Extracting gas from the Northern Territory through hydraulic fracturing (“fracking”) is one of the largest potential sources of carbon pollution in the world.

The Fracking Inquiry that reported earlier this year recommended that unconventional gas extraction should only be permitted if the all 135 recommendations are accepted and implemented. All recommendations were accepted by the NT Government when it lifted the gas moratorium.

One of those recommendations is that the NT and Federal Governments ensure that any domestic emissions resulting from unconventional gas are “offset” elsewhere so there is no net increase in emissions. Using Australian Government projections of the price of greenhouse gas emissions, the cost of offsetting the emissions from fracking the Northern Territory could be up to $4.3 billion in the year 2030 alone.

The cumulative cost of offsets from 2030 to 2040 (the likely operational life of gas fields) could be up to $146 billion. The Fracking Inquiry identified a number of alternative offset sources, such as shutting down coal-fired power plants in other states. These alternatives have jurisdictional issues and may not produce many valid offset credits depending on the lifespans of the plants that are targeted.

Offsetting NT gas production through coal plant closures would require shutting down almost all of Victoria’s coal generation, or its equivalent elsewhere in Australia. The view of The Australia Institute and many of Australia’s leading scientists is that the use of offsets does not justify fracking the NT. This research finds that even if offsets are used, they will be expensive and legally difficult to implement.

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