King sees sense on future gas policy but must endure

The Albanese government has bowed to reality with its renewed commitment to gas but must now stare down the misguided outrage of fringe politicians and activists to make it happen. The federal government has made its job more difficult by repeatedly indulging the false hopes of those who have rejected the use of gas as a transitional fuel as the economy phases out coal-fired power.

The government has finally realised gas has always been the crucial ingredient for decarbonisation, domestic manufacturing and maintaining good faith with our closest trading partners and regional allies. Switching to gas from coal has allowed the US to reduce emissions, something other developed economies have failed to match. On top of that, liquefied natural gas was the nation’s third-biggest export last financial year, making up 14 per cent of all export income.

Resources Minister Madeleine King on Thursday announced the government’s Future Gas Strategy, which is underpinned by six principles. These include a commitment to the bipartisan policy of net zero by 2050; affordable supplies of gas through the transition; new sources of gas supply; support for non-substitutable gas uses; continued choice for households; and remaining a reliable trading partner for energy, including LNG and low-emissions gas. The policy is a breath of fresh air when compared to the wrongheaded policies of some state governments, which have rushed to ban new gas appliances and forbid development of new reserves located close to where industry needs it most. Weak state leaders have allowed themselves to be cowed by the same agitators who will work to disrupt the federal government’s latest plans. As have the banks, with ANZ confirming on Thursday it would extend funding to future oil and gas extraction projects only in the event of a national emergency. Environment groups were quick to decry Ms King’s blueprint for gas as sounding “more like Scott Morrison’s ‘gas-led recovery’, not Anthony Albanese’s ‘renewable energy superpower’ ”. In reality, it is the difference between the responsibility of government and the luxury of perpetual protest. As would be expected, the Greens and teals have shown their true colours, declaring their hostility to the federal government’s plans. Greens leader Adam Bandt warned the gas expansion strategy “puts Labor’s legislative agenda at risk”.

Ms King is correct to say that turning off gas overnight would do untold damage to our economy, impede efforts to get to net zero, and have a severe impact on our region. Australian Energy Producers chief executive Samantha McCulloch said the new gas strategy was an opportunity to reset gas policy nationally, laying the foundations for meaningful reforms, more regulatory certainty, new supply projects, and to restore Australia’s reputation as a reliable energy partner. Chemical and fertiliser giant Orica provides an example of the high stakes. The company has invested $1.5bn in overseas assets in the past six months rather than in Australia because of what it says are unsustainably high domestic gas prices. Orica boss Sanjeev Gandhi said Australia risked losing more manufacturing because gas prices had tripled in the past 10 years, while in the US they were at record lows.

Ms King can expect plenty of opposition to her plans to unwind the sovereign risk introduced by a series of bad policy decisions since the Albanese government came to office, including from her own side of politics. It is important that she prevail and the government deliver on its commitment to encourage new gas development and freedom of choice for households. Without adequate supplies of gas, any hopes of cheap power and a Made in Australia future for manufacturers will be nothing but a pipe dream.