Labor’s great gas con

Labor's promise of more gas is a hand-out to its corporate mates.

Labor leader Bill Shorten’s promise on April 23 to help boost gas companies’ bottom lines if elected to the top job is as much about currying political favor with corporate mates as it is perpetuating the fiction that more gas will reduce energy prices.

Shorten is also guilty of perpetuating the dangerous myth — debunked now for years — that gas is “clean” energy.

Labor owes the gas companies big time. Market Forces estimates that, over 2017–18, Woodside, Santos, Chevron Australia, Origin and Alinta Energy donated close to $500,000 to Labor.

They will want a return.

A section of Labor’s union base also supports gas expansion.

The Australian Workers’ Union, of which Shorten was secretary in the mid-2000s, has been the most vocal. It wants more conventional and unconventional gas mines opened up in Queensland and the Northern Territory, arguing it will create jobs and lower energy prices.

Labor is proposing to re-purpose the Northern Territory Infrastructure Fund (NAIF) into a slush fund and hand over $1.5 billion to gas companies on the basis that expanding the industry would “drive down costs” and “create more jobs”.

Labor also wants to create a new “Northern Australia Development Fund” to provide $1.5 billion for the industry’s proposed pipelines across Queensland’s Galilee and Bowen basins, and another connecting the NT’s Beetaloo Basin, south of Katherine, to Darwin and the east coast.

But Labor’s talk of job opportunities and lower energy prices has been contradicted by reality. Importantly, it also ignores the climate scientists.

After the initial set-up phase, the number of jobs will dramatically dwindle as the gas industry becomes more automated.

Gas prices are subject to the rise and fall of prices on the international market — the destination of most of Australia’s gas supply.

And climate scientists agree that the world has 10–12 years to dramatically reduce greenhouse gas emissions to avert catastrophic climate change.

Price gouging and tax dodging

According to analysis by Bruce Robertson for the Institute for Energy Economics and Financial Analysis, Labor’s offer to subsidise the liquefied natural gas (LNG) industry is a “poor decision”.

The industry, he said, is already renowned for its price gouging and tax dodging.

“Onshore gas will not result in lower prices for consumers,” Robertson said, pointing to the recent tripling of gas production on the east coast alongside a tripling of gas prices as evidence.

Australia is now the world’s largest LNG exporter, having overtaken the United States and Qatar. Robertson explained that the surge in gas production has not put downward pressure on domestic prices — as politicians like to imply — because neoliberal market rules, also known as “deregulation”, allow companies to control the price and supply of gas.

Despite the ongoing industry scare campaign about the east coast running out of gas, the reality is that it now produces three times more gas than it consumes.

Robertson also said that more subsidies to the unconventional gas industry, which is already well established in Queensland and trying to gain a foothold in the NT and NSW, is a bad investment.

“There have also been massive fracking losses in Australia”, he said, pointing to the BG Group, which wrote down its fracking project by $5.4 billion before it sold it to Shell.

He said BHP and Santos have “had multiple write-offs”, with BHP recently losing US$10 billion in the US, and Origin writing off an entire Queensland gas field because it was “unable to find gas”.

The fracking industry had “misjudged the costs” associated with building and operating gas projects as well as what gas fields actually produce.

The unconventional gas industry has long trumpeted its high tax and royalty payments. But this too is a fiction.

The BG group claimed in 2010 that it would pay about $1 billion a year in federal taxes and a further $300 million in royalties to the Queensland government.

But an investigation by Michael West into the top 40 tax dodging companies has found that the BG group paid no tax on the $6.7 billion it listed as its total income over the past 3 years.

Renewable alternatives

Labor’s pro-gas industry announcement comes as the global LNG market is already oversupplied and, for the first time ever, the renewable energy sector (hydro, biomass, wind, solar and geothermal) is projected to generate more electricity than coal-fired plants in the US.

“Domestically, gas is no longer a competitive fuel for electricity production … and its usage is falling”, Robertson said.

Further, he and many others have warned that the opening up of two major gas provinces “will ensure Australia fails to meet its Paris commitments”.

Fugitive methane emissions from the extraction, processing and transportation of gas, as well as leaking well heads, are a significant and growing contribution to Australia’s high per capita carbon footprint, as methane has more than 80 times the climate warming impact of carbon dioxide over the first 20 years after it is released.

The Climate Council said in January that to have a chance of keeping global temperature rise below 2°C, more than 70% of Australia’s existing conventional gas reserves must stay in the ground.

In this federal election, Labor is only proposing an emissions reduction target of 45% on 2005 levels by 2030.

The Coalition says a reduction in emissions to 26–28% on 2005 levels by 2030 is enough to meet Australia’s Paris Agreement.

By any measure, this is climate denialism and stands in stark contrast to the actions of others.

Scotland’s First Minister Nicola Sturgeon declared a “climate emergency” recently and committed Scotland to become carbon neutral by 2050.

British Labour leader Jeremy Corbyn said a Labour government would follow Scotland’s footsteps and ban fracking.

Australia, with its abundance of renewable and sustainable energy sources, could easily go down the same path. But that would require leadership and a commitment to putting people and the planet before profits.

In 2010, Beyond Zero Emissions released a fully-costed plan of $370 billion over 10 years to move to 100% renewable energy. Since then, prices have plummeted, as technology has improved and manufacturing grown.

Imagine if the $5 billion of NAIF funds was earmarked for a jobs transition to a zero carbon economy?

The remaining cost could easily be covered by withdrawing the $12 billion a year the government gives in subsidies to fossil fuel corporations and ending the tax dodging arrangements that allow the 40 biggest companies to pay only $26.8 billion in tax, when they should be paying about $474 billion.

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