Australia’s gas crisis is not caused by a supply shortage – it’s the result of an export system the Coalition allowed donors to essentially design. Labor’s first answer is more fossil fuel. By Jesse Noakes.

Labor’s flawed answer to the energy crisis

Protesters block access to Woodside’s Burrup Hub in Western Australia.
Protesters block access to Woodside’s Burrup Hub in Western Australia.
Credit: Scarborough Gas Action Alliance

Australia’s sudden energy price spike is not in itself a worse crisis than those afflicting other countries such as Britain, where a teetering Boris Johnson recently legislated a windfall profits tax on major energy companies in response to price hikes. What really hurts, even before the pain fully hits home, is that we are doing it to ourselves.

The problem is not that Australia doesn’t have enough gas – the problem is that we are the largest exporter of liquefied natural gas (LNG) in the world, with multinational companies sending the majority to the Asian market and more than a third being sold into a bubbling short-term market and for spot contracts.

Short-term supply issues across the Australian market, such as coal-fired power stations reducing capacity for reasons that remain somewhat opaque, have been exacerbated because consumers are unable to tap the massive export pipeline of Australian LNG heading for lucrative overseas markets.

The war in Ukraine is the immediate trigger for constricting global supply but, as the world economy moves past the pandemic and demand and energy prices soar, Australia’s “gas-led recovery” appears to deliver few benefits for those at home.

Across most of the country, prices have surged during a prolonged cold snap and would have gone far higher than $40 a gigajoule without the Australian Energy Market Operator capping them last week. The exception to this is in Western Australia, where it’s also been cold this week, but gas prices remained stable near $6 a gigajoule thanks to a decision by the previous Labor government to reserve 15 per cent of LNG sold for the domestic market.

The architect of that legislation was former WA premier Alan Carpenter, who last week compared nine years of critical policy failure by the federal Coalition to walking into “the middle of the road with a blindfold”.

“Domestic gas reservation was and is the obvious answer to the gas supply issue,” Carpenter told The Saturday Paper. “There’s plenty of gas on the east coast but it’s being exported. And – most importantly – gas is not the long-term future, it’s renewables.”

Carpenter’s successor, Colin Barnett, called for a cross-country pipeline this week, connecting the east coast with additional gas supply in the west, but former WA Greens senator Scott Ludlam suggests this misses the point. “Arguing for domestic gas reservation or triggers or any of this business sidesteps the real question, which is how fast can we get gas off the network?” he told The Saturday Paper.

He says the supply shock is unsurprising given the major players in the local energy market have hitched domestic gas prices to spiralling international demand. “This has been done deliberately by the gas producers to push the domestic prices up,” he says. “It’s not like they did this in error. This is the system they designed.”

Nationals leader David Littleproud has repeatedly suggested the new government should “pick up the phone and talk to the gas companies”. For Ludlam, however, the infiltration of both major parties by the gas industry is a big part of the problem.

“Donations flow roughly equally in either direction and have for a long time,” he says. “What nine years of Coalition government has done … is kind of engineered this vulnerability to a gas supply crunch by handing the keys to public policy to exporters.”

Ludlam says the imperative is for states, territories and the Commonwealth to facilitate a “very, very rapid” transition to renewable energy. “If the answer to what’s happening on the east coast right now is more oil and gas, then we’ve misunderstood the question.”

This is the second part of the energy crisis. It is not just the supply issues, largely created while Angus Taylor was minister; it is the fact that both parties still believe more fossil fuels are the answer. Investment in renewables has been frustrated by government indifference and so a fuel source that could ease the current market is not there to draw on.

In WA, which effectively delivered majority federal government to Labor last month with a 10 per cent statewide swing flipping four seats, Premier Mark McGowan has firmly committed to Woodside’s Scarborough gas project, the highest profile of more than 100 new fossil fuel projects in the post-election pipeline nationally.

Last November, McGowan threatened to legislate around a challenge to Scarborough’s approvals in the WA Supreme Court, saying at the time, “We want to keep the lights on and make sure our hospitals continue to function”. WA remains the only state in the country whose emissions continue to rise and it has uniquely failed to set a firm emissions reduction target. The hospitals aren’t doing very well, either.

McGowan’s position outraged the former chair of Murujuga Aboriginal Corporation, Raelene Cooper, a Mardudhunera custodian with cultural authority on Murujuga, also known as the Burrup Peninsula in the Pilbara region, where Scarborough gas will come onshore for processing.

