Gas industry cries foul as Environmental Defenders Office gets green light for funding

Australia’s LNG industry had been assured the federal government would close a legal avenue hampering the industry, but now a chief antagonist has been cleared for ongoing funding.

The Environmental Defenders Office can continue to receive taxpayer funding after an independent report cleared the agency of wrongdoing, although the federal government will demand assurances about its behaviour following an official probe.

The findings will allow the climate action legal group to mount more legal challenges to offshore gas developments, stoking ­tensions with Australia’s LNG ­industry.

Federal Environment Minister Tanya Plibersek earlier this year commissioned a report into EDO’s conduct after the Federal Court lashed the taxpayer-funded group for its behaviour in a failed attempt to stop Santos from laying a pipeline for its $5.4bn Barossa LNG development.

The report by global law firm Norton Rose Fulbright could have jeopardised funding for the EDO.

The federal government in 2022 allocated nearly $10m to the EDO and more than $2m for four years, attached to specific conditions. Funding to the EDO is supplemented by donations from the public and benefactors.

Norton Rose Fulbright said it found no evidence that the EDO conducted fraud or breached the conditions of the taxpayer grant.

Still, the report concluded that the Department of Climate Change, Energy, the Environment and Water should work to implement “additional assurances” in relation to the EDO grant agreement, including milestone reporting.

It will also “negotiate variations to the grant agreement to expressly clarify the standards expected” by the government.

Environmental Defenders Office chief David Morris.

EDO chief executive David Morris welcomed the findings of the report, which he said safeguarded the long-term viability of the legal action group.

“We are proud to deliver high-quality legal services under the terms of the federal government’s grant agreement, and to represent those seeking to exercise their right and to protect nature and the climate. Without federal support, many Australians would be unable to access the legal system or participate fully in environmental decision making,” Mr Morris said.

But in an indication of the anger felt in the industry, 3D Oil managing director Noel Newell, who is also a board member of the peak lobby group Australian Energy Producers, said the decision indicated the government’s recent commitment to gas was just lip service.

“In recent times offshore developments have been seriously delayed, in some cases years, or mothballed by the broken environmental approval process,” he said.

“The industry is not asking for short cuts or fast track legislation, but just clear guidelines and timelines for all stakeholders to be able to move forward.

“Currently there are no timelines for the environmental approval process.

3D Oil managing director Noel Newell.

“It is disappointing that the government appears to be walking back from its commitment to address offshore approvals uncertainty and doing deals with the Greens at the expense of ensuring reliable and affordable gas supply for Australians.”

Bill Townsend, senior vice president at Japanese gas giant Inpex, which has developed the Ichthys LNG project in Darwin, said the company had welcomed the government’s recent commitment to gas – but a consistent approach was needed.

“As a long-term investor, Japan’s largest investor in Australia, we strongly advocate for stable and predictable policy settings including clear and streamlined approvals pathways, with reduced red and green tape,” said Mr Townsend.

“These policy settings are essential to enable the net zero goals of Australia and the region, given natural gas will continue to play a key part of the energy mix well into the 2050s.”

While the EDO continues to highlight its right to challenge new LNG projects, Australia’s resource industry hopes its recent legal victory and counteraction will deter them.

Santos chief executive Kevin Gallagher last week said he believed the company’s legal victory against the EDO had created a legal precedent.

“I think ultimately the case that we were successful in January has created some new strong case law, which is giving everybody a lot more confidence,” Mr Gallagher told the Macquarie Australia Conference in Sydney.

Santos chief executive Kevin Gallagher.

Santos in April sought a subpoena to access communications between the EDO and four climate activist groups, in a bid to determine the identities of the financial backers behind the debunked legal claim, action seen by the environmental activists as an attempt to cut off its future ­funding.

The ruling will further inflame tensions between Labor and the LNG industry, which has a decision by the Albanese government to abandon a commitment to provide regulatory certainty, saying it is a betrayal of its broader support for the gas sector.

Labor on Thursday withdrew legislation that would have closed a legal avenue exploited by environmentalists to curtail new LNG developments, after striking a deal with The Greens for support of its wider legislative agenda.

The decision may threaten one of Australia’s most important industries and exacerbate concerns about regional energy ­security.

MST Marquee energy analyst Saul Kavonic.

Government sources said it did not abandon the pledge, and rather would continue to consult and refine it, so it could pass through parliament.

LNG is typically exported, but bolstering supplies of gas would help put downward pressure on domestic prices.

MST Marquee energy analyst Saul Kavonic said regulatory uncertainty would curtail the prospect of new LNG developments in Western Australia and the Northern Territory where the bulk of Australia’s new prospective projects are found, due to recent resource discoveries and state backing for the industry.

Woodside has yet to make a final decision on Browse project, which was developed by Shell, BP, PetroChina, Mitsubishi and Mitsui and is believed to be Australia’s largest untapped gas resource, while Santos is hesitant about proceeding with the Dorado project in Western Australia until it has certainty on the approvals process.

Originally published as Gas industry cries foul as Environmental Defenders Office gets green light for funding