Greens threaten to block Albanese government’s major east coast gas plan
The Greens have threatened to oppose Labor's gas reservation scheme and are demanding a 25 per cent levy on exporters instead, as political divisions deepen over Australia’s energy crisis.
The Greens have warned they will oppose a scheme under consideration by the Albanese government to overhaul Australia’s east coast gas market, sharpening a political clash over how Canberra should respond to the looming supply crunch flagged by energy authorities.
Labor is preparing to unveil the most sweeping reforms to the east coast system in decades, as officials scramble to head off a projected shortage from the late 2020s.
The Australian Energy Market Operator has warned the market could face an economically damaging shortfall as early as 2029, with smaller seasonal deficits possible well before then – a scenario that has injected urgency inside government but deepened political divisions over how far to intervene.
Senior industry figures told The Australian the government was now leaning towards a domestic gas reservation scheme.
The concept has emerged as the de facto frontrunner after months of lobbying from producers, industrial users and unions, each promoting competing models as Canberra weighs whether to pursue a lighter-touch framework or a more forceful restructure of the market.
While industry has broadly advocated a reservation system that ties the three Queensland LNG exporters’ ability to ship gas overseas to their net domestic contributions, Labor is also examining a more interventionist model based on production credits – a structure that would require exporters to secure a set level of domestic supply before accessing international markets.
Officials have not confirmed whether any new framework would require primary legislation, a decision that would shift the political fight to the Senate, where the Greens hold critical leverage.
On Monday, the Greens signalled they would use that leverage to block any mechanism that “financially incentivises” gas production, and declared a levy on LNG exporters the only viable approach to rebalance the market without underwriting new development.
Greens resources spokeswoman Steph Hodgins-May said Australia had ample supply and should use fiscal policy to steer more gas into the domestic system.
“We don’t have a gas shortage, we have a gas export problem,” she said.
“If Labor brings forward an option that incentivises new gas and hands more rewards to the corporations that have been ripping off Australians, they won’t have the support of the Greens.”
The party is instead pushing for a 25 per cent levy on exporters – a measure that would hit producers hard and, in practice, could encourage them to scale back output. The Australian last week revealed the government had previously considered such a tax.
While industry sources believe Labor has since retreated from that idea, concerns persist that a levy could still be paired with a reservation scheme to raise revenue for manufacturing initiatives or cost-of-living relief, while securing Greens support for the broader package.
But a levy would detonate already-strained relations with the gas sector, which has fractured over how to address the emerging shortfall.
“A levy makes the problem worse,” one senior industry source said. “If you want supply, you don’t tax it.”
The three Queensland LNG exporters have split over how to recalibrate the market.
Australia Pacific LNG and Shell-owned Queensland Curtis LNG have both argued that Santos-backed Gladstone LNG should face restrictions on its ability to buy domestic gas for export, noting it is the only one of the three unable to produce enough gas to meet its commitments. Santos chief executive Kevin Gallagher has previously warned that limiting such purchases could force the project to breach export contracts.
Competitors counter that Santos could increase exploration rather than leaning heavily on domestic buyers, though the company says it is already spending $1bn a year on exploration.
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Originally published as Greens threaten to block Albanese government’s major east coast gas plan
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