January 30, 2020 / 11:14 PM / in 25 days

Australia aims to boost east coast gas supply in $1.4 bln state deal

SYDNEY/MELBOURNE, Jan 31 (Reuters) - Australia’s government began a push to boost gas supply and renewable energy as part of a A$2 billion ($1.37 billion) deal with its most populous state, looking to cut carbon emissions in the wake of devastating bushfires.

As part of a joint funding agreement with the state of New South Wales (NSW), Australia will upgrade parts of the east coast power grid, help pay for two new interstate transmission links, and back emissions reduction projects.

The NSW government has committed to help bring on new supply of 70 petajoules (PJ) per year of gas for the east coast market, which faces a sharp decline in supply from its main gas source in the Bass Strait off Australia’s south coast.

Prime Minister Scott Morrison, who critics say has not done enough to address the impact of climate change, said the deal would stabilise the NSW power grid, cut electricity prices, and spur development of more wind, solar and hydro power.

“It is about getting electricity prices down, getting emissions down, getting more power into the system, and getting the gas to make that happen,” Morrison told reporters in Sydney.

The deal is intended to be the first of a series with Australian states, which all have more ambitious carbon reduction and renewable energy targets than the federal government.

Morrison said this week that gas would be key to cutting emissions from the power sector, which is 70% dependent on coal, while keeping the lights on and curbing rising prices as the country transitions toward cleaner energy.

“Gas can help us bridge the gap while our investments in batteries, hydrogen and pumped hydro energy storage bring these technologies to economic parity with traditional energy sources,” he said in a speech to the National Press Club on Wednesday. “So right now, we’ve got to get the gas.”

Half of the country’s coal-fired plants are slated to shut over the next two decades.

$1 = 1.4622 Australian dollars Reporting by Colin Packham and Sonali Paul; Editing by Daniel Wallis

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