Energy fight in Labor Right faction meeting

Labor’s opposition to the expansion of the Clean Energy Finance Corporation has sparked a stoush in the Right faction.

Joel Fitzgibbon is pushing for a reform that would create a new fund to stabilise the grid and allow for more renewables to enter the system. Picture: Gary Ramage

Labor’s opposition to the expansion of the Clean Energy Finance Corporation has sparked a stoush in a meeting of the party’s Right faction, with pro-­resources MPs Alex Gallacher and Joel Fitzgibbon lining up against legal affairs spokesman Mark Dreyfus.

The argument during a meeting of right-faction MPs on Monday came ahead of the release of a report by the competition watchdog warning that the east coast faced gas supply shortages from 2024.

The Australian Competition & Consumer Commission gas inquiry interim report showed prices dropped during the pandemic, from $8-$14 a gigajoule in the second half of 2019 to $6-$8 a gigajoule by mid-2020.

“Forecast production ... will be insufficient to meet forecast demand in the east coast from 2026,” the report, to be released on Tuesday, says. “In the southern states, there is a potential for a shortfall of 30PJ to emerge as early as 2024.”

Energy Minister Angus Taylor said he was concerned with findings in the report that “Australian gas users are not always receiving internationally competitive prices”.

Josh Frydenberg said the government had set “firm expectations for gas producers to put Australians first” and flagged further reforms in the sector if prices for domestic users did not come down.

On Monday night, Senator Gallacher spoke out against Labor’s decision to oppose the creation of the Grid Reliability Fund. The $1bn fund will be managed by the CEFC and encourage investment in hydro, gas and battery projects, as well as transmission and distribution ­infrastructure.

Former climate change minister Mark Butler opposed the government’s reforms, saying it would encourage the green bank to invest in gas, with the party’s new spokesman on the issue, Chris Bowen, retaining the ­position.

Labor is pushing an amendment that would exclude investments in gas from the fund.

Labor sources said Mr Dreyfus delivered a “condescending” and “patronising” rebuke to Senator Gallacher, a former president of the Transport Workers Union, saying he was “surprised you don’t know better” and the government planned to use the fund to prop up gas projects.

Mark Dreyfus. Picture: AAP

Alex Gallacher

Mr Fitzgibbon told Mr Dreyfus he was “wrong” and misunderstood the bill debated in the House of Representatives on Monday. He told MPs the reform would create a new fund that would be used to stabilise the grid to allow for more renewables to enter the system.

Mr Fitzgibbon said Scott Morrison would gain electoral advantage by accusing Labor of opposing jobs created by the projects supported by the fund.

He joked he was speaking despite “not wanting to have a stoush with Mark Dreyfus”, given the pair have exchanged heated words over the past year.

Senator Gallacher told The Australian there was nothing wrong with a government fund investing in gas projects to balance the growth of intermittent renewables.

“This is actually evidence of the success of the climate change advocates that we now face unreliability in the sector,” he said. “My view is: so what if they want to do a bit of gas?”