Queensland legislates for hydrogen injection into gas pipelines

The Gas Supply and Other Legislation (Hydrogen Industry Development) Amendment Bill 2023 (Qld) (the Legislation) was passed by Queensland Parliament on 10 October 2023.  The Legislation will commence on a day to be fixed by proclamation.

As part of a regulatory review to support the regulation of renewable hydrogen development and use in Queensland, the Legislation will provide a regulatory framework to support the development of Queensland’s renewable hydrogen industry by amending the Gas Supply Act 2003 (Qld) (GS Act) and the Petroleum and Gas (Production and Safety) Act 2004 (Qld) (P&G Act).

Snapshot

• The amendments to the GS Act expand its jurisdiction to include hydrogen, hydrogen blends, biomethane and other ‘covered gases’.
• The amendments to the P&G Act establish a regulatory pathway to apply for pipeline licences for the transmission of regulated hydrogen, and includes new obligations for the safe operation of regulated pipelines.
• The amendments are key actions of the Queensland Energy and Jobs Plan and the Queensland Resources Industry Development Plan.

Important Amendments

Amendments to the Gas Supply Act 2003 (Qld)

The the GS Act and the P&G Act to provide a clear approvals pathway for hydrogen, hydrogen carriers and other prescribed substance pipelines, and to complement changes approved nationally by a unanimous decision, on 28 October 2022, by all Australian Energy Ministers to extend the National Gas Law (NGL) and the National Energy Retail Law (NERL) to hydrogen and other renewable gases. The Bill extends to bring hydrogen blends, biomethane and other renewable gases within scope of the NGL.

• Biomethane is defined as a gas produced from refining biogas, which is a gas made from organic matter other than fossilised organic matter.
• ‘Covered gases’ are defined as:
  • A ‘primary gas’, being processed natural gas, hydrogen, biomethane, synthetic methane or a substance prescribed by regulation; or
  • A ‘gas blend’, being primary gases that have been blended together to be suitable for consumption.
• Hydrogen is not defined and therefore has its ordinary meaning.  The Explanatory Note provides that “hydrogen carriers” could include ammonia, methanol, methyl-cyclohexane, dimethyl-ether and toluene.

What do the amendments mean for existing distribution authorities?

Holders of existing distribution authorities will need to apply to amend the relevant distribution authority so that it applies to a covered gas that is hydrogen or a gas blend.

A distribution authority in effect before commencement of the Legislation will not automatically be authorised to transport, or provide customer connection services relating to, a covered gas that is hydrogen or a gas blend. Holders of existing distribution authorities will need to apply to amend the distribution authority so that it applies to a covered gas that is hydrogen or a gas blend.

Amendments to the Petroleum and Gas (Production and Safety) Act 2004 (Qld)

The amendments to the P&G Act provide a regulatory pathway to apply for pipeline licences for the transmission of regulated hydrogen (being hydrogen, or a hydrogen gas blend (i.e. blend of processed natural gas and hydrogen), used or intended to be used as a fuel to produce heat, light or power).

The Legislation also amends key safety requirements of the P&G Act related to the safe design, operation and management of regulated pipelines, including:

• New obligations for pipeline licence holders and pipeline licence applicants, (being a process that is carried out before construction of the pipeline starts to identify, and apply controls to, threats to the safety and integrity of the pipeline).
• for pipeline licence holders to operate a constructed pipeline in a way that ensures its continuing capacity to safely and reliably transport have been expanded to include pipeline licence holders authorised to transport prescribed storage gas or regulated hydrogen.

What will this mean for holders of existing pipeline licences?

The provisions of the P&G Act in force prior to the amendments will continue to apply to the pipeline licence during the transitional period, being the 1 year period after commencement of the legislation. During the transitional period, holders of pipeline licences may make an application to state transport of a substance, for example newly-regulated hydrogen, as a purpose for which the pipeline is to be used.

What will this mean for pipeline licence applications submitted prior to the commencement of the amendments?

The provisions of the P&G Act in force at the time of applications for a pipeline licence to transport a prescribed substance will continue to apply to the assessment of the application. Therefore, an application for a pipeline licence submitted prior to the commencement of the Legislation will not be subject to the amendments to the P&G Act.

What does this mean for existing pipes and systems?

Where an existing pipe or system (for transportation of a substance) was not a “pipeline” under the P&G Act prior to the amendments, but is a “pipeline” under the P&G Act as amended, the existing pipe or system does not necessarily become immediately classed as a a pipeline under the amended Act.

Australia’s National Scene

In Queensland more than 50 hydrogen projects are underway across the state, including the Stanwell Corporation-led CQ-H2: Central Queensland Hydrogen Project in Gladstone – set to deliver $17.2 billion in hydrogen exports over 30 years.

Next Steps

The Legislation will commence on a day to be set by proclamation and the transitional period will begin to run for 1 year from that day.  We will continue to provide updates when the Legislation commences.

By Kathryn Pacey, Partner, Alison Dodd, Partner, Melissa Swain-Tonkin, Partner, Sian Newnham, Partner, Nick Baker, Partner, and Samuel Colwell, Paralegal.