By Nick Toscano
Anthony Albanese’s decision to stare down the Greens and back a four-decade extension of one of Australia’s worst-polluting industrial plants will be the first of many steps he takes to lock in future supplies of natural gas.
It was a controversial call he didn’t want to make before the election, and for an obvious reason: the fate of Woodside Energy’s North West Shelf project – a series of offshore gas platforms and the Karratha gas-processing facility – had become the new front line in the long-running fight between the gas industry and Australians demanding faster action on global warming. So the government pushed back the deadline to the end of May.
Woodside’s gas plant at Karratha in Western Australia.Credit: Aaron Bunch
Campaigners likened the extension plan to a “carbon bomb” that would endanger climate commitments and lock in emissions equivalent to a decade of Australia’s current annual total – if factoring in emissions caused by burning the gas overseas.
But back in power with an even larger majority, Albanese and his newly minted environment minister, Murray Watt, this week gave the provisional green light for the Woodside-led North West Shelf joint venture to keep producing gas for another 45 years, out to 2070.
In doing so, they also gave the strongest signal yet that Labor is prepared to support the ongoing need for more gas infrastructure and drilling programs across the country to keep pumping out supplies of what it considers to be a necessary “transition fuel” on Australia’s pathway to a cleaner economy with net zero emissions.
“It’s net zero, not zero,” Albanese remarked in the days before the decision. “You can’t have renewables unless you have firming capacity – simple as that.”
Make no mistake, the Albanese government is leading Australia through one of the fastest and most ambitious shifts to renewable energy anywhere in the world. Last year, wind turbines, solar panels, hydroelectric dams and big batteries supplied about 40 per cent of our electricity, and the government is trying to double that by 2030, with a target for renewables to meet 82 per cent of the grid by then.
But Labor has long been caught in a fight over the future of natural gas – a fossil fuel that burns more cleanly than coal but is still a main source of harmful greenhouse gas emissions that are overheating the planet.
In a world that has to get more serious about ratcheting up climate action, the Greens and other advocacy groups argue the role for natural gas must be extremely limited and phased out as quickly as possible – not prolonged for decades. Even some executives in Australia’s emissions-intensive mining industry described this week’s 40-year extension of the North West Shelf as a “backwards step” that will cement decades of fossil fuel dependence.
“More than that, it raises questions about how we define climate ambition in Australia,” said Dino Otranto, chief executive of iron ore miner Fortescue.
In 2022, the Albanese government went against the advice of its most senior energy officials and locked gas out of its flagship underwriting program designed to spur investment in new energy projects, known as the Capacity Investment Scheme, which it confined to renewables only.
But the government has had to confront truths about Australia’s green energy transition, which has led it to adopt a more forcefully supportive stance towards the future of gas.
One is that the Australian Energy Market Operator is worried that the build-out of renewables, batteries and power lines is simply not happening at the scale and speed to compensate for impending closures of more coal-fired power stations, which raises the need for fast-start gas turbines to plug critical gaps. Another is that the switch from household gas stoves and heaters to electric alternatives is not happening fast enough either. At the same time, Australia’s biggest legacy gas fields in Bass Strait are drying up so rapidly that officials are forecasting winter gas shortages in Victoria and NSW within as little as three years unless more local supplies become available.
Meg O’Neill, chief executive of Woodside, pointed to an unmistakable shift in the national conversation around gas over the past couple of years. “There’s greater recognition that we need to manage the pace of the energy transition,” she said.
The federal government appears to agree. Last year, it finalised its “future gas strategy”, which set out unequivocal support for an expanded gas industry to help drive Australia’s energy transition, and that of countries overseas, who buy liquefied natural gas (LNG) cargoes for energy security and decarbonisation.
The North West Shelf provides about 14 per cent of WA’s domestic gas needs, while most of its gas is super-chilled to LNG, loaded onto ships and sent to customers across Asia.
The Karratha extension approval opens the door for Woodside to progress a $30 billion proposal to develop the nearby offshore Browse basin, considered one of the country’s largest untapped gas resources, which will also require federal permitting.
There are other projects, too, that may stand to benefit from increased state and federal government support for gas in de-risking the energy transition, such as investments in new pipeline infrastructure, or the development of Australia’s first LNG import terminals in either NSW and Victoria, which could receive shipments of LNG from other parts of the country or overseas.
What remains to be seen is whether it will shift the outlook for contentious fracking projects in the Northern Territory’s Beetaloo Basin, or Santos’ Narrabri gas project in northern NSW, which could deliver up to half of NSW’s natural gas needs, but has faced years of legal appeals and objections from environmental activists, some landholders and the Gomeroi traditional owners, who fear it could inflict irreversible damage on their culture, lands and waters.
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