With the Federal Minister for Energy and Climate Change Chris Bowen, and the state and territory energy ministers discussing strategies to deal with the impending gas crisis, debate has been sparked about what needs to happen next.
Principal voices are speaking out against the gas industry, with some experts claiming that the gas industry working for profit on overseas exports, rather than storing energy for domestic use, is a key factor in understanding how this crisis developed and what needs to change for the future of Australia’s energy.
Further concerns regarding the Australian Government’s reliance on coal and gas have emerged, with the energy ministers being urged to make reforms and coordinate across multiple jurisdictions within both public and private sectors and step away from gas entirely.
The rising cost of gas is leaving Australians “vulnerable to price shocks from global circumstances beyond [their] control”, ITK Services’ Principal, David Leitch said.
Richie Merzian, Climate and Energy Program Director at The Australia Institute said the Government needs to do everything possible to “speed up electrification” and stop relying on gas.
“Australia doesn’t have a gas supply problem; it has a gas export problem. As long as Australia remains dependent on gas and coal, Australian consumers will be over the barrel of global fuel prices influenced by events beyond our control,” Mr Merzian said.
“Allowing global coal and gas companies to export vast quantities of our resources may have seemed like a good idea at the time, but it has locked us into exposure to volatile global prices, making Australians vulnerable to price shocks from global circumstances beyond our control.
“As a matter of urgency, the newly sworn-in Minister for Climate and Energy should examine options to curtail gas exports to safeguard a sufficient affordable gas supply for Australians in the short term.
“In the medium term, this Government should look to do everything possible to speed up electrification, helping households get off expensive gas.
“This would not only save households from skyrocketing energy bills, but free up gas resources for industries that will take longer to transition.
“The only long-term solution to expensive fossil fuels is to get off them and that requires political leadership.”
Marija Petkovic, Founder and Managing Director at Energy Synapse, said Australia is “blessed with some of the best renewable energy resources in the world as well as the space to harness them”.
“What this energy crisis shows more than anything is that Australia needs to urgently put politics aside and get on with the job of building vastly more renewable energy and energy storage to reduce our reliance on fossil fuel.”
Greg Bourne, former President of BP Australasia and current Climate Councillor said the current crisis was geopolitical.
“We knew this was coming. The oil and gas market has always been geopolitical, with inherent extreme price volatility, which rocks the world in times of crisis,” Mr Bourne said.
“Previous responses have been to explore and develop more oil and gas, setting ourselves up for the next crisis in which the oil and gas companies reap super profits while consumers reap the misery.
“When will we learn?”
Clean Energy Council: collaboration is key
The Clean Energy Council (CEC) said soaring wholesale electricity and gas prices threatened intense and lasting pain for households and businesses, with smaller energy retailers also suffering from the chaos.
According to the CEC, high international prices for coal and gas are the biggest factor and they are likely to be sustained for years to come.
But, the CEC said it was encouraged by Mr Bowen’s early push to bring his state and territory counterparts together.
“The response they forge jointly should be collaborative, balanced and staged. A collaborative response between the Commonwealth, states and energy stakeholders is needed because no one player holds all the powers, resources and information to resolve this crisis,” the CEC said.
“Industry and community leaders can bring expertise, urgency and goodwill to the table and we ask energy ministers to work with us.
“Working together and being transparent will give us all the best chance of success.”
A staged response required
The CEC called for a staged response to the crisis, stating that demand-side investments would provide higher energy productivity and help reach emission goals.
“A staged response is essential because this crisis includes both acute price pain and the likelihood of chronic high prices thereafter,” the CEC said.
According to the CEC, “only a handful of measures are likely to help in the short term and they are unlikely to be sustainable”.
“Accelerating [the] clean energy transition in a fair and inclusive way will ultimately deliver durable help, but while that requires immediate action it will largely impact the medium term,” the CEC said.
“A faster buildout of large-scale renewables and transmission makes all the sense in the world, as does a speedier move from natural gas to alternatives from electrification (like efficient reverse cycle air conditioning in households) to biogas (like captured landfill gas running brick kilns) to hydrogen (like green hydrogen for essential chemical products) as appropriate in different contexts.”
Prioritising vulnerable energy users
The CEC said that the acceleration work would be complex and that while short term options are being evaluated, vulnerable energy users should receive financial support as a priority.
The CEC said priority should be given to:
- Low-income households, including through increasing income support payments and more adequate and responsive energy concessions
- Those businesses who are coming out of contract or exposed to spot energy prices; unable to pass increased costs on; and sufficiently energy intensive for these cost increases to threaten business continuity
“Broader reforms such as a lift in income support payments would reduce the need for emergency energy support payments,” the CEC said.
“Without urgent action, this winter will be a difficult one for energy users and the next few years may not be much easier.”
Nicki Hutley, Climate Councillor said Australia’s dependence on fossil fuels is worsening an already negative situation.
“What we’re seeing right now is the cost of remaining heavily reliant on fossil fuels for energy. Soaring energy bills for many households will exacerbate already significant inflationary pressures,” Mr Hutley said.
“As one of the sunniest and windiest countries on earth, we have the tools we need. Governments can step up by attracting capital and by investing in more labour skills to support the transition.
“The Australian Capital Territory and South Australia are showing the rest of the nation how investing in renewables delivers greater returns to households and businesses in the form of cheaper, cleaner energy.”
Is a UK-stylewind-fall tax the answer?
The Australian Workers’ Union (AWU) advised the Federal Government to urgently put a UK-style windfall tax on the table to force multinational gas exporters to give Australian manufacturers access to affordable Australia gas.
In May of 2022, the Britain’s Government announced a 25 per cent windfall tax on the profits of gas firms to support low-income households struggling with a sharp spike in prices.
The AWU has long called for a domestic gas reservation scheme, warning that allowing multinational gas companies to export Australia’s gas without restriction would lead to a domestic price explosion that would force manufacturing operations to close and lead to thousands of job losses.
However, with the emergency now hitting and factory closures imminent, AWU National Secretary, Daniel Walton, said the Government needed to follow the UK’s example and prepare to implement a windfall tax on mega-profits unless affordable gas is made available to Australians.
“Right now multinational gas exporters are using the global situation to cream astronomical mega-profits from Australian gas while forcing Australian factories, smelters and plants to the wall,” Mr Walton said.
“The Government’s offer to exporters needs to be fair and simple: make affordable gas available to Australian manufacturers now or face a UK-style windfall tax and we will distribute the revenue ourselves.
“If the Government refuses to pick up that stick now and get tough then gas exporters will bluster and delay and factories will close en masse.”
Inadequate energy efficiency
Tristan Edis, Director – Analysis and Advisory, Green Energy Markets, said the poor quality of rental property energy efficiencies also needs to be addressed.
“Australian houses have the worst thermal efficiency in the developed world. More people die of cold in their homes in Australia than they do in Sweden,” Mr Edis said.
“As another example of how bad our homes are – Victorians use more energy to heat their homes than in far colder climates like the UK and Holland.
“Landlords have done well out of property price inflation but have proven utterly uninterested in taking advantage of incentive programs for things like solar, efficient heaters and water heaters and better insulation. It’s time to insist they do their bit to help low income households by installing more efficient heaters, better insulation and solar.
“This will provide a long-term fix for energy affordability and also help lower carbon emissions.”
More to come.