Big users issue call to act on energy emergency
What’s good for Snowy Hydro is good for gas, big energy users are telling Canberra.
Australia’s big energy users will hold urgent talks with the federal government requesting emergency gas market measures to ensure heavy industry can stay afloat amid opposition from top producers to government intervention in the sector.
The country’s largest gas consumers — represented by the Energy Users Association of Australia — plan to meet Resources Minister Matt Canavan and Energy Minister Angus Taylor to push for a short-term domestic gas support fund, which may halve the price of gas, and the establishment of a commonwealth gas company to ease pressure on the industry.
Policies pursued by the Coalition in the electricity sector — including underwriting generation and “big stick” enforcement — should be broadened to the gas industry to prevent the closure of industrial facilities.
“The government are up to their neck in the electricity market and if Snowy 2.0 is built it’s the most significant energy generator in the country,” EUAA chief executive Andrew Richards told The Australian.
“If they’re comfortable with that model, it’s good enough to replicate some of the same ideas in the gas sector.”
The Resources Minister said he would meet with gas users and listen to their concerns.
“What we need to see to fix this is a greater supply of gas,” Mr Canavan said.
“The best time to have started getting more supply was probably 10 years ago but the next best time is tomorrow.”
Competition regulator Rod Sims and major commercial users including Orica, Incitec Pivot and Brickworks, have sounded the alarm on soaring energy costs as they struggle to compete with international rivals that enjoy cheaper tariffs, despite having less natural resources.
Chemical giant Dow revealed yesterday it would shut its Altona manufacturing facility in Melbourne, with the loss of 26 jobs, partly due to high energy costs.
Despite the tough market, major east coast gas producers insisted they remained wary about the potential for government intervention and ruled out the prospect of subsidising customers just to keep them in business.
Energy giant ConocoPhillips — operator of the Darwin LNG plant and part-owner of the $25 billion Queensland APLNG project — said international gas producers shouldn’t be subsidising local industry.
“Australia’s policies are somewhat uncertain, with calls for government intervention raising concerns here,” Conoco chief executive Ryan Lance told the APPEA industry conference in Brisbane yesterday.
“We are concerned about proposals our industry subsidise other industries. We believe that would compromise market competition and jeopardise investment in gas resources needed for the future.”
Incitec Pivot has implored the government to think about new policies, including domestic gas reservation and even the revival of last year’s abolished national energy guarantee. But Conoco said intervention was a step too far.
“We recognise that Australia wants to sustain domestic industries and their jobs and their economic benefits. But the best way to do this is by expanding resource access. We believe more Australian resources await discovery and development,” Mr Lance said.
One of Australia’s largest gas producers, Santos, said manufacturers should not be advocating domestic price controls.
“I support free market economics and trade and I’m not a fan of subsidising other industries,” chief executive Kevin Gallagher said.
“It’s unrealistic for manufacturers to expect price controls. Reduction in prices will come with scale and new supply.”
Shell said Australia was failing to make the most of its vast resources, partly due to government decisions to freeze exploration.
“Swathes of southern Australia, onshore and offshore, are being locked up, preventing development,” Shell’s Australian boss Zoe Yujnovich said.
“It should be unthinkable that a resource-rich country like Australia is prevented from looking after the energy needs of its own people and helping to lift the hundreds of millions of people around the world out of energy poverty.”