Gas (Other Gases) Amendment Bill

Second Reading

Adjourned debate on second reading.

(Continued from 27 September 2023.)

Mr PATTERSON (Morphett) (20:40): I am taking this opportunity to speak today in parliament about the Gas (Other Gases) Amendment Bill and indicate that I am the lead speaker. Again, this bill before us, which you can compare: we had the national energy laws with quite substantive amendments, although a lot of them were really scratching out natural gas and replacing it with covered gas—that is the substantive work there. We also have before us the amendment to the Gas Act 1997. This is just a state act, of course, contingent on that act there.

You remember I spoke, and by way of reflection, on why they would be linked. I referred to the fact that in November 2019, the energy ministers endorsed the National Hydrogen Strategy, which was aimed at setting out the government actions to support the development of Australia's hydrogen industry, including a review into the application of the gas regulatory arrangements to hydrogen.

As part of this Hydrogen Strategy, the energy ministers agreed that jurisdictions separately would review their state jurisdictional legislation to determine whether their respective legal frameworks could support hydrogen industry as it stood or would in fact need to be changed. Here we have the bill before us, which does, I suppose, indicate that there was a change needed, although, as you can see, being such a short act, it is not a major change and really just flows through from what has been put in place from the Statutes Amendment (National Energy Laws) (Other Gases) Bill.

This bill seeks to amend the Gas Act to include hydrogen and other gases, but making sure the definitions are consistent with the changes that are proposed for the national gas regulatory framework in the associated Statutes Amendment (National Energy Laws) (Other Gases) Bill. Again, as explained, those national energy laws were bipartisan and supported.

The genesis of this bill happened back in 2019-2021 by the former government, maintained by this one, so it would be quite evidentiary that it was also taken in mind that there would be changes to the South Australian Gas Act 1997 when those changes to the national bills were undertaken. The convention of bipartisan support certainly holds for this piece of legislation as well, so I indicate at the outset that the Liberal Party will be supporting this bill as well.

With regard to what is being looked at in terms of the overall gas system, this will predominantly deal, it seems, with downstream activities such as the distribution, pipeline and use by customers in their appliances, whether that is household appliances, ovens, heaters, gas stoves or industry in terms of their boilers or other plant and equipment relying on gas. That is currently regulated in South Australia by the Gas Act 1997, but it also includes the functions and powers of the Technical Regulator and the Essential Services Commission.

Passing this bill allows those two bodies to also undertake work in this important field of hydrogen and biomethane, or blends as well. Currently, the Gas Act 1997 is limited to regulating gas that consists of hydrocarbons, or predominantly hydrocarbons, such as natural gas. The current definition of gas allows the act to apply to some gas blends that contain a small component of hydrogen, but that current definition does not apply to hydrogen on its own or to gas blends composed of a high proportion of hydrogen gas.

In one amendment in the bill, the definition of gas effectively becomes covered gas as defined by the National Gas Law. By way of refresher, even though it was only spoken about very shortly before, the main amendment to the National Gas Law was to substitute natural gas with covered gas, with the list of covered gases including natural gas, hydrogen, biomethane, synthetic methane or blends of these gases. These definition changes will ensure that the range of gases regulated by the Gas Act 1997 in South Australia is the same as those regulated by the national framework.

I talked about downstream activities, but it is probably worth noting that there are also upstream and midstream activities relating to hydrogen, such as its production. Up at Moomba, for example, its transmission through the pipelines is regulated through the Petroleum and Geothermal Energy Act, which allows it to be regulated. It is worth making the point—it is quite timely, in fact—around those upstream activities as well, because the petroleum act deals with naturally occurring hydrogen, whereas this act deals with hydrogen that can be produced via renewable energy, or potentially by steam methane reforming and carbon capture as well. Those are the two differences.

I have talked previously about Hydrogen Park SA at Tonsley, and I talked about that 5 per cent blend. One of the considerations around that particular blend—whether it be 5 per cent or 10 per cent—was the fact that the appliances that are used in those 700 homes in Mitchell Park are geared towards natural gas: they are compliant and they have the safety mechanisms in place.

By having the Technical Regulator look at these high blends, they will be able to consider the way forward, particularly around how to handle current appliances and what levels of concentration of hydrogen they can cope with before there are issues with embrittlement, because the chemical make-up of hydrogen reacts differently in the pipelines that transport natural gas, and the methane reacts differently in the actual appliances themselves. They get embrittled and that causes them to have to be replaced, which would be counterproductive for households, certainly if they are looking to go to these blends to reduce their emissions but then end up having to replace their appliances. By having this legislation in place, the Technical Regulator will be able to look at that.

There are certainly safety issues that do come into play, especially if you look at 100 per cent hydrogen because hydrogen is a much smaller molecule than the methane in the natural gas, so there are certainly going to have to be standards introduced to ensure the safety of the distribution network, that there are no leakages and that the materials used allow those pipelines to maintain their structural integrity. Equally, the appliances used will have to be compliant and cater for 100 per cent hydrogen as the end goal, but potentially with higher hydrogen blends as well. The opportunity of passing this bill concurrently with the national energy laws will allow the Technical Regulator to get underway and do that important body of work.

Previously, I have spoken about the importance of the gas sector to the state's energy mix and certainly the role that gas will play in an orderly transition for the states. The commitment by the gas industry is to be net zero by 2050 through the use of technologies such as considered by this bill, whether that be hydrogen, renewable energy or blending these two gases with natural gas.

We are able to progress this. The industry is able to continue with certainty to put money, investment and research into progressing this, rolling it out. As I have said, it has gone from 700 homes in Mitchell Park to rolling out to 4,000 homes since March 2023. To continue this progress will certainly help with the energy transition as far as the gas network is concerned, and for that reason the Liberal Party is supporting this amendment bill. I indicate we will not need to go into committee on this bill.

The Hon. A. KOUTSANTONIS (West Torrens—Minister for Infrastructure and Transport, Minister for Energy and Mining) (20:52): I would like to again thank the shadow minister for his cooperation in this matter. His bipartisanship deserves to be credited and I thank him for it. I thank him for his sensible contribution to the debate. I commend the bill to the house.

Bill read a second time.

Third Reading

The Hon. A. KOUTSANTONIS (West Torrens—Minister for Infrastructure and Transport, Minister for Energy and Mining) (20:52): I move:

That this bill be now read a third time.

Bill read a third time and passed.