As the May 2021 budget looms near, the centrepiece of the federal government’s COVID-19 recovery is gas: a fossil fuel that apparently needs taxpayer funding to get off the ground. The federal government just announced $173 million in funding towards gas infrastructure in the Northern Territory, after allocating a starter of $52.9 million to conduct feasibility studies for gas projects in Queensland, New South Wales and Western Australia. The question for me is why pivot towards a rapidly tanking industry in the face of an economic and ecological crisis?
The government’s swerving manoeuvre towards gas isn’t the result of market forces. In the past year alone, the four biggest gas producers Shell, Woodside, Santos and Origin have all written down billions in failed assets as domestic gas prices have skyrocketed, leaving energy customers to foot the bill for expensive infrastructure. The price of oil has plummeted during the COVID-19 pandemic and dragged down gas revenues with it – in order to scrape away with a profit, the major players are exporting so much LNG that the AFR are projecting gas shortages in almost every state except Western Australia, the only state that regulates its exports with a gas reservation policy.
Australia is currently the world’s biggest exporter of LNG and yet there is currently no federal plan to stop price-gouging by the consortium of three major companies that control the gas market. And now the coalition has put all of its proverbial eggs into one basket – the gas-led recovery.
The push for gas to be the ‘transition fuel’ into a lower carbon future is a non sequitur. Yes, gas emits less carbon dioxide than coal when it is converted into energy, but it’s still predominantly methane, a fossil fuel – and when you include the pollution from the production stage of unconventional gas, it’s revealed to be a massive carbon bomb. In the Northern Territory alone, government estimates show that developing gas reserves in the Beetaloo Basin could emit over 117 million tonnes of CO2 every year, or nearly a quarter of Australia’s current annual emissions. Adding an extra 22 per cent of our current CO2 emissions to the mix is going to be difficult to align with the Paris climate goals.
In reality, climate is probably the furthest thing from the federal government’s priorities. A year ago, in March 2020, the prime minister’s office appointed a taskforce chaired by Neville Power, former Fortescue Metals CEO and a gas company director, to steer the nation’s economic recovery at the National COVID-19 Commission (NCC). Alongside Power was a host of gas industry representatives, including commissioner Catherine Tanna, the former chair of the British Gas/Queensland Gas Company, and an advisory panel stacked with gas industry kingpins including Andrew Liveris and James Fazzino. Liveris is the deputy chair of Worley (the world’s biggest oil and gas engineering firm), and a board director of Saudi Aramco; Fazzino is the director of the Australian Pipelines Association. During the Queensland gas rush in 2014 he was known as a ‘king maker’ for underwriting major gas contracts and pipeline developments.
Following the NCC’s formation, Federal treasurer Josh Frydenberg held conference calls with a group of business leaders that included the CEOs of Origin Energy, AGL energy, and BHP. The writing was on the wall: the COVID-19 economic recovery would be a fossil-fuelled one, with jobs for mates.
Since 2019, Power has lobbied the government for a $6 billion gas pipeline running from WA to the East Coast. Now, the National Covid-19 Commission has become a vehicle for the mining mogul’s pipe dream. But the federal government hasn’t approved public funds for such a white elephant yet, and it’s not without its critics on the NCC.
On the manufacturing taskforce is Paul Bastian, the national secretary of the Australian Manufacturing Workers Union. ‘There has been an overemphasis in public discussion about gas and not enough discussion about [other] opportunities that are presented and the need to focus on renewables,’ he says. Investment in renewables is a key priority for manufacturers to prepare for a low carbon future as the industry has been hit particularly hard by sky-high gas prices.
In the meantime, however, getting the price down needs to go further than subsidising gas infrastructure. Michele O’Neil, the Australian Council of Trade Unions president, has called the commission’s recovery plan ‘narrower than what was really needed, in terms of our energy needs and the energy transformation needed for a sustainable manufacturing industry.’ The ACTU’s National Economic Reconstruction Plan policy paper calls for zero-interest loans for renewable energy developments with a direct link to manufacturing, as part of a $1bn fund to invest in new industrial uses of renewable energy and carbon-neutral manufacturing projects.
Instead, the government’s plan at the moment is to use taxpayer funds to ‘unlock’ unconventional gas basins and massive pipeline infrastructure. The coalition has also proposed to build a gas-fired generator in the Hunter region, the electorate where Labor MP Joel Fitzgibbon is primed to support the gas push. The Labor party’s cabinet has shuffled the former climate spokesperson Mark Butler aside in order for Chris Bowen to take on the climate portfolio, indicating that emission goals have taken the backseat.
