Gas Exports Hurt The Climate And Consumer

New South Wales Greens mining spokesperson Jeremy Buckingham has recently called for an East Coast domestic gas reservation policy. His plan would ensure the needs of domestic and industrial gas users are met before gas is allowed to be exported via plants currently being built in Queensland.

It is also the only policy response that will counter gas price rises that have been locked in by the reckless approval of damaging coal seam gas developments across Queensland.

Gas reservation is a sensible approach for the Greens and it should become part of the formal policy platform of the party. The proposal would reserve a proportion of conventional gas resources — not coal seam gas or shale gas — for domestic and industrial gas users.

This reserved gas would not be open to purchasing competition from export buyers and would guarantee Australian gas for Australian users at a price that would allow industrial gas users in manufacturing to remain viable. It would also protect domestic consumers from the price rises that will be caused by the opening up of the gas export market in Queensland.

Importantly, this policy would not reserve gas for electricity generation and therefore not reduce the incentives to move to renewable electricity.

The proposal for reservation provides a direct challenge to the current industry and federal government scare campaign of a gas “crisis” and escalating prices for NSW consumers.

The Sydney Morning Herald’s Economics Editor Ross Gittins affirmed this week what other economists have been saying all along about the industry’s scare campaign:

“The gas industry is working a scam on the people of NSW… It's trying to frighten us into agreeing to remove restrictions on the exploitation of coal seam gas deposits. Failing that, the various parties want to be able to lay the blame for an inevitable jump in the price of natural gas on the greenies and farmers.”

The fact, as highlighted by Gittins and The Australia Institute’s Matt Grudnoff, is that the reckless expansion of the coal seam gas industry has made gas exports viable on the East Coast. It is this connection with export markets that is pushing up the price of all gas in the Eastern states.

Origin Energy’s purchase this month of $3 billion of Bass Straight gas from ExxonMobil and BHP was reported to be at prices that reflect coming export parity rates. Had the export plants not have been coming online, this conventional gas would have been available for local purchase at much lower rates.

Supporting a gas reservation policy does not mean the Greens support the development of further gas, particularly unconventional gas resources like coal seam gas and shale gas. These developments cannot be supported given the unacceptable risks they present to farmland, water supplies and sensitive environmental areas.

It is also increasingly clear that the climate impacts from fugitive emissions from the unconventional gas production process are higher than estimated by industry and may produce lifecycle emissions as high or even higher than coal.

Eighty per cent of known fossil fuels must stay in the ground if we are to avoid dangerous climate change. This presents even more reason to continue to reject all unconventional gas development.

While the Buckingham proposal doesn’t include unconventional gas because it is inherently unsafe, if government continues to pursue it despite the clear environmental and climate risks, it too should be captured by a reservation policy. 

It would be unfair to reserve only conventional sources of gas, which can be produced more cheaply, while unconventional supplies are allowed unrestrained access to higher-paying export markets. A reservation policy affecting unconventional gas will likely constrain some higher cost projects, which explains the hysterical industry opposition to a reservation policy.

The Greens have the right long-term plan for Australia’s energy future. For the climate’s sake we need a rapid transition to 100 per cent renewable energy. A reservation policy will ensure Australian gas is available for Australian use in the meantime. 

While the major parties continue to fiddle with climate policy and do the bidding of big fossil fuel companies by supporting the unsustainable unconventional gas industry, the Greens have to be able to engage in the energy debate as it affects the day to day lives of domestic energy users and businesses. A domestic gas reservation policy is a common sense approach and will ensure no blame can be laid at the feet of “greenies” who have been putting forward constructive energy solutions from the start.