State, territory and federal energy ministers have started the process for significant reforms to Australia’s energy future.
The ministers met on Friday in Canberra where they received a briefing from energy market operators and the consumer watchdog on expected gas and electricity shortfalls in 2023 and 2024.
On top of the agenda was the establishment of a new National Energy Transformation Partnership (NETP) to better collaborate on Australia’s transition to greater reliance on renewables in the electricity grid.
Federal Climate and Energy Minister Chris Bowen announced that as part of the new NETP, emissions reduction would be included in the national energy objectives for market operators.
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Mr Bowen said the decision would send a “very clear” message of certainty to investors and would ensure emissions reduction is at the forefront of every aspect of energy market operators’ functions.
“This might not sound much, this is the first change to the national energy objectives in 15 years this is important,” he said in Canberra on Friday.
“It sends a very clear direction to our energy market operators that they must include emissions reduction in the work that they do.
“And the message of certainty to investors in renewable energy and transition and storage around the world that Australia is open for business, Australia is determined to reduce emissions.
“And we welcome investment to achieve it and we will provide a stable and certain policy framework.”
The ministers also agreed to extend the powers of the Australian Energy Market Operator (AEMO) to better manage east coast supply shortfall risks.
It will also provide AEMO with the option of direct market participation ahead of winter 2023.
In its interim gas report, the Australian consumer watchdog warned of a serious shortfall in natural gas in 2023.
The Australian Competition and Consumer Commissions (ACCC) said LNG exporters needed to redirect excess supplies to the domestic market or Australia would risk its energy security heading into next year.
It comes after AEMO intervened in the Victorian gas market to redirect excess supply from Queensland producers to avoid mass shortages in the southern state – using its emergency mechanism for the second time in history.
The ministers joined the ACCC in calling for producers to redirect excess gas to the domestic consumers rather than the lucrative export market.
NSW Energy Minister Matt Kean said it was a “non-negotiable” for his state when it came to protecting households and businesses.
“What we don’t want to see is domestic gas producers prioritizing profits and exports ahead of local users, that is a non-negotiable for us in New South Wales,” he said.
“There is going to be a shortfall in gas in 2023 and 2024. That shortfall needs to be met.
“And what we need to do is prioritize Australian gas for Australian gas users ahead of companies making super profits and exporting that gas offshore.”
His Victorian counterpart Lily D’Ambrosio shared the concerns and said the country produced “more than sufficient gas” to meet domestic needs but “too much of it was sent overseas”.
“And that’s got to change and that’s really the task of all of us and we’re all up for it. And we’ve all agreed about how we can go about doing that,” she said.
On top of the gas market reforms, the ministers also discussed a future capacity mechanism to ensure firming power in the grid during the transition away from coal.
Senior federal and jurisdictional officials have now been charged to provide options for a framework which delivers “adequate capacity, ensures orderly transition, and incentivises new investment in firm renewable energy.”
“Ministers intend to take a more active role in delivering the firming capacity needed as the system transforms and consider the best means to manage the risks of a disorderly exit of coal generation,” the joint communique said.
Queensland’s Surat Basin may be home to the state’s main coal seam gas region but it could be about to get a whole lot bigger.
Key points:
Senex Energy announces a $1 billion expansion of its natural gas developments in the Surat Basin
CEO Ian Davies says the supply will mostly be for the domestic market
The expansion is set to create 200 jobs during construction and 50 ongoing roles
Senex Energy, which is owned by Gina Rinehart’s Hancock Energy and South Korean steel maker Posco, has announced a $1 billion expansion of its natural gas developments in the Surat Basin, which includes hydraulic fracturing, or fracking.
The expansion, which still needs approval from federal Environment Minister Tanya Plibersek, will increase the company’s gas production to 60 petajoules (PJ) per year from the end of 2025.
Producing enough electricity to power more than 2.7 million homes each year, it is equivalent to more than 10 per cent of the east coast’s annual domestic gas requirements.
In a speech to industry leaders in Brisbane on Thursday, federal Resources Minister Madeleine King urged them to expand amid warnings a gas shortage could lead to higher prices.
“More supply of gas is a good thing in the domestic market and for the international markets,” Ms King said.
