Greens gas policy ‘raises sovereign risk’

A Greens plan to divert LNG gas exports to the domestic market has been seen as a ‘confession’ that gas is important to keeping the lights on in Australia and driving down electricity prices.

Greens leader Adam Bandt. Collage: Frank Ling

The Greens have been accused of raising the nation’s sovereign risk profile by proposing to tear up LNG export contracts and divert supply to the domestic market, damaging Australia’s international standing.

Opposition resources spokeswoman Susan McDonald also said the Greens’ plan amounted to a “confession” that gas was “not only important to keeping the lights on in Australia, but also bringing down electricity prices”.

Resources Minister Madeleine King warned that Greens leader Adam Bandt’s plan to demand legislation in a minority parliament restricting LNG export contracts would destabilise international relations and trash Australia’s global reputation.

“It’s somewhat ironic that in proposing to tear up Australia’s long-term export contracts, the Greens political party proposes to vastly oversupply the domestic market with an order of magnitude increase in domestic gas,” Ms King said. “The Albanese government believes in renewable energy firmed by gas, not the other way around.”

Ms King said that in “proposing to cancel our longstanding LNG contracts with regional trading partners, the Greens would trash our reputation as a stable investment destination and turn the lights off in countries that depend on Australian gas for their energy security, all the while articulating no credible plan to actually get surplus gas to where it is needed on the east coast”.

She said Labor’s mandatory code of conduct had secured more than 600 petajoules of gas for the domestic market.

“The heads of agreement continues to ensure contracted gas from our east coast gas exporters is offered to the domestic market first, and the Australian domestic gas security mechanism remains a mechanism of last resort to prevent gas supply shortfalls in the domestic market,” Ms King said.

Mr Bandt told The Australian last week the Greens in the next parliament would push for LNG exports to be restricted, electrification of LNG terminals, and much greater government support to transition industry and households off gas.

Senator McDonald said the Greens’ plan was an admission “renewables-only energy policies not only haven’t worked, but won’t work into the future. Why else would they now be saying more gas is needed in Australia?

“Families and businesses everywhere have been crippled by the energy costs under Labor. For the Greens to now say that corporations should be keeping more gas in the domestic market is confirmation that gas is needed into the future.”

Following Mr Bandt’s comments, Australian Energy Producers chief executive Samantha McCulloch said demand for LNG in Southeast Asia was “expected to increase by a factor of 10 by 2050 under some International Energy Agency scenarios”.

Ms McCulloch said it would be “shortsighted and at odds with Australia’s commitment to global emissions reductions if we were to stifle LNG exports and miss out on the significant economic opportunity on our doorstep”.

“Compromising regional LNG relationships would run counter to this commitment and create significant sovereign risk that would undermine the investment needed in Australia’s broader energy transformation,” she said.

“As well as being central to energy security and regional decarbonisation … LNG exports drive enormous economic benefits, including $92bn of export earnings in 2022-23 that underpinned an estimated $17bn in direct payments to governments.”