The shareholders of the longest gas pipeline in Australia, Damper-to –Bunbury, have cut the pipeline’s lifespan, blaming the renewable energy surge. The team has brought forward the end-of-life date to 2063 from the previously set deadline of 2090. According to experts, this move shows a change in fossil fuel industries in the future due to competition from green power sources. In the words of the Australian Gas Infrastructure Group (AGIG), the current economic existence of the pipeline was too long, considering the surge in competition from renewables and government policies to cut on carbon emission.
AGIG will reduce the schedule of depreciation for the pipeline to reflect the changes. The 1600-kilometer passage is Western Australia’s (WA) economic backbone. Companies such as Alcoa, Alinta, and Wesfarmers get their power from this pipeline. Besides, forty percent of the electricity supplied by the WA grid comes from the pipeline. Although customers fault the decision saying it would add extra costs to their bills in the next half-decade, experts say this move is significant globally. It is an indication that renewable energy is altering the economy of fossil fuels.
“It is significant for two reasons. The first is it results in higher prices on the pipeline if the Economic Regulation Authority agrees to this,” said Matthew Bowen, a partner at Jackson McDonald, an energy law firm. Dampier to Bunbury gas pipeline has been the cornerstone of WA’s economic growth for almost four decades.
“The bigger reason why it’s significant is; this is a concrete indication from an investor in energy infrastructure that the world is changing. That the world is moving to decarbonize and that their business model, which is based on transporting carbon-based fuels, faces a shelf life,” added Bowen.
AGIG, which is Chinese-owned, maybe chasing more profits with the shorter depreciation with this move. According to Michael Brooks, an energy consultant at Energy Matrix, shortening the lifespan would boost profits in the short term. The gas pipeline operators are being forced to change their strategy by changing market conditions.
“Over the last 10 years, a lot has changed, and we’re seeing prices for renewable energy decrease substantially, different technologies being discussed. Ten years ago, it was hard to imagine a world not requiring a Dampier to Bunbury pipeline,” said Brooks.
A former pipeline engineer noted that although the AGIG decision will raise questions, other gas pipeline owners should do the same. Peter Milne, who is currently a journalist, added that the owners could reduce the lifespan more, and the 2063 deadline was overly optimistic. “I can’t see it operating in 2063.Net zero by 2050, it’s real, and countries are engaging it. And particularly now the US has turned under the new president, the world has changed,” said Milne.