“We want to have a sustainable and ongoing system of gas supply for the domestic market, while also honoring the arrangements companies have in place and Australia has in place with our international partners.”
Filling domestic demand
According to the Australian Competition and Consumer Commission’s (ACCC) interim report of its inquiry into gas supply, there is a significant risk to the east coast’s energy security in 2023.
Resources Minister Madeleine King is encouraging gas production expansions.(Supplied: Senex Energy)
“The outlook for 2023 is very concerning and is likely to place further upward pressure on prices, which could result in some commercial and industrial users no longer being able to operate,” the report said.
“Liquified natural gas (LNG) exporters are expected to contribute to the shortfall in 2023 by withdrawing 58PJ more gas from the domestic market than they expect to supply into the market.”
An ‘obligation’ to Asia
Senex Energy chief executive Ian Davies said the supply would be mostly directed to the domestic market.
“[The] majority is absolutely domestic, but we do have an obligation, which we take quite seriously, [in] supporting our Asian neighbors to decarbonise and provide energy security,” he said.
“We have an [international] supply arrangement with Gladstone LNG for a minority of that 60PJ.
“We’re fundamentally a domestic company focused on a domestic supply.”
Senex Energy CEO Ian Davies [R] says the project will create 50 ongoing jobs.(Supplied: Senex Energy)
Landowners ‘deeply concerned’
Senex said its expansion would create 200 jobs during construction at its Atlas and Roma North projects, and 50 ongoing roles, and inject $200 million into the region’s economies.
But property owners in Queensland’s south-west have already felt the impact of gas wells in their backyard.
Ellie Smith of the Lock the Gate Alliance said she was “deeply concerned” about the impact of Senex’s proposed expansion.
“We don’t believe that will have any impact on prices that Queenslanders are facing with this gas price crisis,” she said.
“We’re seeing gas exported overseas when we need it at home, and the only way that we can bring energy prices down is by supporting manufacturers and Australians to shift to renewables.
“What we need to see the federal government do is put in place the gas price caps and the gas trigger to keep more gas onshore to really combat this predatory behavior by the gas industry, so we can see prices come down and protect our farmland and not open new areas to gas fields.”
The ACCC’s interim report recommended the government consider intervening in the market by pulling what’s known as the “gas trigger” to ensure there was enough supply.
Filling a supply shortfall
Queensland Resources Council chief executive Ian Macfarlane said the proposed expansion would pick up the shortfall from Australia’s southern states.
Ian Macfarlane claims the expansion will pick up the shortfall from other states.(AAP: Lukas Coch)
“It is a significant step by Senex in terms of helping this shortage of supply in Victoria and New South Wales,” he said.
“The shortage has come about because Victoria does not explore for [unconventional] gas onshore and New South Wales as a gas industry has been tied up by red and green type.
He said it would set some “certainty about supply in the future”.
“Spot prices are spot prices, and the actual supply of gas today and tomorrow will continue to be affected by the fact that the Victorians and New South Welshmen have not developed their own supply and gas is short globally.”
Potential price drop
Mr Macfarlane said consumers could expect a price drop in coming years as certainty returned to the domestic market.
“there will be a continuation of higher prices in the short term, but with the hope and certainty of lower prices going forward,” he said.
“It’ll be very strong interest and coming from domestic buyers, both here in Queensland and also in southern states.
“Industries such as brickworks, glass making, but also of course, power generation — there’s a whole range of industry that relies on gas, and there’ll be very strong competition in the market for it.”
John Irwin is the general manager of Steritech and on the frontline of Australia’s ongoing gas crisis.
Key points:
State and federal energy ministers meet on Friday for the first time since the ACCC’s scathing report on the east coast gas market
Industry has called for the government to “stand on the throat of gas producers” to ensure supply and fair prices
The Australian Petroleum Production & Exploration Association says there is no gas cartel controlling prices on the east coast
“Without natural gas, we don’t operate our operations,” he said.
Steritech was one of the hundreds of manufacturers left exposed to the spot market when energy retailer Weston Energy collapsed in July.
Only two other gas providers were willing to consider signing a new supply deal with Steritech.
