Origin Energy boss Frank Calabria says Santos-backed GLNG could coexist with export permits
Origin Energy’s chief wants urgent and significant action on Australia’s decarbonisation timeline, which is way behind. He also risks a showdown with Santos boss Kevin Gallagher over gas exports.
Origin Energy chief executive Frank Calabria has declared Australia’s energy market is “no longer working” to deliver affordable, reliable power capable of facilitating the transition to renewables, and sought urgent reforms, including limiting Santos-backed GLNG’s ability to buy gas from the domestic market.
Mr Calabria said governments must act swiftly to prevent further delays to the exit of coal, ensure robust community support for decarbonising, and reconcile Australia’s role as a major LNG exporter while also addressing a looming gas shortage.
“Current policy settings in both electricity and gas markets are no longer delivering the required outcomes for the market or customers, and reform is urgently needed,” he said at Origin’s annual meeting.
And he countered Santos’s position that linking LNG export approvals to domestic gas supply obligations would imperil Australia’s most important trade links.
The remarks highlight the deepening frustration across the sector at the pace of reform, amid warnings that the rollout of new renewable energy projects is lagging behind schedule, and that the east coast faces a gas shortfall before 2030.
The Australian Energy Market Operator expects nearly all coal-fired power stations to retire by 2037, though Queensland’s revised energy plan suggests the fossil fuel will remain part of its mix into the 2040s. Even so, coal faces intensifying economic and social headwinds, leaving Labor under mounting pressure to accelerate investment in zero-emissions generation to meet its goal of sourcing 82 per cent of electricity from renewables by 2030.
To that end, the Albanese government has pledged to underwrite wind, solar and battery projects under its capacity investment scheme — the centrepiece of its transition plan. But it too has been hampered by slow planning approvals, transmission delays and community opposition, with the Clean Energy Regulator conceding the scheme has not met expectations.
The slow rollout has raised doubts about the planned closure of Origin’s Eraring coal plant, the largest source of electricity in New South Wales. Under a deal with the state’s Labor government, the plant is due to close in 2027, though Origin retains the option to keep it in business until 2029.
Some analysts now believe it could keep Eraring running into the next decade. Mr Calabria, however, said that was not Origin’s “base case” scenario.
The capacity investment scheme is built around a 2030 timeline and offers developers guaranteed returns. Yet industry leaders argue the policy overlooks the need for longer-duration projects such as large-scale storage and pumped hydro that are costly and take years to develop. Without them, Australia’s power system remains vulnerable when the wind isn’t blowing or the sun isn’t shining.
Mr Calabria’s comments came as a new report from consultancy Alvarez & Marsal has warned that Australia’s $120bn clean energy transition risks stalling unless governments move to de-risk the market and give investors greater policy certainty. Based on discussions with more than 40 senior energy executives and investors, the firm found that capital was “ready and willing” to flow into projects, but that long lead times, inconsistent regulation and collapsing project returns had left the sector on “shaky ground”.
The report argued that the main barrier to progress was not the availability of funding, but the lack of a stable investment framework. It called for blended finance models combining public and private capital, and nationally consistent policy settings to unlock large-scale deployment. “Australia has both the ambition and the capital,” A&M managing director Ellie Atkinson said. “What’s needed now is a stronger bridge between the two.”
The warnings of a slow renewable energy rollout also highlight concerns about gas.
Gas remains a critical stopgap, used to balance the grid during periods of high demand or low renewable output. But AEMO forecasts the east coast will face a supply shortfall as soon as 2029, a prospect that risks widespread economic disruption.
To head off the crunch, Labor is weighing a major intervention that would link LNG export approvals to domestic gas supply obligations. Under that model, revealed by The Australian, exporters would have to prove they supplied a minimum share of gas to Australian users before receiving approval to sell cargoes to Asia.
Producers with surplus supply — such as Origin’s Australia Pacific LNG and Shell’s Queensland Curtis LNG — could generate tradeable credits, sold to exporters like Santos’ Gladstone LNG project. GLNG relies heavily on third-party gas purchases to meet long-term export contracts, including with customers in China, Japan and South Korea.
The plan would hit Santos hardest, forcing it to boost production or acquire credits. Santos chief executive Kevin Gallagher has warned that the proposal risks breaching existing export contracts and jeopardising key trade relationships.
But Mr Calabria dismissed those concerns, saying QLNG could balance domestic obligations with export commitments.
“Export permitting does not break the sanctity of those contracts. It would require more gas to be sourced domestically and provide it domestically,” Mr Calabria said.
Origin’s stake in APLNG gives its chief executive a direct interest in the debate, but his comments will likely stiffen Labor’s resolve as it weighs one of the most far-reaching interventions in the east coast gas market in years.
Mr Gallagher said Santos’ ability to contribute more domestically has been constrained by delays to its Narrabri project in NSW. The long-stalled venture, endorsed by the premiers of NSW and South Australia, could meet up to half of NSW’s daily gas demand, although there are questions over Santos’ capacity to fund the project alone.
Mr Gallagher has indicated he is open to partners.
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