The secretive R&D tax scheme handing millions to gas companies

Three gas companies have received millions from a R&D tax scheme.

Three gas companies have received millions from a R&D tax scheme. Photo: Getty

Gas companies are receiving millions in money from a research and development tax scheme that is meant to exclude fossil fuels, with the federal government set to examine the scheme following the revelations.

The scheme was launched to help “companies innovate and grow by offsetting some of the costs of eligible research and development”.

Applicants for the rebate must be conducting “experimental activities” based on established science and cannot be “prospecting, exploring or drilling for minerals or petroleum”.

Environmental group Stop the Gate and the Tax Justice Network Australia wrote to Minister for Industry and Science Ed Husic last year, asking him to examine Empire Energy’s successful application for a total of $28.8 million in tax rebates.

The company conducts gas exploration in the Beetaloo Basin, but it isn’t the only gas company receiving funding from a scheme.

What did the Senate reveal?

At a Senate estimates hearing, Greens Senator Penny Allman-Payne questioned how gas companies were able to access funding through the federal government’s research and development scheme.

“Section three-five of the income tax assessment act stipulates that you can’t get R&D tax credits for petroleum exploration activities,” she said.

“Will you now investigate or at least interrogate further whether Empire Energy claiming the R&D tax incentive for activities undertaken in the course of exploring for shale gas is valid and legal?”

Government officials confirmed prospecting cannot fall under R&D and that the department would “look into” the successful claims.

Who is receiving money?

At least three gas or fracking companies have accessed more than $40 million in grants: Empire Energy, Blue Energy and Galilee Energy.

Empire Energy received $28.8 million in grants across three years, while Blue Energy and Galilee Energy received $7 million and $4.95 million respectively according to their announcements.

Empire Energy is involved in fracking in the Northern Territory. Photo: AAP

“Blue Energy says explicitly in their ASX statement, and I quote, this R&D rebate provides Blue with significant non-diluted funding for the ongoing exploration and appraisal of its portfolio of domestically focused gas exploration projects,” Allman-Payne said.

“On its face that looks like an invalid claim right there.”

She also said while Galilee Energy do wastewater management, “the bulk of their work program is focused on gas exploration and appraisal,” before asking government officials to advise on notice of the lawfulness of their grants.

Galilee Energy and Blue Energy were contacted for comment.

Empire Energy chief executive Alex Underwood told ABC that the money wasn’t used to discover gas, but to find new ways to extract that gas from the ground.


The R&D scheme is shrouded by confidentiality laws, making it nearly impossible to know just how many fossil fuel companies are funding invalid claims through it.

Government officials told Senate estimates that they could not discuss individual applicants because of the Research and Industry Development Act, even with the minister’s office.

The scheme is administered jointly by the government and the Australian Taxation Office, and information on 2022 recipients won’t be released until late 2024.

Lock the Gate’s national co-ordinator Carmel Flint said the government needs to act swiftly.

“Any invalid claims need to be paid back with suitable penalties,” she said.

“There’s a significant cloud over these grants and the government needs to make sure the scheme is squeaky clean.”

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