Dissenting Report to Gas Inquiry

Here is my dissenting report to the NSW Parliament Inquiry into gas supply and prices in which I highlight some areas where i think the committee could have been much stronger in its recomendations.  The full report is available here.  My media release on the report is here.

By Mr Jeremy Buckingham, The Greens

Coal seam gas development is not in the public interest

I am pleased that the committee accepted the strong evidence presented that the development of coal seam gas in NSW will have no meaningful impact on the supply or cost of gas in NSW. However, given the significant risks that the development of a coal seam gas industry poses to water resources, the environment and public health, it is disappointing that the committee decided not to go a step further and recommend that the industry not be allowed to proceed in NSW.

I believe that the report should have included the following recommendation:

  1. The NSW government should not risk public health, the quality or quantity of water resources or the nature of farmland and rural communities by developing an indigenous gas supply from unconventional resources.

I am also concerned that the Liberal, National and Shooters Party members of the committee voted to prevent the important evidence given by NSW Farmers and Lock the Gate, that the risks and the widespread and determined community opposition to unconventional gas exploration and production cannot be ignored when examining issues which affect gas supply and pricing issues, being included in the final report.

Stronger recommendations regarding market transparency

Significant concerns were expressed in evidence to the committee by a number of stakeholders, including the Minister for Resources and Energy, about the lack of transparency in the gas market and the possibility of cartel behaviour and price-gouging to the detriment of consumers are very serious and warranted stronger recommendations from the committee to rebuild public confidence in the industry. To this end I recommend that the NSW government:

  1. requests that the Australia Competition and Consumer Commission investigate current arrangements and practices in the upstream gas industry to ensure that any monopoly, cartel or other behaviours are not being practiced to the detriment of Australian gas consumers, and that upstream gas companies are disclosing adequate information to ensure a competitive gas market, and
  2. requires the disclosure of the details of gas export contracts to the government on a confidential basis, for those companies wanting to do business in NSW.

Transition to renewable energy alternatives

While gas is currently a significant energy input for many businesses and households in NSW, in the medium term it is not a vital energy source and can be replaced by renewable energy alternatives. Unfortunately, this committee report is woeful in its failure to make any recommendations regarding the need for government support for households, business, the public sector and energy generators to transition away from gas and towards renewable energy alternatives. This is especially important for low income households and renters for whom the upfront cost of switching from gas to renewable alternatives could be prohibitive and who will therefore be impacted the most by a sudden increase in gas prices. In recognition of this, I believe the following recommendations are appropriate and should have been supported:

  1. To assist in the development of other sources of energy, the NSW Government should develop contingent legislation that provides a guarantee that in the event of any future change to the federal Renewable Energy Target, no renewable energy generator in NSW would be worse off.
  2. Further, that the NSW Government implement policies and strategies to facilitate a complete phase out of fossil fuels, including gas, for energy generation and other purposes by 2030.
  3. The NSW government should develop programs, policies and strategies that facilitate households, businesses, the public sector and industry transitioning from gas and fossil fuels to high efficiency energy use and renewable forms of local energy generation, including the provision of low interest loans, independent technical advice and benefit sharing schemes.
  4. The NSW Government should undertake detailed, segmented analysis of the financial impacts of rising gas prices on low-income and vulnerable households in NSW, including analysis of the extent to which gas is used in:
    1. NSW public housing and the cost impacts for residents (over 5 and 10 year timeframes)
    2. community housing and the cost impacts for residents
    3. low-income rental housing and the cost impacts for residents.
  5. The NSW Government should undertake detailed research into the barriers and opportunities related to disconnecting from gas for residential consumers, especially public and community housing tenants and low-income renters.
  6. The NSW Government should develop policies and programs to support to support improved energy efficiency by NSW households, especially dedicated support for low-income households.
  7. The NSW Government should provide NSW households with accurate information on the relative costs of electrical and gas systems for cooking, hot water heating and space heating, and encourage people to switch to efficient electrical systems where it is cost effective to do so.
  8. The NSW Government should facilitate identification and financing of energy efficiency and economic fuel switching alternatives to gas use in the commercial and industrial sectors.

Climate change context

It is disappointing that the committee refused to support amendments to the report which would acknowledge that any examination of the supply and cost of gas must take into account climate change. Governments around the world, including Australia’s, have recognised that greenhouse gas emissions need to be significantly and rapidly reduced to ensure global temperature increases are limited to two degrees Celsius. Measures to reduce emissions, whether through government regulation or market mechanisms, are being introduced around the world and it is inevitable that in the near future global or national policies will act to reduce the carbon intensity of our economy and this will have a direct impact on the supply and cost of gas. A recent study in the Journal Nature has concluded that order to ensure global temperature increases are limited to two degrees Celsius between 51 and 56 percent of gas reserves in the OECD Pacific would have to remain unused. (FOOTNOTE: http://www.nature.com/nature/journal/v517/n7533/full/nature14016.html)

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