A gas-fired recovery? Seriously?
Australia’s Minister for Energy and Emissions Reduction, Angus Taylor, has suggested that the recovery from the Covid-19 crisis will be gas-fired. That’s right, our Minister for Emissions Reduction is advocating for more emissions.
Seriously, is that the best we can do?
The writing was on the wall in late March, when Prime Minister Scott Morrison handpicked former Fortescue Metals Group CEO Nev Power to lead the National Covid-19 Coordination Commission (NCCC). Nev Power is known in business circles for being a bit of a “doer”, having led Twiggy Forrest’s FMG from minnow to global iron ore powerhouse. Twiggy Forrest of course owns junior gas company Squadron Energy, and also has a significant stake in another, Buru Energy. Nev Power retired from FMG in 2018, and is now a non-executive director of Strike Energy, which is planning to develop gas reserves in the Perth Basin, Western Australia.
Other appointees to the NCCC include former Telstra CEO David Thodey; former Labor Minister Greg Combet; Crown Casino director Jane Halton; former Toll Holdings CEO Paul Little; EnergyAustralia CEO Catherine Tanna; along with the heads of PMC and Home Affairs respectively, Phil Gaetjens and Mike Pezzullo.
EnergyAustralia owns two coal-fired power stations — Mt Piper in NSW and Yallourn in Victoria — and is Australia’s second largest carbon polluter, emitting 22 million tonnes (CO2-e) in FY2018. CEO Catherine Tanna also sits on the board of the Business Council of Australia (BCA).
Game of mates
Initially, the NCCC wasn’t exactly stacked with fossil fuel interests. But in early April, Morrison announced as part of the NCCC, a manufacturing taskforce to be led by former Dow Chemicals boss Andrew Liveris. Liveris is a director of IBM, ASX-listed Worley, NOVONIX and Saudi Aramco (yes that Saudi Aramco), and has long advocated for natural gas as the “silver bullet” for Australia’s energy woes. Way back in 2012, Liveris argued that Australia should be using its gas resources rather than shipping them offshore.
Joining Liveris on Morrison’s manufacturing taskforce is AiGroup CEO Innes Willox; Manufacturing Australia CEO Ben Eade; Manufacturing Australia Chair, former Incitec Pivot CEO and current director of APA Group James Fazzino, Australian Manufacturing Workers’ Union national secretary Paul Bastian, and Advanced Manufacturing Growth Centre boss Jens Goennemann.
Innes Willox has a long history of opposing climate policy in Australia. Clive Hamilton named Willox as one of his ‘dirty dozen’ in 2014 — the 12 Australians most responsible for blocking climate action. The AiGroup (whose members include AGL Energy, Bluescope Steel, Boral and Woolworths) campaigned against the carbon price in 2012–14, supports the development of new thermal coal mines in the Galilee Basin, and has lobbied against moratoriums on onshore gas development. UK-based NGO InfluenceMap ranked AiGroup among the most highly climate-oppositional industry associations in the world.
Similarly, Manufacturing Australia (whose members include Adelaide Brighton, Bluescope Steel, CSR, Incitec Pivot and Tomago Aluminium) has routinely opposed and campaigned against climate action. Most notably, Manufacturing Australia opposed the closure of the Liddell coal-fired power station, and supported Alinta Energy’s bid to acquire the clunker from AGL Energy in order to keep it open indefinitely. More recently, Manufacturing Australia has called for a domestic gas reservation policy.
Former Incitec Pivot CEO and APA Group director James Fazzino is, unsurprisingly, also a big fan of gas. During his time at IPL, Fazzino was known in the gas industry as a “kingmaker”. This was due to the fact that Incitec Pivot was a very large consumer of gas, using it to produce fertilizers and explosives.
In 2018, Fazzino told his peers at an energy conference that Australia should “frack like the Americans”. (Renew Economy, 4 May 2018)
Fazzino also pointed out that Incitec Pivot had “basically underwritten” the development of major gas pipelines in Australia’s Northern Territory through 15-year gas contracts. Fazzino was referring to Jemena’s Northern Gas Pipeline which connects Tennant Creek in the NT to Mt Isa in Queensland. That pipeline supplies Incitec Pivot’s Phosphate Hill plant in Mt Isa. Jemena is currently planning to expand the capacity of that pipeline.
Is it any wonder then, with people like Nev Power, Catherine Tanna, Andrew Liveris, Innes Willox, Ben Eade and James Fazzino leading the recovery, that Angus Taylor is talking about a “gas-fired recovery”?
Some recent media interviews with members of the manufacturing taskforce have given us some insight into what their plans may be.
