Fuel efficiency standards, PRRT changes pass Senate as Labor dumps offshore gas bill

Labor has shelved a major change to gas approval processes, in return for Greens support for its fuel efficiency standards.

Labor’s proposed fuel efficiency standards and its overhaul to petroleum resource rent tax have sailed through the Senate after the government clinched a deal with the Greens.

But in return for support from the minor party on Thursday, Labor will put legislation designed to speed up environmental approval processes for new offshore gas developments on the backburner, sparking a backlash from the oil and gas lobby.

The gas approval policy policy would have handed Resources Minister Madeleine King the power to streamline consultation rules on offshore gas developments after Woodside’s Scarborough and Santos’ Barossa gas fields were subject to legal action, causing delays and rocking investor confidence.

The government has agreed to temporarily shelve changes which would have altered consultation requirements for offshore gas projects. Picture: NCA NewsWire / Martin Ollman

The government argues it still plans to legislate the gas approval policy, likely requiring support from the Opposition.

The revelation comes just days after the government unveiled its ‘Future Gas Strategy’ - a plan that will lock in gas use beyond 2050 to help firm intermittent renewable supply.

But peak oil and gas lobby Australian Energy Producers (AEP) said securing the passage of the PRRT changes, which it had supported, should not have come at the expense of the streamlined approval processes.

“Regulatory certainty and timely environmental approvals are needed to address delays facing critical new gas supply projects and to restore investment confidence,” AEP boss Samantha McCulloch said.

“The Greens cannot be allowed to hold Australia’s energy and economic security to ransom, and we expect the government to deliver on the Future Gas Strategy’s commitment to ensure Australians have access to reliable and affordable gas supply.”

Australian Energy Producers boss Samantha McCulloch urged the government to pass the streamlined consultation rules. Picture: NCA NewsWire / Naomi Jellicoe

Shadow treasurer Angus Taylor also slammed the government’s back down on the gas approvals legislation, claiming the resources industry had been abandoned just a week after its Future Gas Strategy had been released.

“This is an assault on one of our major export industries ... Labor has made it clear: the Greens are their preferred negotiation partners on tax and on economic management,” Mr Taylor said.

Hailing the result as a major win, Greens leader Adam Bandt claimed the minor party had “killed” the gas approvals policy.

“This is a big blow to the coal and gas corporations, a big win for the climate and First Nations voices, and it happened because the Greens have power in parliament,” he said.

Fuel standards, PRRT changes become law

Under the new emissions standards, fleetwide emission caps for new passenger and light commercial vehicles will be established, bringing Australia into line with other developed economies that have similar schemes.

While the standards won’t ban any particular model, car brands will be penalised if the average emissions of all the vehicles they import is higher than a cap that will be reduced through to 2029.

The new fuel efficiency standards are designed to spur the uptake of low- and zero emissions vehicles. NewsWire / Sarah Marshall

Climate Council chief Amanda McKenzie said the fuel efficiency caps would slash climate pollution and enhance consumer choice for low- and zero emissions vehicles.

“Australia has locked up the garage for good when it comes to expensive, polluting cars. This is a win for the climate, a win for our health, and a win for all Australians – whether they drive a car or not,” she said.

But James Voortman, boss of the Australian Automotive Dealers Association said implementing the standard would be difficult to achieve.

“While this legislation is a significant reform, there is a lot more complementary work needed to ensure lower emissions vehicles are affordable and that Australians buying these vehicles have access to charging infrastructure,” Mr Voortman said.

The fuel efficiency standard will apply from mid-2025.

Meanwhile, the overhaul to the PRRT will reduce generous tax deductions to oil and gas companies’ capital expenditures, and are expected to raise $2.4bn over the four-year forward estimates.

The changes, which will take effect from July 1, will bring forward the date that LNG projects are subject to PRRT.

Originally published as Fuel efficiency standards, PRRT changes pass Senate as Labor dumps offshore gas bill