Australian gas industry pushes end date to code of conduct
Australia’s gas industry reluctantly accepted the code of conduct imposed on it by the Albanese government, but now the sector wants clarity about how it can be lifted.
The Australian government should immediately set the terms for how the mandatory code of conduct that has been enacted on the local gas market will end, the head of the energy industry body has urged.
The Albanese government late last year moved to establish a mandatory code of conduct on Australia’s gas industry, the centrepiece of which includes a cap on uncontracted gas at $12 a gigajoule until 2025. It said it would put pressure on prices for households and businesses without disincentivising much-needed new developments to fill a looming supply shortfall across NSW and Victoria.
The introduction, however, saw the market enter into a state of paralysis, with work on several developments paused as developers said they were exposed to unspecified risk.
A spate of concessions offered by Labor has seen an uneasy truce emerge, but the Australian Energy Producers chief executive Samantha McCulloch said the government must move to define the criteria for how the government lift what it said was unnecessary intervention.
“It is critical that clear and objective terms of the review are established now,” said Ms McCulloch.
“We need to look at how we get back to a market-based system that provides long-term price signals for investment.”
Energy users, many of whom are unable to switch to alternative energy sources and have been struggling with crippling costs, said they would support an end of the code of conduct in 2025 if the gas industry had proven it would aid domestic customers.
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Energy Users Association of Australia CEO Andrew Richards said he supports a free market, but the onus is on the gas industry to demonstrate the legislation is not required from 2025.
“At the end of the day, we are market purists. We want markets to work. As soon as there is a competitive market, then we can remove things like the price cap. This is not something we wanted to do, but it was something we had to do because we didn’t have any alternative,” said Mr Richards.
While the legislation was aimed at easing local price pressures on users, Labor must incentivise new gas developments. Australia’s east coast gas market is facing a material shortfall in the next few years as traditional supplies run dry and proposed new developments struggle to secure regulatory and social licences.
Illustrating ever-growing tight supplies, the Australian Consumer and Competition Commission said the east coast had sufficient supplies for the until early next year, but analysts said the surplus is thin and could be eroded quickly.
Still, Australia’s gas industry remains frustrated by ongoing delays in regulatory permissions for projects, which executives say is indicative of the lukewarm attitude of the government towards gas.
Anthony Albanese earlier this year rejected allegations his government was not supportive of gas, insisting the fuel source was vital for manufacturing and allowing Australia to transition away from coal.
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