Queensland is stepping up its pace in the renewable hydrogen race
Mar 2023 | Energy & ResourcesIt is anticipated that by 2030 Queensland will be at the forefront of renewable hydrogen production in Australia. Queensland is uniquely placed to grow its domestic and export hydrogen industry with established renewable energy resources, existing infrastructure, processing and manufacturing capabilities and ready access to southeast Asian markets.
Hydrogen is considered to be a very versatile source of energy, and capable of supporting a number of industries in their energy transition and decarbonisation journeys. Identified uses of hydrogen include ammonia production, industrial heating, powering rail and road transport, oil refining, steel production, aviation, power generation and the production of e-fuels.
Support for growth of the renewable hydrogen industry has been reflected in the Queensland Energy and Jobs Plan (the Plan) and the Queensland Resources Industry Development Plan (the QIRDP). Earlier this month, the State Government announced the implementation of key actions outlined in the Plan and the QRIDP by releasing its draft Gas Supply and Other Legislation (Hydrogen Industry Development) Amendment Bill 2023 (the Bill).
The Department of Energy and Public Works is inviting interested stakeholders to comment on the Bill by 3 April 2023.
The Bill
All aspects of hydrogen projects (including production, transportation, storage and distribution) will require effective regulation. Transportation of hydrogen via pipelines has been identified as an important area requiring policy development and legislative amendment to support effective regulation.
In its current form, the Bill proposes amendments to the Petroleum and Gas (Production and Safety) Act 2004 (Qld) (the P&G Act) and the Gas Supply Act 2003 (Qld) (the Gas Supply Act) (collectively, the Acts).
The amendments are made with the intention of removing regulatory barriers surrounding the licensing and development of hydrogen pipelines within Queensland’s existing gas pipeline regulatory framework. Broadly, the key amendments to both Acts that are proposed by the Bill involve amendment to the terminology to include reference to hydrogen and hydrogen blends. By amending the existing terminology, the Bill seeks to ensure not only that Queensland legislation is compliant with the National Gas Law (NGL) and the National Energy Retail Laws (NERL), but also that natural gases, specifically renewable hydrogen, are captured by the Acts. Changes to the NGL and the NERL are occurring at a national level. On 28 October 2022, the Energy Ministers agreed amendments to include hydrogen and other renewable gases in the national gas regulatory framework.
Key amendments
Shift in Terminology
The Bill proposes to replace the term processed natural gas with covered gasses where it appears in the Gas Supply Act. If passed, this amendment will mean the Gas Supply Act will longer apply exclusively to processed natural gasses, and will apply to:
- processed natural gas, which refers to a substance that is in a gaseous state at standard temperature and pressure, consisting of naturally occurring hydrocarbons and other substances and which is more than half methane in volume and has been processed to become suitable for production;
- hydrogen;
- biomethane, which refers to a substance that is in a gaseous state at standard temperature and pressure, principally constituted of methane, produced by refining biogas and suitable for consumption;
- synthetic methane, which refers to a substance that is in a gaseous state at standard temperature and pressure, principally constituted of methane, produced by the methanation of carbon dioxide and suitable for consumption;
- any other gas prescribed by regulation; and
- a gas blend, which refers to a mix of two or more of the gases outlined above.
Proposed amendments to the P&G Act include:
- inserting ‘hydrogen, or a hydrogen gas blend [a blend of natural gas and hydrogen], used or intended to be used as a fuel to produce heat, light or power’ in the definition of fuel gas in section 11 of the P&G Act;
- inserting a new section 11A to describe the meaning of 'regulated hydrogen' as: ‘hydrogen; or a hydrogen gas blend; or another substance prescribed by regulation that is involved in, or produced for, a process related to the storage or transport of hydrogen;
- allowing transmission pipelines to transport hydrogen, a hydrogen gas blend or another regulated substance including methanol and ammonia; and
- clarifying several existing pipeline provisions that are relevant to pipeline licence holders.
Amendment to purpose
Currently, the P&G Act has the preliminary purpose of facilitating, regulating and carrying out responsible petroleum activities and the development of a safe, efficient and viable fuel gas industry and a secondary purpose of facilitating the Geothermal Energy Act 2010 (Qld) and the Greenhouse Gas Storage Act 2009 (Cth).
The Bill proposes that the secondary purpose be amended to include the facilitation and regulation of key authorised pipeline licences and the construction and operation of pipelines for regulated hydrogen in a way that is safe, effective and efficient.
Incidental effects of amendments
If hydrogen is included in the definition of ‘fuel gas’, the provisions in chapter 7 of the P&G act dealing with fuel gas quality and characteristics for consumers would also apply to hydrogen. The Petroleum and Gas (Safety) Regulation 2018 (Qld) (Safety Regulation) prescribes the quality of fuel gas for Liquefied Petroleum Gas (LPG) used for heating and for processed natural gas. The Safety Regulations are not currently proposed to be amended by the Bill and will not specify a prescribed quality for hydrogen.
The petroleum and fuel gas provisions in chapter 8 of the P&G Act will now apply to hydrogen.
Chapter 9 of the P&G Act concerns safety. Section 669 of the P&G Act provides that a regulation may make requirements for petroleum or fuel gas safety. The Bill does not propose to amend the Safety Regulation to include specific safety requirements for hydrogen. For example, the Safety Regulation currently provides the required gauge pressure for LPG and processed natural gas and provides that the design and distribution system must comply with AS/NZS 4645.
Certain infrastructure forming part of the hydrogen supply chain will be considered to be ‘operating plant’ for the purpose of the legislative regime and will be subject to the relevant requirements of the P&G Act relating to safety management systems. For example, this will include a network:
- that includes filling a fuel gas container;
- that includes the delivery or supply of fuel gas in a tanker;
- with a combined water capacity of fuel gas containers of more than 5,000L;
- that includes dispensing fuel gas to a vehicle’.1
Takeaways
The Bill will amend the Acts to provide clarification regarding the regulation of certain aspects of the burgeoning hydrogen industry in Queensland. The proposed amendments to the Gas Supply Act capture hydrogen in the new definition of ‘covered gas’, enabling regulators to make decisions regarding the distribution of renewable gases under the Gas Supply Act. The proposed amendments to the P&G Act will also facilitate the transportation of hydrogen via transmission pipelines from processing or storage facilities to market.
Whilst the amendments will establish a framework for the transport of renewable gases using pipelines, it is clear that additional amendments and provisions will be required in order to provide a fully effective regulatory regime for all components of a hydrogen project’s lifecycle. It is expected that consultation for these further changes will be undertaken in 2023.
If you have any questions about the amendments and how they might impact your existing or future operations, please do not hesitate to contact our Energy & Resources team.
1. Petroleum and Gas (Safety) Regulation 2018 s 11(1).
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