Big business frantic bid to kill gas price cap

Big business will push Labor to abandon aggressive gas price caps past 2025 as major oil and gas producers make a last-minute appeal to middle Australia to support them during the nation’s transition to renewables.

Australian Petroleum Production & Exploration Association (APPEA) chief executive Samantha McCulloch. Picture: Tom Huntley

Big business will push Labor to abandon aggressive gas price caps past 2025 as major oil and gas producers make a last-minute appeal to middle Australia to support them during the nation’s transition to renewables.

As the Greens lobby to shut down the resources sector, the nation’s peak body is preparing to launch a multimillion-dollar nationwide advertising campaign touting the benefits of gas with industry figures estimating the sector provides $55bn in direct economic activity and more than 165,000 jobs.

Ahead of its national conference on Tuesday, the Australian Petroleum Production and Exploration Association chief executive Samantha McCulloch told The Australian that the public awareness campaign would show Australians “the important role of natural gas in ensuring reliable energy for Australian households and industry and in supporting the transformation of the energy system for net zero”.

“As an industry, we consider it important that Australians understand the role that gas plays in their everyday lives, in keeping the lights on and in manufacturing the products that we use every day,” Ms McCulloch said.

The government splashed $1.6bn on a sweeping electrification package in its budget, including $1.3bn in concessional loans to incentivise Australian households to transition off gas. While Anthony Albanese has backed gas as a crucial part of Australia’s energy transition, the government is pushing for the nation’s five million homes connected to gas to be more reliant on renewable energy.

Amid rising concerns from Australian gas producers that Labor’s market intervention – including price caps, a revamped safeguard mechanism and a new code of conduct – could stifle new investment in gas, Australian Chamber of Commerce and Industry (ACCI) warned against stringent price caps being imposed for longer than necessary.

In a new submission to the federal government’s consultation on its proposed mandatory code of conduct, the peak body said a heavy-handed regulatory approach had “the potential to impair the market and deter crucial investment in the industry”. It notes that the proposed mandatory code will provide temporary relief to gas-reliant businesses that face spiralling prices, but argues against the price cap being extended to 2025 and beyond. It also warned the introduction of exemptions from the code to be granted at the discretion of ministers would add “significant complexity and uncertainty to the gas market”.

Woodside's Cossack Pioneer oil production facility in the North West Shelf (NWS) gas project.

Australian Industry Group climate change and energy director Tennant Reed said “an aggressive and binding set of caps on gas should not outlive the emergency that inspired them” ahead of its formal submission to be released this week. The proposed mandatory code of conduct should be “at the bottom of a list of fears for new investment”, he said.

Opposition climate change and energy spokesman Ted O’Brien accused Labor of “trying to kill the gas industry” and that gas would play a critical role as baseload power stations close.

But a spokesman for Energy and Climate Change Minister Chris Bowen said Labor’s mandatory code of conduct incentivised LNG exporters to make long-term commitments to the domestic market at a reasonable price while remaining a reliable source of supply for trading partners.

Energy Users Association Australia chief executive Andrew Richards said gas would play a central role during the nation’s transition towards renewables, but that some guardrails must be in place on industry to ensure ­consumers and manufacturers had access to affordable energy.