The Federal Government’s gas ultimatum has been met with considerable backlash from the energy industry.

Prime Minister Scott Morrison said that if no solutions were presented by the private sector by April 2021, the government would build a state-run gas generator.

The Australian Energy Council (AEC) said the Federal Government’s ultimatum risks deterring the very investments it is attempting to encourage.

AEC’s Chief Executive, Sarah McNamara, said, “The sector is struggling to make final investment decisions in an environment of ongoing policy uncertainty.”

The AEC noted that the Federal Government’s energy advisers, the Energy Security Board, has previously warned of government interventions or “even discussions and ‘threats’ of intervention” acting as a deterrent.

“For more than a decade we have been warning of the dampening effect State and Federal Government interventions have on investor confidence,” Ms McNamara said.

“The Government’s earlier plan to underwrite new generation projects in the market also remains under consideration, and this too contributes to the ongoing uncertainty, together with various and competing State-based renewable energy targets.

“There are no material reliability concerns that would warrant this kind of interventionist approach, and there are already mechanisms in place to address any shortfall identified. 

“The Australian Energy Market Operator’s most recent assessment identified a potential shortfall in New South Wales of only 154MW.”

The Clean Energy Council said that despite over $20 billion of investment into large-scale renewable energy projects in Australia over the last three years and a large pipeline of projects forming part of the economic recovery from COVID-19, challenges with the grid and uncertainty in government policy have rattled investment confidence. 

The Clean Energy Council maintained that investors shouldn’t be taken for granted and will be concerned about another change in government policy.

Clean Energy Council Chief Executive, Kane Thornton, said, “Wind, solar and storage technologies are by far the cheapest form of new electricity generation for Australia and can provide the flexible, reliable and secure generation we need.

“Gas generation is costly to build and expensive to run. The only way that a new gas-fired power station will get built in Australia is if the government builds it using taxpayers’ money, and that’s because it’s largely uneconomical when compared to renewable energy and energy storage equivalents. There’s a good chance that a new plant could become a white elephant, unable to compete with firmed renewables.

“A new gas-fired power station will also take years to build. It would be far more sensible for the government to support new big batteries than gas-fired electricity generators that are high cost.

“Any government funding for a new gas-fired electricity generator would be better spent on much needed new transmission.

“Australia has an enormous opportunity to leverage renewable energy as part of a nation-building COVID-19 economic response, creating jobs and the infrastructure to support Australia’s future.”

Queensland Mines and Energy Minister, Dr Anthony Lynham, took a different stance on the subject, and instead demanded the Federal Government provide the same support to Queensland gas and manufacturing industries and jobs as they had to New South Wales.

“The Federal Government gave NSW a billion dollars to open up their gas fields and have ignored our calls to invest in gas and electricity infrastructure,” Dr Lynham said.

“And yet Queensland has been doing the heavy lifting on gas supply and policy for the past five years.

“It’s about time the LNP responded to our calls, but where’s Queensland’s billion dollars?” 

Queensland Manufacturing Minister, Glenn Butcher, said gas supply was critical to Queensland’s $20.3 billion manufacturing industry and the nearly 168,000 workers it employs.

“The Palaszczuk Government has been calling on the Federal LNP since 2017 to invest in critical gas infrastructure to support the gas and manufacturing industries,” Mr Butcher said.

“We’ve been doing this because the Palaszczuk Government knows that more gas will help relieve gas prices and supply for our manufacturers and their workers’ jobs. 

“We have already committed $5 million to investigate feasibility and options for a new transmission pipeline from central Queensland to open up the Bowen Basin gas fields, and gas from Senex Energy’s Project Atlas is flowing to  building product and packaging manufacturers.”

Since 2015 the Queensland Government has released almost 80,000 square kilometres of land for gas exploration, over a quarter of it guaranteeing the gas will be for Australian customers.

In a national first, land was released more than three years ago exclusively for gas for the domestic market.

Dr Lynham said the independent bodies had recognised Queensland’s contribution.

“The Australian Consumer and Competition Commission has recognised that Queensland Government initiatives continue to ensure supply to the east coast gas market,” Dr Lynham said.

“The Energy Users Association of Australia says our policy initiative is “delivering real and measurable outcomes for Australian businesses”.

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