Alan Kohler: The Future Gas Strategy will demolish Australia’s climate change project

Australia is sleepwalking into trouble on climate change.

Australia is sleepwalking into trouble on climate change. Photo: TND/Getty

The day before Resources Minister Madeleine King released the government’s strange Future Gas Strategy, the European Union’s climate change monitoring service, Copernicus, announced that April was the hottest April on record, extending an 11-month streak in which every month had set a temperature record.

On the same day, The Guardian published a survey of the climate scientists who are part of the Intergovernmental Panel on Climate Change (IPCC) asking them what degree of warming they think the Earth is likely to get to.

Eighty per cent of them said the warming would be at least 2.5 degrees Celsius of global heating, while almost half said it would be at least 3 degrees. Only 6 per cent thought the internationally agreed 1.5 degrees limit would be met.

Two years ago the Australian Academy of Science published a report looking at the consequences of what half of the world’s scientists now think we’re heading for: “At 3 degrees Celsius of global warming, many of Australia’s ecological systems would be unrecognisable.”

‘Major societal disruption’

“I think we are headed for major societal disruption within the next five years,” said Gretta Pecl, at the University of Tasmania. “[Authorities] will be overwhelmed by extreme event after extreme event, food production will be disrupted. I could not feel greater despair over the future.”

Next day Madeleine King bounced out of bed, feeling net-zero despair, promoting more fossil fuels. Very strange: Most of the world’s scientists say we’re heading for disaster because of the burning of fossil fuels, yet the government is promoting them.

I can’t see what’s in it for them, beyond wedging the Opposition by stealing their ideas.

But the impact of it on Australia’s emissions reduction project will be disproportionate, and devastating.

Not only will the scientists and others who are genuinely trying to save the planet be both outraged and deflated, the morale of the army of government employees who are working on the difficult project of getting Australia’s emissions down will be crushed, wondering “what’s the point?”

Exports priority

Ms King said: “… it is clear we will need continued exploration, investment and development in the sector to support the path to net zero for Australia and for our export partners, and to avoid a shortfall in gas supplies.”

But by far the biggest use of gas in Australia is in the production and liquification of it for export.

So the dominant purpose of the Future Gas Strategy is exports, but this is not a very important export industry.

The industry employs 20,000 people – one-sixth as many as Coles – and pays little in taxes and royalties.

If it was a country, WA would be the world’s third largest exporters of natural gas, but according to the Australia Institute, the royalties paid by the gas industry to the WA government, totalled $670 million in 2023-24, or just 1.5 per cent of the state government’s revenue. Motor vehicle registration contributes almost twice as much; iron ore royalties nine times as much.

The Australian Taxation Office considers the oil and gas industry to be “systemic non-payers” of tax. The four biggest LNG producers operating in WA – Chevron, ExxonMobil, Woodside and Shell – made combined income of $55.2 billion in 2021-22 and paid $1.7 billion in corporate income tax and petroleum resource rent tax. ExxonMobil paid nothing. Exxon, Woodside, Shell and Chevron contributed less to the Commonwealth government than Australia’s beer drinkers, who raised $2.5 billion through the beer excise.

Domestic dilemma

As for its importance in supplying domestic energy, and specifically the transition to net zero by 2050, Madeleine King said: “Ensuring Australia continues to have adequate access to reasonably priced gas will be key to delivering an 82 per cent renewable energy grid by 2030, and to achieve our commitment to net-zero emissions by 2050.”

Really? The obvious key to delivering 82 per cent renewable energy is more solar and wind, with adequate storage – mainly battery and pumped hydro – so you would think words of encouragement and/or money should be applied to that.

In fact, it’s agreed by scientists that we need to electrify the nation’s homes and turn off the gas in them as quickly as possible along with those industries that use gas.

That’s what the safeguard mechanism process of reducing the emissions of the largest emitters by 5 per cent a year is designed to do.

Developing new gas fields like Scarborough and Beetaloo Basin, which seems to be what the Future Gas Strategy is designed to achieve, will just make that harder for everybody else.

The federal gas strategy has left the door open for more new gas projects. Photo: Getty

Hot air

The government’s plan relies on carbon capture and storage to meet the emissions reduction goals while also expanding gas production, and includes $12 million “to provide regulatory and administrative certainty for offshore CCS projects”, but CCS is unproven at scale, and contentious.

It’s the same as Peter Dutton saying we can have small modular reactors (SMRs).

The government is already way behind in delivering that renewable target and net zero by 2050 and will be hammered if it fails.

But it obviously doesn’t care; it has given up on those targets for the short-term approval of the gas industry.

This is a moment for difficult leadership, not easy pandering to vested interests.

Alan Kohler writes weekly for The New Daily. He is finance presenter on the ABC News and also writes for Intelligent Investor

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