Unveiling of the ALP’s draft policy on February 28, Bowen said the coalition’s gas plan has a crucial role in Labor’s target for net zero emissions by 2050. (As yet, their emissions target for 2035 remains hidden.) Anthony Albanese has also said ‘no one is opposed to new gas’ in response to the funding allocations in September 2020, despite obvious evidence to the contrary – including Butler’s removal from the climate portfolio.
As Federal politics turns towards gas, the Liberals are aiming to keep a low profile. In his National Energy Address in September 2020, Scott Morrison said: ‘The Commonwealth Government would prefer not to step in. That is not our Plan A.’ Yet when it comes to propping up the fossil fuel industry, the Federal government is pulling every string and has been doing so for years. In 2017, back when he was Federal treasurer, Morrison accused the NT of ‘not getting on and doing things’ with regard to the Territory’s moratorium on fracking, before announcing significant budget cuts through the GST. It’s through this kind of financial coercion that the Federal government puts pressures on states and territories on behalf of vested interests again and again. Just yesterday, Four Corners revealed that federal energy minister Angus Taylor pressured the chief executive of the Australian Energy Market Operator (AEMO) to change the organisation’s report conclusions which were revealed to be unfavourable for the government’s gas plan. Taylor’s secretary even phoned the Energy Security Board’s head, Kerry Schott, to tell her to resign.
It may be true that we need to make gas more affordable for household consumers and industry. However, the answer to Australia’s gas woes is not to produce more unconventional gas: the majority of proposed gas basins in the Northern Territory and NSW are overly expensive to develop as they require fracking to access the reserves. Furthermore, fracking projects – especially in Narrabri and the Beetaloo Basin – have met overwhelming community opposition and delays due to the high public cost of fracking.
The fracking process, which includes injecting millions of litres of water into deep shale beds at high pressure with a mixture of biocides and pollutants, has serious implications for communities that rely on underground water sources – in the Northern Territory, for example, over 90 per cent of residents in the Beetaloo Basin rely on aquifers for their livelihoods and consumption. In the Pilliga region in Narrabri, similar concerns around water safety and availability are a priority for farming communities. The question of whether the gas industry goes ahead is also a question for tourism and agricultural sectors – who else is the government willing to steamroll over for the illusion of a ‘quick fix’?
The regions where gas extraction is taking place are already suffering the impacts of climate change. In Darwin, hot days over 35 degrees have already quadrupled annually since the last century. Profound heat stress, drought and water shortages are already impacting communities in the Beetaloo Basin, the Pilbara and Narrabri, where the fossil fuel industry has set its sights.
A sweeping show of public opposition is needed to shift the politics away from taxpayer-funded gas expansions. To say that the industry has bipartisan support would be an understatement – it’s embedded in Australia’s political ecology. The opposition party has been romantically entwined with the gas industry: long time representative Tony Burke is married to Skye Laris, a senior manager at AGL; Labor’s former trade minister, Craig Emerson, is the partner of former Santos executive Tracey Winters, who was also the chief policy adviser to Labor’s former energy minister Martin Ferguson; Mark Butler is married to Santos’ media manager, Daniela Ritorto; and Santos’ head of sustainability Alicia Genet is married to Ryan Liddell, the former chief of staff of Bill Shorten.
The relationship goes beyond romance and into fiscal ties. In 2019-20, donations from coal, oil and gas companies totalled $1,897,379 to the Labor, Liberal and National parties – up 48 per cent from the previous year. From 2017 to 2018, gas giant Origin Energy donated $110,595 in total to major federal parties, with the largest cut going to the ALP. In the same time period, Santos donated $182,083 to the three major parties; Chevron Australia donated $121,879; Woodside Energy $237,300. It’s important to note that these are only the amounts declared under the Australian Electoral Commission where funding disclosure laws vary from each state, making it difficult to follow the trail of money.
We’ve seen a repeating pattern where donations increase during expansions of gas drilling. During the coal-seam gas rush in Queensland of 2010 to 2014, donations to the National Party increased tenfold. Donations from Arrow Energy, Chevron and the Australian Petroleum Exploration and Production Association totalled nearly $100,000 in the four-year period and, in 2014, the Australian Electoral Commission released political funding figures that show Santos donated $151,000 to the Queensland Liberal Party and the Nationals. The company made 13 separate donations below $5,200 between 2012 and 2014.
These donations are political investments that pay off to their donors in the long term. The announcement likely to come in the budget of May 2021 will funnel taxpayer subsidies towards gas developments after years of a steady stream of corporate funding.
We are at a crossroads where gas could be locked into the energy grid for the coming decades. We could combine investment in renewable energy to decarbonise manufacturing jobs, and regulate the industry to ensure that more gas stays in Australia. But the choice is likely to be obfuscated as a single pathway: one more silver bullet, one more rush for gas. Will we be sold out once again?
Image: LNG tanker leaves Darwin Harbour for Yokohama, Japan. Scott Whalan.