Labor gas policy a multi-billion dollar handbrake on producers

Gas producers may have to have to pay billions of dollars annually under new Labor climate policies.

Environment Minister Eva Lawler. Picture: Emma Murray

Gas producers and ­industrial players may pay billions of dollars annually under new Labor climate policies aimed at offsetting a forecast tripling of emissions once the Northern Territory’s onshore gas industry ramps up.

New supply from the NT, which was once estimated to have enough gas to power Australia for 200 years, is seen by some as crucial to heading off future east coast gas shortages and replacing coal-fired power generation.

Yet calculations based on government data and endorsed by senior figures within the NT ­bureaucracy show the cost of offsetting the NT’s higher emissions could exceed $4.5 billion in 2026, or about 10 per cent of gross state product in that year.

There are fears delays and uncertainty could damage the onshore gas industry before it gets started. The silver lining in Labor’s plan is it might boost remote economies by creating new opportunities for Aboriginal ­rangers to do carbon farming.

Environment Minister Eva Lawler said the Gunner government was “serious about developing” climate change and environmental offset policies, adding that “good environmental policy is smart economic policy”.

“Further consultation with industry is required to determine future costs; organisations involved in extraction and processing of gas will be expected to participate in offsetting, in ­addition to avoiding and mitigating emissions,” Ms Lawler said.

Labor accepted a recommendation from its own independent fracking inquiry to ensure there was “no net increase” in greenhouse gas emissions as a consequence of growth in onshore gas. It did so before working out what that would entail.

The Gunner government also adopted federal Labor’s 50 per cent renewable energy generation by 2030 target without knowing what percentage of renewables the NT had.

By 2022, NT businesses and consumers could be paying about $880 million annually for carbon offsets if the 20 per cent reductions target is adopted or about $1.9bn under the more severe zero-net-emissions target.

Those costs could then rise as high as somewhere between $3.4bn and $4.5bn annually by 2026, depending on how the onshore gas industry grows.

Australian Petroleum Production and Exploration Association spokesman Matthew Doman questioned the NT government’s emissions forecasts, based on the findings of its independent fracking inquiry.