Labor’s gas strategy: what is it and why do critics call it ‘Back to the Future’?
The Albanese government has finally released its gas strategy, which sets out the “guiding principles” for how the government will approach the use of gas and the approval of new gasfields in the medium and long term.
The main takeaway? Gas will remain a central part of Australia’s energy and export sectors to 2050 and beyond, with the government backing the energy source as the key to transitioning the energy sector and economy.
The strategy, released by the resources minister, Madeleine King, on Thursday, received almost universal condemnation from environment and climate groups, which say it is a revival of the Morrison era “gas-led recovery” plan. The critics argue Labor’s strategy will lead to more emissions, not less. It has been labelled a betrayal of the Pacific and Australia’s climate aims.
The government says gas will play a “critical” role in the transition to renewable energy and will act as an affordable energy source in the meantime. It says natural gas is a key part of the Future made in Australia plan, which sets out a roadmap for the nation’s manufacturing and energy sectors. But it is not all smooth sailing within the Labor caucus, with some backbenchers, like Josh Burns and Jerome Laxale, within hours speaking out against the expansion of fossil fuel projects including gas.
The strategy
The government says the gas strategy has six “principles” to guide how future projects are assessed.
1. Australia’s net zero 2050 target remains in place so gas production “must be abated or offset to achieve this economy-wide commitment”.
2. Gas must remain affordable, so future gas rights contracts “should prioritise timely development and discourage repeated delays” – meaning that those who hold the contracts will not be allowed to sit on them.
3. New gasfields must be found and opened “to meet demand during the economy-wide transition”. This is already being encouraged by the federal government but will be expedited.
4. Gas use will eventually shift to industries and sectors where transitioning to renewables is either not yet technologically feasible or cost-effective, while the rest of the economy transitions to renewable energy. However, “households will continue to have a choice over how their energy needs are met”. States like Victoria are already shifting away from domestic gas.
5. Gas and electricity markets must adapt to remain “fit for purpose throughout the energy transformation”, which means finding cleaner and more affordable ways to upgrade existing infrastructure.
6. LNG – liquefied natural gas – will remain a key export market for Australia with plans to expand the amount of gas Australia sells overseas.
What does it all mean?
The strategy lays out a plan to continue to explore and open new gasfields in the near to medium term as a “crutch” while Australia transitions towards a renewable energy grid and economy. It commits Australia to continuing to export gas overseas, particularly to Japan and Korea, which use Australian LNG as part of their energy transition.
The export component is key, as green groups have long argued that Australia has more than enough gas for its domestic needs already – but it exports most of it.
This strategy indicates the Albanese government will seek to increase gas exports, which King has previously argued “helps the region prosper”. Critics say Australia is choosing its export partners over the climate commitments it has made to the Pacific but the minister insists Australia remains committed to its emissions goals and will consider abatement in future gas plans.
In short, Australia will not only continue to rely on gas to fulfil its energy needs, it will increase how much it relies on it, with new gas fields fundamental to the strategy. Environmental and climate groups say this will be “devastating” to Australia’s emissions reduction targets and the environment.
Can the government do both?
The strategy is only one part of the story. Chris Bowen, the federal climate change minister, is yet to release the economy-wide decarbonisation plan, which will lay out how Australia plans to meet its net zero challenges.
King, in her strategy document, says that “the greenhouse gas emissions associated with gas must sharply decline and where gas use cannot be reduced, emissions must be increasingly abated and offset”. What is missing from the strategy is the detail on how that will occur. The plan states Australia will eventually move away from gas as a primary energy source, but again, details are scarce.
Scientists and environmentalists have long been concerned about the expansion of gas industries by countries which have committed to the Paris agreement, with warnings gas had become “the fastest-growing source of carbon dioxide to the atmosphere – the most important greenhouse gas” in 2020.
The Albanese government is banking on the expansion of the geological carbon management market – carbon capture and storage (CCS) – to help meet its abatement goals at the same time as expanding gasfields. It has committed $12m over three years “to provide regulatory and administrative certainty for offshore CCS projects” in a bid to stimulate the sector in Australia.
But carbon capture, which involves “capturing” greenhouse gases at emission sources (usually large power generation or industrial facilities) before transporting and storing the captured gas in the ground, remains controversial and unproven.
What is everyone saying?
The response has been very split. The gas industry and those who rely on it are overwhelmingly supportive while environmentalists have been scathing.
There has also been a split within the Labor caucus. Labor members in the left faction were given briefings ahead of the strategy being released but there are already rumblings of discontent.
Inner-city Labor MPs who are facing strong challenges from Greens candidates at the next election, such as the Macnamara MP, Josh Burns, have come out against spending any public money on new fossil fuel projects.
Burns said the government needed “to continue to move towards low emission technology, not prolong fossil fuels”.
“In my opinion, not a cent of public money should be spent on new gas or resources projects that don’t help us transition us to a low-emissions economy,” he said.
The Bennelong MP, Jerome Laxale, also said the government needed to move faster on the energy transition: “We need to be moving away from fossil fuels, not championing them. While we know that many in the community understand the role of gas in the transition away from fossil fuels, particularly after 10 years of climate neglect and denial by the Liberals, our government should continue to execute this transition as quickly as possible. This will remain my focus.”
The gas industry has embraced the plan, with the Australian Energy Producers chief executive, Samantha McCulloch, saying it sent “a clear message that gas has a critical long-term role in Australia’s energy mix” and tangible action was needed to “urgently unlock new gas supply to address looming shortfalls and provide an unequivocal signal to the market that Australia is committed to ensuring sustainable gas supply to the Australian economy and the region”.
The Business Council of Australia was glowing, with its chief executive, Bran Black, saying the plan struck “the right balance by ensuring Australia can transition to net zero, while also keeping prices down, delivering reliable power supply and retaining jobs”.
The Climate Council’s Dr Jennifer Rayner called the strategy “a regressive echo of the past”. “Today’s announcement is more Back to the Future than Future made in Australia. Australia is already using less gas, so the suggestion we need more of it sounds like Scott Morrison’s ‘gas led recovery’, not Anthony Albanese’s ‘renewable energy superpower’.”
The Australia Institute said the strategy was regressive and while gas was a significant contributor to gross domestic product it “does not play a critical role in the Australian economy”.
“In fact, it is fair to say it costs the Australian public more than it raises once subsidies, tax breaks and other liabilities – financial and climate-related – are factored in.”
The federal Greens leader, Adam Bandt, said Labor was “threatening its legislative agenda” by committing to a future fuelled by fossil fuels: “Why should the Greens work with Labor on legislation apparently aimed at cutting pollution, like the fuel efficiency bill, if Labor is then going to reverse any climate gains by fast-tracking new coal and gas projects.”
Teal MPs, progressive senators and environmental groups including the Australian Conservation Foundation, Surfers for Climate, Solutions for Climate Australia, Climate Communities Alliance and Parents for Climate were all disappointed.
Where to now?
Attention will turn to the government’s decarbonisation strategy, which is supposed to lay out how Labor plans to meet Australia’s climate targets and how that will work with an expansion of the gas industry.
The Albanese government is unlikely to shift course, which means gas could be the next political battleground.
With additional reporting by Josh Butler.
