Shell calls on Australia to consider carbon price to end uncertainty

Energy giant Shell has called on the federal government to consider a carbon price and end political backflips on energy.

Shell Australia chair Zoe Yujnovich. Picture: Frances Andrijich

Energy giant Royal Dutch Shell has called for the federal government to consider a carbon pricing mechanism and end political backflips and policy turmoil warning ongoing paralysis in Canberra is damaging investor confidence.

Shell, Australia’s biggest LNG exporter and one of the world’s largest oil companies, said the industry needs more clarity on policy from Canberra before it can invest and bring new supply to customers.

“Part of the role for government will be to encourage consumers and businesses into lower carbon choices, perhaps through government-led carbon-pricing mechanisms that avoid the pitfalls of previous designs,” Shell Australia chairman Zoe Yujnovich said in a speech to the Melbourne Mining Club on Wednesday. “We are the ones who will need to advocate in a united way for parties to take a politically durable, bipartisan approach: our united advocacy can send strong signals for policy direction to provide investors with comfort and security.”

The call by such a large industry player to reintroduce carbon pricing ahead of a looming federal election may spark tension within the Liberal party five years after its former leader Tony Abbott dismantled the so-called carbon tax, citing economic concerns.

Prime Minister Malcolm Turnbull settled on the national energy guarantee as a compromise to end partisan warfare, but his signature policy was subsequently dumped under Scott Morrison’s leadership.

Shell says political tensions are “reaching a peak” ahead of a federal election with the lack of settled policy impacting companies as they weigh investment decisions.

“Energy and climate policies look set to be prime battlegrounds for the hearts and minds of voters. We’ve all seen how difficult it is for all parties, irrespective of their ideology, to explain and sell these policies to political opponents and disenchanted voters,” Ms Yujnovich said. “In the time since World War Two, up to the defeat of John Howard in 2007, Australia has 11 prime ministers. Since 2007 Australia has had six: five lost their tenure one way or another over climate and energy policy.”

Big business needs to advocate for cross-party agreement on energy and climate policy, Shell said.

“Majority government as increasingly hard to form as disenchanted voters opt for micro-parties. All of us here today should be concerned about this, as our resources projects span several terms of governments and the last thing this industry needs are policy backflips and turmoil,” Ms Yujnovich warned. “The forthcoming election should signal to the legislators and policy makers what Australians want: cross-party agreement on energy and climate policies.”

Shell is one of the dominant players in Australia’s booming energy sector, operating the QCLNG export plant in Queensland, the Prelude floating LNG project off northern Australia along with stakes in Western Australia’s North West Shelf, Gorgon, Browse and Sunrise LNG ventures and gas business Arrow.

The producer has been among companies blamed by politicians for contributing to a domestic gas price squeeze in the last few years due to LNG export plants like its QCLNG facility shipping local gas to Asian buyers.

However, Shell said gas exports from the state were necessary to unlock the huge Queensland coal seams.

Without its investment, Australia would be relying on LNG imports despite having huge gas resources in the ground, according to Ms Yujnovich.