Gas funding going underground

by Mark Ogge

It’s a funny thing that the word “gas”, so prominent in the last year’s “gas-fired recovery” budget, but it barely rates a mention in this year’s budget and wasn’t mentioned at all in the Treasurer’s budget night speech. A cursory glance suggests subsidies for the gas industry add up to $50.3 million to “accelerate the development of priority gas infrastructure”.

But this is the tip of the iceberg. The budget funnels somewhere between $3-4 billion of public money to the gas industry, significantly more than the cost of the most prominent budget measure, cuts to the fuel excise (after the rebate is taken into account). It wasn’t lost on the gas industry lobby group APPEA, who immediately congratulated the Government on a host of subsidies including for hydrogen, so-called “low emissions” Liquified Natural Gas (LNG), Carbon Capture and Storage (CCS), and patent tax concessions including for gas-related tech, as discussed in the False Solutions section of our Budget Wrap.

Perhaps by design, many subsidies to the gas industry in the budget are difficult to identify. Most don’t even mention the word gas. They are spread across different portfolios and mixed in with funding that can go to other industries but are predominantly for gas.

For instance, as APPEA recognises, subsidies for hydrogen will largely go to oil and gas industry projects that use gas to make hydrogen – a process that is more high polluting than just burning the gas directly. Similarly, CCS subsidies will almost entirely go to oil and gas companies who tout this failed technology to greenwash their highly polluting projects.

Most of these enormous subsidies are in the “Energy Security and Regional Development plan” in Deputy Prime Minister Barnaby Joyce’s portfolio as Minister for Infrastructure, Transport and Regional Development.

A lot of this is focused on the Northern Territory including $1.5 billion for new port infrastructure, $300 million for “low emissions LNG” (about as credible as “clean coal” if you still remember that government spin), and $200 million for the Middle Arm “Sustainable Development Precent”. On top of this there is a further $300 million in the National Water Grid “to help meet Middle Arm industrial users demand for water.”

Middle Arm is an LNG Hub with the giant Darwin LNG and INPEX Icthys LNG projects. It is proposed to receive gas from Santos’s new Barossa Field and onshore fracking in the Beetaloo basin – both government priorities under the gas-fired recovery. Almost all this gas is not for Australians but for export through those LNG facilities, but there are also proposals for industrial facilities that will use some of the gas as a feedstock. It is also the hub for questionable proposed CCS projects that would inject CO2 into the Timor Sea that even the Northern Territory Government euphemistically describes as “highly prospective” (read: unlikely to work).

Expect to see attempts to greenwash the Middle Arm gas hub with proposals for critical minerals processing and “clean” hydrogen (hydrogen from gas with a claim to use CCS – a false climate solution), but make no mistake, the vast bulk of any subsidies going to Middle Arm will go to the gas industry.

The “Energy Security and Regional Development plan” repeats these gas subsidies across Australia. There is $80 million towards the future construction of the Bowen Pipeline in Queensland, and around $585 million to projects in Western Australia’s Pilbara region that will be largely gas focused. These include $285 million in upgrades to the Port of Dampier which includes LNG, $200 million for so called “low emissions manufacturing” which will almost certainly uses fossil gas hydrogen and $100 million to “de-risk private sector investment in firm generation and grid infrastructure” in the region, for which the gas industry itself is a major energy user.

To the extent that the Government acknowledges it is subsiding the gas industry, it disingenuously justifies these handouts variously as energy security, affordability and emissions reduction measures.

In the lead up to the budget, Minister Taylor was warning Australians of a potential gas shortage. But that is not true. Australia doesn’t have a gas supply problem, it has a gas export problem – 80 percent of Australian gas is exported as LNG. Just operating the LNG terminals (to prep and cool the gas for export) uses more gas than Australia’s entire manufacturing sector.

Most of the projects making up the only official gas handout of $50.3 million are for accelerating “the development of priority gas infrastructure projects” and would have no effect on prices or supply because they are for export. The Beetaloo, Bowen and Surat basins will overwhelmingly be for export, and public subsidies to pipeline projects in the Northern Territory and Queensland are simply helping the multinational companies – most of whom pay no tax in Australia – connect to export terminals to send more gas overseas.

Attempts to conflate high gas prices in Europe with Australia’s domestic market are absurd. Australia’s gas supply is under threat, but not from Russia. Our supply shortages and high prices are because Australia allows a handful of multinational gas companies to make a fortune exporting almost all our gas, and the Government is exacerbating this problem in this budget by subsidising them to export even more.

Three of the subsidies are to the APA Group, a private company with $21 billion of assets and revenue of over $2 billion last year. Why is the Australian Government handing more taxpayer dollars to a multi-billion dollar company to help them build more profitable pipelines to send more Australian gas overseas?

If the Government was serious about securing our energy supply and reducing energy prices, they would compel the LNG producers to supply more of our gas to the domestic Australian market. Particularly when the ACCC has pointed out these companies are not even complying with their agreement to offer surplus gas to Australian customers, but are simply exporting it overseas to cash in on high international prices instead.

The Government should also follow AEMO’s advice to take “urgent action” to help households and businesses electrify and get out of the vicious cycle of gas dependence.

While government handouts to the gas industry won’t prevent shortfalls or reduce gas prices, what is certain is that they will make climate change worse. The Government is aiming to open five enormous new gas basins that would add billions of tonnes of greenhouse gas to the atmosphere.

But you don’t see this government gas largesse explicitly mentioned in the budget, because as our research shows — Australians do not want a gas-fired recovery.

The Australia Institute’s Climate of the Nation survey found only 12% of Australians prefer Australia’s economic recovery to be primarily powered by investment in gas, compared to the majority of Australians (63%) who would prefer it powered by investment in renewables.

While the gas-funding is still flowing, for this election budget it’s just gone underground.

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