NEARLY 40% of all Australian electricity generation will be from renewables by 2030, a report from consulting firm McKinsey has claimed.
The report, released at the APPEA conference in Brisbane on Tuesday, said by 2030 up to 37% of Australian electricity could come from renewable sources. This compares to 14% in 2014.
But across all fuel sources, including transport fuel, renewables are still only expected to make up about 5% by 2030.
Using a "business-as-usual" approach the McKinsey report said despite an increase in renewables Australia was likely to miss Paris Climate Change Accords emission reductions.
"In the power sector, gas would continue to be used to supply power to the grid during periods of peak demand.
However, increased generation from renewables and the lower cost of existing coal-fired generation mean that overall demand is expected to shrink," the report read.
The report said gas-fired power plants were likely to complement renewables as they can "ramp up" to cover for energy shortfalls faster than alternatives.
But the report said gas may become more important to Australia's energy use because of a number of environmental and economic concerns.
These included fuelling trucks with liquid natural gas and buses with compressed natural gas, fuelling trains with LNG and using gas to power off-grid or on-grid power.
"Satisfying Australia's future energy consumption while at the same time reducing emissions significantly will require a different approach to what has worked in the past," the report read.
"Overall consumption in 2030 is expected to be 21% higher than it is today, and the mix of fuels that supplies it will likely change as a result of increased renewable penetration and action to reduce (carbon dioxide equivalent) emissions intensity.
"The options and numbers presented in this report are intended to help inform the debate amongst society, businesses, policy makers and regulators about what this future could look like."
The McKinsey report comes after Oxford economist Cameron Hepburn told the APPEA conference the gas industry must develop carbon capture technology quickly or the industry will die.
- ARM NEWSDESK