“How dare he use his power to be able to make a statement like that? He’s not above the law, and nor are these huge companies,” she told The Saturday Paper.

Murujuga is one of the oldest and largest rock art sites on the planet, nominated for UNESCO World Heritage listing for more than one million petroglyphs that researchers and custodians say are threatened by nearby industrial emissions. “It’s a place of healing and a place of togetherness and spiritual essence,” says Cooper. “It’s really quite phenomenal.”

Cooper is one of 27 senior elders and custodians of Murujuga who signed an open letter delivered to WA parliament in March calling for the lifting of what they describe as “gag orders” in the Burrup industrial agreement signed with the state government two decades ago.

“We have a right to speak on behalf of this Country,” Cooper says. “It is our beliefs. It is our church and our parliament out there.”

Greens leader Adam Bandt told The Saturday Paper that the Albanese government could stop Scarborough if it chose to and said the Greens would support legislation to prevent new coal and gas projects.

“By backing massive projects like Scarborough, the new government is not listening to what the public just said in the election,” Bandt said.

WA’s swing to federal Labor, superficially resembling McGowan’s pandemic election landslide in March 2021, was facilitated by the fact only one teal independent ran in the state. Kate Chaney, whose father Michael was chair of Woodside until 2018, has refused to be drawn on her position on Scarborough and other new fossil fuel projects since toppling the Liberal incumbent in the formerly safe seat of Curtin.

On a post-campaign visit to Perth last weekend, Anthony Albanese cut short an event with Labor volunteers after he was surprised by protesters opposing Scarborough. Days earlier, Resources minister Madeleine King had declared Labor’s “absolute” support for Scarborough, which is projected to emit more than one billion tonnes of carbon by 2050.

Bill Hare, the chief executive of research firm Climate Analytics and former lead author for the Intergovernmental Panel on Climate Change, pointed out that this would add about 7 per cent to Australia’s annual emissions baseline by 2030.

He told The Saturday Paper Scarborough will significantly add to the mitigation burden needed to meet Labor’s 43 per cent emissions reduction target. “So if these emissions all occurred and were not reduced, then the effective reduction needed to achieve a 43 per cent reduction including these emissions would be around 50-52 per cent,” Hare said.

Woodside says Scarborough has all necessary “primary” approvals, and that “execution” is well under way. “Major civil works have started on the construction of the accommodation village and manufacture of the Scarborough line pipe has commenced,” a spokesperson said.

Hare and others say it is premature to claim, as McGowan has recently, that Scarborough has all the approvals it needs. “The big gap in the assessment is that there’s been no assessment of Aboriginal cultural heritage impacts,” Hare said.

“It’s mistaken to think that Scarborough is a done deal,” agreed the head of clean energy transition at Greenpeace Australia Pacific, Jess Panegyres. “At this point, there are still regulatory and legal avenues for stopping Scarborough, including the NOPSEMA approvals process, which present significant obstacles for Woodside.”

NOPSEMA, the National Offshore Petroleum Safety and Environmental Management Authority, is the independent regulator for safety and environmental management of offshore petroleum projects in Commonwealth waters. In response to queries from The Saturday Paper, NOPSEMA confirmed that Woodside still required several approvals for specific parts of the project that will run pipeline almost 400 kilometres off WA’s north-west coast to the Scarborough field.

“To date, Woodside has only received an approval for the operations project plan for Scarborough,” a NOPSEMA spokesperson said, adding that Woodside had already submitted three environment plans under assessment, with more needed.

“The cultural features of the environment are part of the definition of ‘environment’ … As such, each environment plan must address impacts to cultural features and identify appropriate management strategies.”

This means Woodside will need to consult with traditional custodians, such as Raelene Cooper, who have cultural connection and obligations to Murujuga. The Saturday Paper has seen a letter to Woodside from Cooper and another custodian, Kuruma Mardudhunera woman Josie Alec, requesting consultation as “relevant persons” under the 2009 act that governs offshore petroleum projects.

“We’re not opposing what’s there now, because it’s there,” says Cooper. “However, we are opposing these new projects that come about, because enough is enough, when do we draw the line?

“And the importance of this is our songlines and our culture and the future of it. And I guess that’s the story that we want to get out to people, that there’s more to it, because it’s not just about us – it’s about everybody.”

This article was first published in the print edition of The Saturday Paper on June 11, 2022 as "Out of gas".

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