Greens seal deal: PM pushes residents to get off gas

Anthony Albanese will offer households financial incentives to switch from gas to electricity in uncosted deal with Greens.

Gas and energy chiefs warned Anthony Albanese his energy plan could curtail investment in the Australian market. Picture: AAP

Anthony Albanese will offer households financial incentives to switch from gas to electricity in an uncosted deal with the Greens to wave through the government’s legislation to intervene on power prices.

The deal, announced by Greens leader Adam Bandt, could see households offered concessional loans to switch gas hot-water systems, or appliances such as ovens and heaters, to electric alternatives.

Moves to electrify homes came as the Prime Minister had a key meeting with gas and energy chiefs, who warned him his energy plan could curtail investment in the Australian market.

Confirmation the government had won the necessary support to pass its gas market bill – including a $12-a-gigajoule, 12-month cap on gas and $1.5bn in direct support to lower the electricity bills of ­welfare recipients and small businesses – came as the industry continued to warn the plan would create a less reliable power grid and push up energy prices.

Energy Minister Chris Bowen would not specify what mechanism the government would use to offer support to electrify households, which will be worked on with the Greens and announced in May’s budget. But he pointed to the example of discounted loans offered through the Clean Energy Finance Corporation to buy electric vehicles.

“This becomes, frankly, more relevant as interest rates are going up,” Mr Bowen said.

“A little while ago, you might not have had the same impact ­because interest rates were so low across the board. With interest rates rising, concessional rates can have a bigger impact.”

There were no costings ­attached to the deal with the Greens, as the government begins work on the design of the household support.

Adam Bandt said his party would vote for the gas market bill after negotiating a package targeted at low and middle-income earners, renters and public housing residents. Picture: Martin Ollman

Australian billionaire Mike Cannon-Brookes’ Grok Ventures estimated in May that converting the average Australian home to 100 per cent electric power would cost about $100,000 each.

Mr Bowen said the government’s energy package, endorsed by national cabinet, would take the “sting out of the tail” of energy bills, with expectations costs would still increase but households would on average be $230 better off.

A temporary $125-a-tonne cap on coal and a mandatory code of conduct that could result in a requirement for gas to be permanently sold at what the code defined as a reasonable price have also been announced as part of the government’s package.

The coal cap will be implemented by the NSW and Queensland governments and the code of conduct will be negotiated over the next couple of months.

Mr Bandt said his party would vote for the gas market bill after negotiating a package targeted at low and middle-income earners, renters and public housing residents, which would help them “get off dirty and expensive gas”.

He estimated households could save about $1900 annually by switching from gas to electrical appliances and almost $3500 to “fully electrify” their home.

“For too long, too many people have been barred from making that switch and enjoying those savings because there is an upfront cost associated with that,” Mr Bandt said.

A delegation of Australia‘s top oil and gas bosses met the Prime Minister on Wednesday. Sources described the government’s tone as “bolshie” and said there was little expectation from industry of any significant back down over Labor’s proposed price caps and code of conduct.

Energy Minister Chris Bowen would not specify what mechanism the government would use to offer support to electrify households. Picture: Gary Ramage

Those at the meeting were said to include Woodside chief executive Meg O’Neill, Origin Energy chief executive Frank Calabria, Shell Australia chairman Tony Nunan, Cooper Energy managing director David Maxwell and Australian Petroleum Production & Exploration Association head Samantha McCulloch.

The industry is understood to have raised concerns that the government’s plan would curtail investment in gas developments.

“We (Woodside) were on the verge of signing a deal last week and then when rumours of the market intervention were floated the customer said, ‘actually, we’re not comfortable signing the deal’,” Ms O’Neill told 2GB radio ahead of the meeting.

“That creates tremendous uncertainty for us.”

One of Australia’s most prominent energy investors, Allan Gray, savaged the Albanese government’s intervention in energy markets as an ill-conceived policy that picked winners.

“Setting a price cap and a reasonableness test will only make gas more valuable in the future,” Allan Gray portfolio manager Suhas Nayak said in a submission to the government. “That will dramatically reduce the incentive of producers to produce today because they may as well wait for higher prices.”

Before the deal with the Greens was announced, Peter Dutton urged the Albanese government to split the legislation so the Coalition could support the $1.5bn energy bill relief and reject the price cap on gas. The Coalition partyroom will meet on Thursday ahead of parliament sitting to finalise its position.

“The Prime Minister is clearly looking for a political wedge here because the Coalition’s been clear about our support of the $1.5bn, or support going to families who are really suffering under this ­government with increased energy costs,” the Opposition Leader said.

“The most important decision that the Prime Minister could ­arrive at is to bring more gas into the system. If he doesn’t do that at a time when there’s increasing demand, your electricity prices and your gas prices under Labor will continue to go through the roof.”

ACT independent senator David Pocock added his support to the bill, which he described as necessary to deal with rising fossil fuel prices, despite having previously lashed market intervention as “a Band-Aid on a festering wound”.

With the Greens on side and the backing of Senator Pocock and the Jacqui Lambie Network, the government doesn’t need the support of the Coalition to push the legislation – which has support from manufacturers, some business groups and ACOSS – through the Senate.

The Business Council of Australia warned the plan before parliament risked “kicking the energy can down the road” and hampering a smooth transition to net-zero emissions without a commitment to longer-term reform. “A mandatory code of conduct and price caps won’t deliver sustainable relief and will make our supply problem much worse over time,” BCA chief executive Jennifer Westacott said. “The worst thing for our transition and the community would be a system that simply flicks the switch off on old generation, driving price spikes, putting the reliability of the system at risk and sending perverse investment signals.”

Resources Minister Madeleine King said it was “not unreasonable” for Shell and Woodside Energy to suspend talks with buyers to supply new gas into Australia’s east coast, as they tried to understand how the market intervention would impact them.

Ms King said a national gas reservation policy had to be ­considered “given the extraordinary state of the market at the moment”.

“It is complicated to retrofit a reservation policy after we have had an LNG export industry in place for a number of years, but that doesn’t mean it’s impossible and we’ll look at this,” Ms King told ABC radio.