Concerns over the east coast gas market have deepened, with warnings gas generators may soon burn diesel at extra cost and emissions to plug energy shortages unless new gas supply is developed.

Australian Energy Producers today said the latest Australian Energy Market Operator (AEMO) Gas Statement of Opportunities (GSOO) again signalled that new gas investment was urgently needed to meet demand from homes and businesses as well as for use in gas-powered electricity generation.

Australian Energy Producers Chief Executive Samantha McCulloch said the report highlighted the risks of peak-day shortfalls on some days under extreme winter conditions from 2025, the potential for seasonal supply gaps from 2026 in southern states, and structural shortfalls from 2028.

"The warning bells are getting louder as report after report forecasts gas shortfalls and exposes the urgent need for new east coast gas supply," Ms McCulloch said.

"How many warnings will it take before governments act to enable the urgent development of gas supplies?

"The policy failure is underscored when diesel, a higher emitting and more expensive fuel, may be needed for electricity because governments have stifled new gas projects with approval delays and compounding interventions."

Ms McCulloch said AEMO had reaffirmed the important role gas-powered electricity generation plays in reducing emissions and ensuring electricity reliability as a back-up to renewables and as coal retires.

"If gas supply from 2028 is to keep up with demand from homes and businesses, particularly for gas-powered electricity generation, then new investment is needed," she said.

AEMO said: "While the scale of gas consumption remains uncertain through the energy transition, particularly in relation to gas usage for electricity generation, all scenarios identify the urgent need for new investments to maintain supply adequacy."

AEMO's 2024 Victorian Gas Planning Report Update, also released today, found Australia's biggest gas-consuming state is facing peak-day gas shortages from next year and supply forecasts have worsened as a result of investment uncertainty and project delays.

Ms McCulloch said: "The report warns that as a result of Gippsland Basin fields reaching the end of their production life, Victoria's gas supply will almost halve between now and 2028."

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