East Coast gas supplies – speech – 23 October 2013
EAST COAST GAS SUPPLIES
The Hon. JEREMY BUCKINGHAM [10.03 p.m.]: Earlier this week, at the East Coast Gas Outlook Conference, Innes Willox, from the Australian Industry Group spoke about what he called “one of the sharpest policy divides in Australia as we prepare for 2014”. This policy divide is over how we should ensure a supply of gas to East Coast markets as we make a responsible and hopefully rapid transition away from fossil fuels to renewables.
The Australian Industry Group surveyed gas users across the East Coast network. They found that of those who were looking for a gas contract one in ten were unable to get an offer at all; a third were unable to get an offer they considered serious—whether because of the volumes on offer, the contract term, or conditions of supply or price; another quarter were able to get a serious offer but only from one supplier; and a final third were able to get multiple offers.
It is now accepted that the move into coal seam gas and liquefied natural gas [LNG] exports is causing a major issue for the Australian manufacturing sector. Of this, Mr Willox said:
- … the Commonwealth and the States took the decision to allow the Eastern Australian gas market to be linked to the high-price East Asian gas market. They should not escape responsibility for the unintended consequences.
The Australian Industry Group advocates a series of measures to address the gas market failure, including a “national interest test”. It recommends that this test be applied to any new liquefied natural gas export capacity beyond that which already has a final investment decision. I suggest that, to be effective, such a test would need to be applied to existing projects as well. Mr Willox continues:
- Such a test should not be startling. It is the expansion of LNG exports that lies behind the painful transition in Eastern Australia’s gas market. The current set of projects were not subject to adequate consideration of economic impacts before approval. For all the demands of the environmental impacts process, in the economic arena they sailed through without real debate.
This goes to the heart of the gas supply issue: why were the liquefied natural gas projects approved without any consideration of the effect it would have on domestic manufacturing and residential consumers? Why were the liquefied natural gas projects approved without securing a social licence from the community to roll out coal seam gas developments on our farmlands and in our aquifers? And it raises a couple of serious strategic economic and environmental questions: Is Australia’s economic future based on resource extraction or does our economic future lie with value-adding to our natural resources through a skilled workforce and through manufacturing?
Why would we start a new fossil fuel industry in an age of record heat, mega fires, rising seas and climate change? The Greens believe we must rapidly transition to renewable energy. Indeed any gas reserve policy must factor in a transition to renewable energy. Built into any reserve system should be incentives for manufacturers and others users to switch to renewable energy where possible. Perhaps the quota of gas reserved would decrease over time to encourage the transition. Other policies, such as a price on pollution and incentives for the renewable energy sector, must also be pursued.
Currently governments are in paralysis, failing to realistically respond to this tsunami of a market failure. Blindly they stumble down the road in the belief that the ramping up of coal seam gas and a supply increase will save the day. It is not going to happen—neither now nor in the medium term. The community will not have their farms, water resources and environment trashed by coal seam gas mining; and nor will they allow governments to sit on their hands stubbornly adhering to free market fundamentalism whilst energy companies deride our collapsing manufacturers as “rent seekers”.
The Greens acknowledge this serious economic and energy policy issue. We are grappling with this. We will be discussing a range of policy solutions at our New South Wales State conference and will discuss the issue at the Australian Greens national conference in November.