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Manufacturers, food processors and other industrial energy users in Australia are beginning to turn away from natural gas and adopt electric alternatives where possible to cut pollution and seize a competitive edge amid rising costs.
Factories that burn gas to create the heat and steam they need to make various products account for nearly a quarter of the nation’s overall energy use, making them major sources of planet-warming emissions. However, they are also considered among the most difficult areas of the economy to decarbonise.
As solar systems become cheaper and companies struggle with high energy prices, more businesses are adopting electric alternatives to gas.Credit: Brendon Thorne
That is slowly starting to change, a new report from the Smart Energy Council says, as solar systems, batteries and heat pumps become cheaper, and companies struggling with high fossil-fuel prices look for long-term operational savings.
While steel, cement and glass factories requiring extremely high-temperature heat still face a shortage of affordable cleaner alternatives, other gas users – from smaller manufacturers to farms and municipal facilities – are increasingly investing in technologies like heat pumps or thermal energy batteries, it says.
Confectionary and pet food giant Mars, consumer goods maker Unilever and whitegoods manufacturer Electrolux are among the multinational companies surveyed in the report that have taken steps to deploy upgrades to their local plants to move off gas and take advantage of “Australia’s abundant renewables”.
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“Most of these companies have billion-dollar global empires,” it says. “Their switch from gas to renewable alternatives in Australia will drive a global switch away from gas, towards renewable energy alternatives instead.”
In the Victorian town of Wodonga, Mars Petcare’s manufacturing plant has traditionally sourced steam from gas-fired furnaces, but it has now built a concentrated solar thermal plant, which uses mirrors that concentrate sunlight onto a central receiver to create and store heat to produce steam.
The company has also installed an electric-thermal energy storage system at the site, paired with an electric boiler, which charges from the grid during times of low-cost renewable supply and later creates steam for the factory on demand.
“Australia with its access to low-cost renewable energy is at the forefront of Mars’ efforts to reduce its global carbon footprint,” Mars Petcare Australia and New Zealand general manager Craig Sargeant said.
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Unilever’s Tatura factory near Shepparton has installed solar thermal technology to replace its use of gas to maintain temperature control in its mixing room for products including Cup A Soup. The company, which plans to eliminate fossil fuel use across its global operations by 2030, said the new system, comprising 800 solar thermal tubes on the factory’s roof, marked the first stage of a push to expand solar thermal technology across the entire factory.
Over the past decade, the wholesale price of gas in eastern Australia has more than doubled from $4 to $5 a gigajoule to $10 to $15, following the depletion of the cheapest domestic gas fields and the start-up of Queensland’s liquefied natural gas (LNG) export industry.
Rising prices have increased bills for millions of homes that still use gas for cooking, heating and hot water, and added to the price of electricity. The increases have also increased pressure on the viability of factories that need gas to fire their kilns and furnaces, or as a feedstock in plastics, chemicals and fertilisers.
Concerns are intensifying across the manufacturing sector that gas prices could rise even further soon, as the giant gas fields in Bass Strait, which have supplied the bulk of east coast demand for decades, continue rapidly drying up, with not enough new supplies available to replace them. Officials and experts warn that homes and businesses in Victoria and NSW could face gas shortfalls before the end of the decade unless more supply becomes available or gas demand reduces significantly.
State and federal governments are investing in a range of initiatives to cut gas use, encouraging people to switch from gas-fired heaters and stoves. However, the Australian Energy Market Operator has cautioned that gas demand is not falling fast enough to ease the looming crunch.
This year, the Albanese government has begun a sweeping review to ensure the rules requiring gas exporters to keep the local market well supplied are delivering “as intended”. Manufacturers and the Victorian government have revived calls for the government to set up an east coast reservation scheme for Queensland’s LNG sector, similar to what is in place in Western Australia, where gas exporters are required to hold back a prescribed volume for the local market only.
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