Article by Greg Brown courtesy of the Australian.
Energy Minister Angus Taylor will warn the energy crisis facing Europe could happen in Australia unless new gas fields are opened up as he unveils budget funding to accelerate the development of seven projects.
As the government moves to make energy security a feature of the coming election campaign, Mr Taylor will claim Labor cannot be trusted to support the expansion of the gas sector to prevent the escalation of electricity prices.
He will tell the Australian Domestic Gas Outlook Conference that a failure to bring on new supply could see gas prices escalate like in Europe, where there has been a 300 per cent increase in the past year.
“Bills have skyrocketed, energy retailers have closed, factories have been mothballed, and families have been forced to choose between eating or heating,” Mr Taylor will tell the conference.
“With Russian gas accounting for around 32 per cent of total European and UK gas consumption in 2021, the full impact of the current crisis remains to be seen.
“The energy crisis in Europe should act as a warning of what could happen in Australia if there is not enough investment in the gas sector here.”
Government analysis showed the east coast spot gas price is about 80 per cent lower than Europe, at $9.50 a gigajoule.
In next week’s budget, the government will pour nearly $50m in grants to accelerate “priority gas infrastructure projects” for storage and pipelines that would deliver more supply to the southern states.
This includes funding for APA Group’s Southwest Pipeline Expansion proposal to transport gas from Queensland to Victoria, along with support for the company’s planned greenfield gas processing facility in Queensland’s Surat Basin.
Grants will also go to expand storage through Lochard Energy’s Heytesbury Underground Gas Storage Project in Victoria and Transition Energy Corporation’s infrastructure hub in Queensland.
In the Northern Territory, the government will fund a feasibility study into infrastructure that could deliver gas from the Beetaloo Basin to east coast markets.
The budget will also include funding for feasibility studies into carbon capture and storage on major gas pipelines.
On Tuesday, Mr Taylor will say part of the reason for skyrocketing gas prices in Europe was a “lack of investment in supply and infrastructure”.
“In Australia, Labor and the Greens have adopted the anti-gas policies of activists at a cost to consumers,” he will say.
“The ACT government’s plan to phase out gas connections, for example, will place upward pressure on gas prices.
“The Australian Energy Regulator has noted that the policy would see an increase in residential and small business consumer gas bills of 3.2 and 3.5 per cent over five years.”
Mr Taylor will say that voters have a choice between a government that resolutely supports the gas sector “or an Anthony Albanese-led opposition that has obstructed and undermined it at every opportunity”.
“When it comes to gas, Labor play postcode politics – telling inner-city voters one thing and regional Australia another,” he will say.
“Labor MPs like Joel Fitzgibbon have been replaced by the Labor Environment Action Network, which has called for the end to the oil and gas sector.
“Our gas-fired recovery has not only delivered results, it is the envy of the world.
“We cannot allow activism or policy uncertainty to stop or slow gas projects and increase gas prices.
“Without unlocking more gas, we will feel the price pressures being experienced overseas.
“This would result in household bills going up and our essential industrial and manufacturing business closing.
“Under Labor, this is a very real and very frightening scenario.”
Under Mr Albanese’s leadership, Labor has outlined its support for the gas industry but the issue is contentious within caucus.
Last year, Left faction MPs used a caucus meeting to speak out against shadow cabinet’s decision to back taxpayer support to open up supply from the Beetaloo Basin.
Labor also opposed the expansion of the Clean Energy Finance Corporation allowing it to invest in gas.
The Greens and environmental groups are opposed to any new gas projects, with the government set to try and wedge Labor on the issue.
A report by the Australian Competition and Consumer Commission, released in February, predicted a shortfall in gas supply across the entire east coast from 2026.
The ACCC report warned of “uncertainty surrounding the supply outlook in 2022 and beyond”, with NSW, South Australia, Victoria and Tasmania unable to produce enough supply to meet demand.
“Additional supply from an LNG import terminal in the south, or more domestic supply from the north will be required to address this shortfall,” the report said.
“It may also be necessary to divert some gas into the domestic market that would otherwise be exported if new supply cannot be developed rapidly enough.”
APA Group chief executive Rob Wheals will tell the conference on Tuesday that “gas is the workhorse of the energy system”.
“Gas generation is the perfect complement to variable renewable energy for when the wind doesn’t blow and the sun doesn’t shine, which will help achieve the orderly and responsible transition that we all need to avoid supply and price shocks,” Mr Wheals will say.
“The simple reality is gas will complement … not compete.”
