The failure of Australian gas supply policy has been chronic and costly. The key decision, under the two major parties during the 2000s, was to allow gas projects to go ahead without a national reserve policy. As with submarines, a political system focused on a short-term cycle was unfortunate for long-term decisions.
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However, warnings from unions and manufacturers are as relevant as they are now. McDine’s successor to the AWU, Daniel Walton, wants an “extraordinary tax” on gas exporters to punish them if they do not supply the domestic market. Although Treasurer Jim Chalmers ruled it out on Wednesday, Labor must find an alternative lever if they are not to use a tax.
“Oil and gas companies won’t find a solution unless you drag them by kicking and screaming,” Walton says. He wants a result that goes beyond the “trigger” of gas because he believes the answer is to ensure an affordable price as well as a fair supply. While Labor turned a deaf ear to the AWU when it was last in government, it does not appear to be doing the same again.
One of the easy statements about the problem is that there is no shortage of gas, that Australia swims with gas. This is only true if the government orders companies such as Chevron, Santos and Woodside to break contracts with customers in Japan, South Korea, China, Singapore and elsewhere. The energy crisis would turn into a nightmare of foreign affairs. Cutting Australian gas supplies undermines efforts in Europe to respond to the invasion of Ukraine by reducing global dependence on Russian gas.
There is no increase in the Australian supply. The country produced 5,377 petajoulas of gas last year, 1% more than the previous year, says Graeme Bethune, chief executive of EnergyQuest. Total exports of liquefied natural gas were 4413 petajoules, or 82 percent of production. About a third of exports were shipped from the east coast, while the rest came from Western Australia and the Northern Territory. Between 90 and 95 percent of exports were shipped on long-term contracts.
While the ideal solution to gas shortages is to find a renewable alternative to gas, the grid cannot be reconnected quickly. And manufacturers depend on gas as a raw material. Inevitably, the argument boils down to whether Labor will support the new gas fields.
King has more gasoline online next year. This is based on a Santos plan to put another gas platform in the Cooper Basin and the plans for Beach Energy and Cooper Energy to extract more from the Otway and Bass basins.
There was outrage, however, when he supported a larger project: the Scarborough camp developed by Woodside on the WA coast. Warringah member Zali Steggall said it was “crazy” to give the green light to Scarborough. Kooyong member Monique Ryan said she was “totally at odds with climate action” to allow the project to move forward.
What about the Narrabri gas field that Santos is developing in the NSW region? Will Albanese and his ministers support it, as the NSW state government has done, or will it be difficult for them to argue the case with voters who believe the gas should be left on the ground? Labor cannot win the argument over energy and climate without a convincing answer.
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The leader of the Greens, Adam Bandt, has a simple position: no more coal and gas. He marked this point in the election campaign instead of discussing the best target for carbon emissions. And his message raised the greens to their best result.
Albanese, who has never been a great friend of the Greens, must find a way to give the AWU what it wants without losing more voters to the Greens or the independent candidates who will be targeting Labor seats.
The question of the national reserve must shape decisions about new gas fields. What good is a web site if it simply “blends in” with everything else out there? While it is risky to apply a reserve policy to old gas fields, it is not too late to apply it to new ones. It is very difficult to see Albanese having a response on energy without supporting new gas production, so Bowen and King are at the beginning of a difficult process with their new overhaul.
The most logical result is for Labor to do what its platform suggests: reserve gas in a way it should have done in the 2000s. But that also means telling voters something many don’t want to hear. it can leave all the gas on the ground.
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