In an interview with The Australian on 7 April, Liveris spoke about his eagerness to develop Australia’s petrochemical sector. Liveris, who previously chaired Donald Trump’s American Manufacturing Council, told the newspaper:
“Petrochemicals should be a no-brainer for this country… We have all the raw materials for it. And it is a job multiplier. For every one job in terms of energy input, you can get an output of eight jobs in the industry.” (The Australian, 7 April 2020)
Liveris has previously suggested that Darwin would be the ideal location for a petrochemical industry. Petrochemicals are chemical products refined from petroleum, and used in thousands of products from fertilisers to plastics and beauty products. But an entirely new petrochemical industry would require one key ingredient — the development of new gas fields in the Northern Territory, i.e. the Beetaloo Basin. Following the collapse in oil prices, the proponent of the Beetaloo Basin project, Origin Energy, delayed any further exploration work until prices recovered.
Last week, NCCC Chair Nev Power was even more explicit than Liveris, telling the SMH that “we need competitive energy prices, particularly gas, to attract large-scale manufacturing like fertiliser and petrochemicals”. He went further:
“We have significant reserves of gas on the east coast that are not connected up. We have significant reserves in central Australia and significant reserves in Western Australia. There are options to connect our major demand centres with our major supply centres.” (SMH, 22 April 2020)
The gas reserves Power is referring to include Santos’ Narrabri coal seam gas project, new coal seam gas fields in Queensland’s Bowen, Galilee and Surat Basins, and in case you weren’t paying attention, the Beetaloo Basin in the Northern Territory.
Angus Taylor’s recent ‘Fair Deal On Energy’ plan also includes specific reference to the Beetaloo Basin. The Fair Deal On Energy’s goal is a “reliable, secure and affordable energy supply”, but not to lower emissions. It has four key objectives, one of which is increasing domestic gas supplies. The government’s proposed path to achieving increased domestic gas supplies is as follows:
- Beetaloo Basin Development Strategy
- Exploring electrification of industrial power
- Australian Domestic Gas Security Mechanism
- National Gas Reservation Scheme
As the government is likely to fund a range of projects in order to stimulate the economy, gas industry proponents are pushing their pet projects in the hope of a taxpayer subsidy.
So which pipelines is Angus Taylor likely to throw money at?
Ahead of the federal election last year, the ALP promised $1.5 billion for new gas pipelines connecting the Beetaloo Basin and the Northern Bowen Basin. Elsewhere, Jemena is planning a new pipeline in the Galilee Basin, and to double the capacity of its Northern gas pipeline between Tennant Creek and Mt Isa.
Beyond subsidised pipelines, the gas industry has already won a couple of victories through the Covid-19 crisis. The Victorian government lifted its moratorium on onshore gas development, but maintained its ban on fracking. In Western Australia, NOPSEMA approved Woodside’s Scarborough project just days after Woodside itself delayed the project due to the crash in oil prices. Queensland and South Australia have also postponed fees and tenure requirements for junior exploration companies.
In the US, the oil and gas industry has been terribly successful at weakening air pollution standards, among a range of other regulatory slash and burn initiatives (the team at Drilled has collated a complete list of what’s going on in the US here).
While Australian gas companies aren’t publicly asking for bailouts like US shale producers are, there is plenty of talk of cutting “red and green tape”. An editorial in The Australian last week echoed these sentiments:
“red- and green-tape delays on project approvals must be consigned to the past” (The Australian, 13 April 2020).
The Business Council of Australia, the Minerals Council of Australia and others have long advocated for cutting “red and green tape”. But since the Covid-19 crisis began, the usual drumbeat has become far more regular. The carbon lobby has also been repeating its usual demands for industrial relations “reforms”, faster approval processes, accelerated asset depreciation and reducing disclosure obligations.
A number of others, not limited to oil and gas industry actors, have joined the chorus — calling for deregulation, tax cuts, IR reform, and so on. These include:
- Centre for Independent Studies CEO Tom Switzer wrote in the AFR about “the private sector being freed to invest by being taxed and regulated less”. (AFR, 17 March 2020)
- Business Council of Australia CEO Jennifer Westacott told the ABC “we’ve got to get the regulation down” (ABC, 19 March 2020)
- Scott Morrison told 3AW that tax breaks for big business, deregulation and wide-scale industrial relations reform were on his growth agenda. (SMH, 17 April 2020)
- Mathias Cormann said “we will be presenting our plan based on lower taxes and aggressive deregulation agenda”. (ABC, 21 April 2020)
- Business leaders have raised tax reform, industrial relations and deregulation with Josh Frydenberg. (AFR, 22 April 2020)
- Sussan Ley said work was already under way to accelerate deregulation before the EPBC Act review is completed. (The Guardian, 24 April 2020)
This week, Treasurer Josh Frydenberg held a conference call with various business leaders, seeking ideas for the government’s reform agenda, in what he described as a “harvesting phase”. Those business leaders included AGL Energy CEO Brett Redman, BHP CEO Mike Henry, Incitec Pivot CEO Jeanne Johns and Origin Energy CEO Frank Calabria. There is no shortage of gas advocates in that bunch.
The gas industry is doing its utmost to take advantage of this crisis. But the climate crisis isn’t going away, and it will not be solved by repeating the mistakes of the past.
In our next post, we will dig into some of the carbon lobby’s other proposals, and sadly, its victories so far.
