NSW faces a looming gas crisis that threatens jobs, small businesses, and the future of key industries, according to a new report from Business NSW.

Running on Empty 2.0 – The Evolving Role of Gas in NSW outlines the growing risk to the state’s economy from declining gas supply.

It also outlines how renewable gas biomethane presents one of the most immediate, commercially realistic pathways for gas-reliant businesses to decarbonise without disruption, maintain competitiveness, and stabilise long-term energy supply in NSW.

“Medical devices, milk, bread, coffee, clothing: these everyday essentials all depend on gas for production,” said Daniel Hunter, CEO of Business NSW.

“On a larger scale, fertiliser production, alumina refining, and food processing are all reliant on gas.

“Without urgent investment and policy clarity, we face higher costs, lost jobs, and a weaker industrial base.

“Gas is not just a transitional fuel: it’s essential to the economic future of NSW. The declining use of gas is an indication we are losing our industrial and manufacturing strength.”

Gas powers over 1.5 million households and 50,000 small businesses. Gas underpins 250,000 jobs in NSW’s 29,000 manufacturing businesses.

Nearly one in five NSW businesses – including 64% in hospitality – depend entirely on gas.

Over the past four years, however, gas prices have increased by almost 50 per cent for business customers, according to IPART.

“NSW businesses will rely on gas well past 2050, especially hard-to-abate industries that need natural and low-carbon gases to reach net zero,” Mr Hunter said.

“If we don’t act to secure affordable, reliable gas, many businesses risk closure or moving offshore. 

“The Australian Energy Market Operator forecasts major shortfalls from 2028. This is a major concern for businesses.

“The big cities have long benefited from regional NSW’s golden triangle of manufacturing, agriculture and mining working together to drive our economy.

“All of this relies heavily on gas. Generating more gas supply will help strengthen our industrial and manufacturing spine.”

Mr Hunter also made comment on a proposed east coast gas reservation scheme.

“Establishing an east coast gas reservation could help to keep more gas onshore for local users, stabilising prices and improving supply certainty,” Mr Hunter said.

The report found:

• A supply crunch is coming: Despite approvals, projects like Narrabri are still stalled. Without new supply, shortages are inevitable.
• Key industries at risk: Gas is crucial for industries such as fertiliser production, alumina refining, and food processing, where electrification isn’t feasible. Volatile prices and insecure supply have already pushed some manufacturers to the brink.
• Economic fallout: With the $33 billion coal export market in decline, gas is needed to fuel new clean industries like green steel, fertiliser, and advanced manufacturing.
• Grid reliability in jeopardy: Gas provides critical firming for electricity supply as coal retires and renewables ramp up.

To safeguard jobs and investment, Business NSW is calling for immediate action:

1. Accelerate new gas supply: Fast-track Narrabri, streamline approvals, and expand LNG import capacity.
2. Treat gas infrastructure as strategic: Secure pipelines, storage, and networks for both natural gas and renewable alternatives.
3. Build a renewable gas market: Back biomethane and hydrogen to support emissions cuts in hard-to-electrify sectors.
4. Support energy transition stability: Implement a state-based capacity mechanism to keep the grid reliable.

 
MEDIA CONTACT: BEN PIKE – 0429 993 822