving at the Port of Newcastle and they need to be safely stored before they can be moved to renewable energy zones. The Newcastle Logistics Precinct will significantly improve our capacity to store and efficiently transport the equipment required to build the critical renewable energy projects we need to replace ageing coal-fired power stations.”

NSW Minister for Climate Change and Energy Penny Sharpe

Policy

While productivity is on the agenda, again, energy efficiency can be key to gaining an edge. An International Energy Agency analysis of economies achieving low levels of industrial energy intensity while continuing to grow found five common industrial policy themes:

Promoting the use of energy management tools - audits, management systems and the appointment of an energy manager
Interaction with industrial networks to build trust between companies and government
Targeted fiscal supports and financing mechanisms
R&D to bridge the gap to commercialisation for new energy efficiency technologies
Minimum energy performance standards for motors and other industrial equipment.

Professor of Engineering at Rice University Daniel Cohan explains how the ‘Big Beautiful Bill’ positions American energy to be more costly for US consumers and the climate, despite strong popular and scientific support for a rapid shift to renewables. (The Conversation)

Regulation

The large-scale generation certificate (LGC) market is in surplus, but the LGC price decline is unlikely to materially impact investment because the drivers are changing, with the Capacity Investment Scheme and other policies supporting investment, according to the latest quarterly report from the Clean Energy Regulator.

The regulator also expects tightening baselines to reduce the issuance of Safeguard Mechanism credit units (SMCs), each representing one tonne of emissions below a facility's baseline, and increase total Australian Carbon Credit Unit (ACCU) and SMC surrenders. This will strengthen the incentive for facilities to identify, invest in, and deliver on-site emissions reductions, according to Chair David Parker.

Technology

The London-based Energy Transition Commission warned against poorly executed “nearshoring” of vital technology supply chains in response to China’s dominance. Instead, their latest briefing note suggested six principles:

Aim for diversified supply chains not complete self-reliance
Clarify different dimensions of "security" - economic vs national security – with various implications in different sectors
Tailor policy by technology, focusing efforts on sectors where cost-competitive domestic production can be achieved
Base any use of tariffs on factual analysis of current subsidies in compliance with WTO rules
Focus primarily on the location of employment and value-add rather than ownership, recognising that inward investment can be a major driver of technology transfer
Work with China to increase climate finance flows to lower-income countries, supporting accelerated deployment of clean technologies.

Climate

Greens Deputy Leader and Higher Education Spokesperson Mehreen Faruqi called on Monash University to dump its sponsorship by Woodside Energy (ASX: WDS) amid staff concerns about attempts to allegedly cover up a “climate change and energy transition” conference with the gas giant at the university’s Prato campus.

People

Hastings Technology Metals (ASX: HAS) appointed former WA politician Vince Catania as Chief Executive.

BloombergNEF energy transition expert Kobad Bhavnagri was appointed a Governor of WWF-Australia after being nominated by current Governors.

Research

A Rennie Advisory report, commissioned by Energy Consumers Australia to inform their work on the ongoing NEM review, examines how to increase the participation of widely distributed consumer energy resources in the wholesale market and support grid services.

“We need a national body to drive the strategy for this and ensure all consumers benefit.” — ECA CEO Dr Brendan French

The research also recommends lowering participation thresholds in line with international markets and modernising metering and telemetry rules and standards.

Random

Australia's largest wind farm — the $4 billion Golden Plains project — has been infiltrated by criminal-linked companies as part of a ploy by Australian Woorkers' Union figures to outmuscle thugs and bikies aligned with the rival CFMEU. (The Age)

What's on

June 17-20
Australia Energy Week

Energy Minister Chris Bowen, Ausgrid CEO Marc England, AEMC Chair Anna Collyer, EnergyAustralia Managing Director Mark Collette, Woodside Energy COO Liz Westcott and NEM review Chair Tim Nelson headline this Melbourne event.

June 24-25
Noosa Power & Energy Conference

Climate Change Authority Chair Matt Kean, Grattan Institute Energy and Climate Change Program Director Tony Wood, Windlab Director of Policy Maggie Shelton and Energy Estate Co-founder Simon Currie are speaking at this new Queensland event.

June 25
NSW Budget Address

NSW Treasurer Daniel Mookhey will break down the 2025/26 State Budget at a CEDA event in Sydney.

June 25
NSW Budget Breakfast

NSW Treasurer Daniel Mookhey will speak at a post-budget breakfast at a Property Council event in Sydney.

July 17-18
Carbon Capture APAC Summit

Chevron General Manager of Energy Transition David Fallon, Beach Energy CEO Brett Woods, CarbonNet Project Director Jane Burton, Geoscience Director of Offshore Energy Systems Merrie-Ellen Gunning are among speakers at this event in Melbourne.

July 19
Tasmanian election

Tasmanians face a snap election after Governor Barbara Baker granted Liberal Premier Jeremy Rockliff's election request following the state parliament’s no confidence motion.

July 29-30
Australian Clean Energy Summit (ACES) 2025

AEMO CEO Daniel Westerman, AEMC Chair Anna Collyer, Climate Change Authority Chair Matt Kean, AGL CEO Damien Nicks, Iberdrola Australia CEO Ross Rolfe and Squadron Energy CEO Rob Wheals are among the lineup at the Clean Energy Council’s flagship event in Sydney.

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The Energy

Rule maker weighs in on gas ‘death spiral’