The Coalition has vowed to fast-track approvals for gas projects if elected, claiming it would help ease worries about supplies on the east coast and help bring down energy prices.
Frontbencher Senator Jane Hume said on Tuesday a future Coalition government would “make sure approvals are met within 30 days of coming to government”.
Echoing a claim from Nationals leader David Littleproud on Monday, Hume said “it’s all about demand and supply”.
“Bring on more supply and prices will come down,” she said.
The statement makes for a simple and understandable political grab, but experts are sceptical.
Are there gas projects that could be fast-tracked?
A promise to fast-track approvals assumes that there are projects that could supply gas to the east coast that are being held up.
The federal government only has direct control of approvals for offshore projects. Licensing and approvals for onshore gas projects are run by the states.
But Tony Wood, the director of the Grattan Institute’s energy program who previously worked in the gas industry, said while Woodside’s controversial extension of its massive North-West Shelf project was awaiting approval, that gas would either go to Western Australia or be exported.
“I don’t know of any other projects that are currently being held up. Onshore gas is a state issue, not federal, and there is nothing being held up that I know of,” he said.
Federal government only becomes involved in approvals for onshore projects if they affect the habitats of threatened species, or if the gas needs an export licence.
Santos’ Narrabri project in New South Wales has already been approved by the state, but has been struck by delays and legal challenges.
Wood said even if a hypothetical new project was approved tomorrow, it would take between two and five years for new gas to make it to the market.
“It doesn’t happen quickly and you need to know you have a market to sell to,” said Wood.
Would increasing gas production solve the problems?
The previous Coalition government, under Scott Morrison, promised a “gas-powered recovery” from the Covid pandemic, but Wood said little was done to turn that into reality.
More than 80% of the gas produced in Australia is used for the country’s LNG export industry, which is concentrated in north Queensland.
Joshua Runciman is lead analyst for Australian gas at the Institute for Energy Economics and Financial Analysis (IEEFA).
He said an increase in production of gas does not guarantee that it would be supplied to the domestic market. There was a chance any additional gas being produced would be soaked up by existing LNG exports projects.
He said: “Government approval does not mean that new gas projects will be commercially viable. A looming glut in liquefied natural gas markets, which is already pushing down LNG prices, presents headwinds for Woodside’s planned expansion. The business case for the project will also be impacted by the need for carbon capture and storage – which has a poor and expensive track record – or offsets to address the significant carbon implications of the project.”
Wood said concerns of a gas supply shortage had been ongoing for many years, yet the domestic market continued to have enough supply.
He said if a future government introduced an obligation on gas producers to supply the domestic market, then the “the issue is, what is the price of that gas?”
“The only way you get the price down is to set the price, and that is a very heavy-handed form of regulation and hard to do. Or you oversupply the market, but why would companies do that? And then what happens to the extra gas?”
What other options are there to ease perceived pressures and prices on the east coat?
Gas is used by industry, used in gas-fired electricity plants as well as by households for heating and cooking.
Wood points to last winter when cold temperatures and a reduction in wind and hydro-power meant more gas was used for electricity, pushing prices upwards.
Some experts have said before that a solution to electricity price rises is not to have more fossil fuels – like gas – but less, while speeding up the penetration of renewables and storage.
Another route to lowering demand for gas, and the high prices associate with the fuel, says Runciman, is to promote policies that encourage households to electrify their homes, such as incentives to ease the upfront costs of alternative technologies.
“A way to address supply concerns quickly is to get households off gas,” he said. “Most households use gas for space heating and hot water, but we know there are more efficient and cleaner alternatives, like heat pumps.”
Analysis by IEEFA has suggested that electrifying homes and moving away from gas would save Victorian households – the heaviest users of gas – as much as $1200 a year, as well as substantial reductions in the demand for the fossil fuel.
