Labor can’t hide its spectacular hypocrisy on gas

Minister for Climate Change and Energy Chris Bowen during Question Time at Parliament House in Canberra. Picture: NCA NewsWire / Martin Ollman

Last week, Resources Minister Madeleine King released the Future Gas Strategy in which gas would play an important role in Australia’s economic and energy future. She listed several uses for gas as part of the transition to net zero by 2050. They include use by households and manufacturing as well as for firming the electricity grid. The need of our trading partners for our gas so they can meet their net zero commitments was also mentioned.

When discussing the strategy, she was careful with her words. She talked about the policy being “based on facts and data, not ideology or wishful thinking”. She is clearly not certain of the support of her cabinet colleagues.

The release of the document would no doubt have had some members of Labor’s left faction and the Greens seeing red. After all, it was only in 2021 that federal Labor’s climate and energy spokesman, Chris Bowen, was declaring that the Coalition’s policy to promote the development and use of gas was a “fraud”. According to Bowen, now Energy Minister, “it’s a slogan, not a policy. There’s not one job created, and there won’t be a job created of this alleged gas fired recovery”.

Three years on, it would seem federal Labor could be about to change its tune, although this outcome is not assured. Confronted by an increasingly fragile electricity grid, rising energy prices and gas-dependent manufacturing plants either closing or threatening to close, the only conclusion is to encourage exploration for gas as well as the development of new gas reserves. This is made more urgent by the rapid depletion of the reserves in Bass Strait.

When the Grattan Institute declares the decarbonisation of the National Electricity Market is not going well, we should realise that real and imminent threats to affordable and reliable electricity now exist. Only last week, the NSW grid came close to collapsing with some generators offline. There was insufficient electricity from either Victoria or Queensland to avert the problem. Spot prices spiked and the Australian Energy Market Operator was forced to intervene and cap prices. Compensation will be paid to generators down the track.

In the near future, we should expect more of these types of events, particularly as the coal-fired plants are becoming more unreliable as they age. At some stages of most days, South Australia is completely dependent on electricity from Victoria. When the Victorian coal-fired plants are all closed, it’s not clear what South Australia will do other than rely on gas and diesel. Batteries are expensive and of limited duration. There is a real possibility of all the states doing their own thing.

It is surely ironic in this context that the Victorian and now NSW governments are handing out secret payments to the owners of some coal-fired plants, even though the emissions content of gas-fired plants is about half that of coal. It’s like having one foot on the accelerator – by subsidising investment in renewable energy – and the other on the brake by extending the lives of coal-fired plants. It’s bizarre.

Minister for Resources and Northern Australia Madeleine King

But the hapless Energy Minister in Victoria, Lily D’Ambrosio, is so vehemently opposed to gas that the government has banned the reticulation of gas to new homes in the state. She has also led the charge against including gas (or coal) in the capacity mechanism that should in theory help to stabilise the grid. She has likened King to a “Coalition minister”. The Andrews’s Labor government even went to the trouble of prohibiting fracking for gas in the state’s Constitution.

The point is that the opposition to gas is both irrational and deep-seated in Victoria, notwithstanding the fact that a disproportionate number of Victorian households use gas for their heating and cooking needs. We should not expect this to change under Labor.

There is also widespread hysterical resistance to gas in NSW, including among members of the Liberal Party. Notwithstanding the operator of the much-delayed Narrabri project guaranteeing that all the processed gas will be for domestic use, consecutive governments have made it close to impossible for this project to proceed.

Some trade union leaders are likely to see the sense in the King approach. The fact that the international Mars corporation pointed out its six Australian plants are among the most expensive in the world was quite deliberate. Food processing is highly dependent on gas; there is no future for food processing here unless we have affordable and reliable gas.

There are other manufacturing plants that are vulnerable as well. What is the point of throwing taxpayer money at new plants under the Future Made in Australia scheme while existing plants are closing down? A recent example is the Qenos plants in Sydney and Melbourne. Unfortunately, the list of things to do outlined by Madeleine King to promote the discovery and exploitation of new gas reserves is thin on the ground, particularly as the states are the key policy drivers for on-shore reserves. She may have more leverage for off-shore developments, particularly in Western Australia.Welcoming foreign investment in the gas industry assumes overseas players are interested. After the past two years of botched interventions, it’s fair to say Australia is not seen as a good place to spend investment dollars.

Lily D'Ambrosio

Much of the equipment (and people) needed to explore for and exploit gas have already left the country. The current network of pipelines is clearly inadequate and needs to be extended, but regulatory barriers abound.

Most states already work on the basis of ‘use it or lose it’ for reserved acreage. Allocating more land for carbon capture and storage, which is part of the Future Gas Strategy, is unlikely to hasten its development. The Queensland government has already vetoed a CCS proposal from resource company, Glencore.

The recent decision by the ANZ bank to cease funding all oil and gas projects, notwithstanding its acknowledged ongoing need for gas, is illustrative of the hostile environment in which the industry must operate. To say projects could be funded “if any national energy security issues arise” is just mindless nonsense: oil and gas projects generally take many years to achieve production.

The reality is King is correct in her analysis of the useful role gas should play over the coming years, particularly as a perfect adjunct to renewable energy. Bowen, using a very quiet voice, actually agrees. Albanese sees no conflict in handing over billions of dollars to subsidise renewable energy and the associated infrastructure while telling us that not a dollar will be spent on gas.

The likelihood is that this will go nowhere and a few years down the track, as we face even higher electricity prices, rolling blackouts and more plant closures, people will be asking how this has been allowed to happen. Just don’t blame Madeleine King.