“And both of them were very unwilling to negotiate what we would consider a fair and long term price,” Mr Irwin said.
“It’s take it or leave it, you really don’t have a choice.”
Steritech is now paying up to four times what it used to for gas.
Mr Irwin said the dramatic price hike will eventually be passed through to patients on surgery operating tables around the country.
His company sterilises medical devices in procedure packs that are used in approximately 90 per cent of major operations in Australia.
“So increasing the price of those means that your health insurance is going to go up, and governments’ are going to have to spend more money in the public system for the materials being used,” Mr Irwin said.
Plenty of gas
Australia has plenty of gas and for decades the nation enjoyed cheap prices of around $5-a-gigajoule.
Technology enabled gas to be liquefied and sent overseas and Australia’s price became linked to the global market where prices are higher.
Recently prices on the east coast have skyrocketed as producers ramp up exports to supply a desperate global market caught short because of the war in Ukraine.
Mr Irwin does not hold back when it comes to who is responsible for the gas crisis.
“Both sides of politics have been in a situation where I don’t think they’ve represented the country too well,” he said.
“You’ve got to go back and look at who came up with a deal that does not ensure that we had appropriate domestic gas.
“The Australian community owns the gas in the ground, we license it out to gas companies to be able to extract it and deliver it to us, and you would expect that’s going to be done at a fair price.”
Malcolm Turnbull was prime minister in 2017 when he sat down with the heads of Santos, Shell and Origin and got them to agree to supply enough gas to the domestic market to fill projected shortfalls.
But he did not impose export or price controls, much like the current federal government in this current gas crisis.
Australia exports more LNG than it uses. (Supplied)
Australians have been left paying more for our gas than overseas customers for long periods.
Last week the ACCC delivered a scathing report on the east coast gas market which detailed concerns about price-fixing behavior by exporters.
It also found profits had exploded compared to the cost of extracting gas.
It made similar findings in 2015, concluding that gas suppliers on the east coast had used a market restructure to hike prices on domestic consumers and evidence of collusion.
In its most recent report, the consumer watchdog concluded the east coast market is highly concentrated and dominated by the three LNG exporters, APLNG, GLNG and QCLNG, and their associates – controlling 90 per cent of the proven and probable gas reserves.
The damning ACCC report found exporters were withdrawing more from the domestic market than they were supplying, risking a 56 petajoule shortfall in 2023.
“On top of that it showed that they [exporters] pretty much ignored the heads of agreement that they had agreed with the Australian government [in 2017],” Mark Ogge, principal adviser on climate and energy at the Australian Institute, said.
“They weren’t providing gas at reasonable prices and reasonable terms and conditions to Australian gas customers – they were sending it overseas instead.
“The ACCC report doesn’t use the word cartel, but it describes cartel behaviour.
“If there’s cartel behaviour, if they have been colluding to keep prices high, then they’ve broken the law and that should be investigated.”
Mark Ogge is a gas and energy analyst at the Australia Institute.(ABC News: Peter Drought )
The Australian Energy Market Regulator has said it plans to investigate potentially illegal behavior by the gas companies.
The ACCC said it will review the arrangements of exporters and “where appropriate consider enforcement action”.
Bruce Robertson, an energy analyst with the Institute for Energy Economics and Financial Analysis (IEEFA) said Australia was in “a rolling energy crisis caused by the gas cartel”.
“They control and fix the price through their contracting mechanisms. All these are detailed in the ACCC report, and if it walks like a duck, quacks like a duck, waddles like a duck, it is a duck.
“What the gas cartel is doing is starving the Australian market of gas to force up the price. That’s what cartels do. They fix prices.
“This is a price fixing cartel. It’s illegal and it should be dealt with with the full force of the Australian law.”
Energy analyst Bruce Robertson says gas companies on the east coast act like a “price fixing cartel”.(ABC News: Wiriya Sati )
Since the ACCC report was released on August 1, the gas price has been noticeably lower dropping to as low as $10.50-a-gigajoule.
“The gas price was as high as $55-a-gigajoule just two weeks ago in Sydney. So what we’ve seen is a collapse in the gas price. That could not have occurred without the gas cartel fixing the price,” Mr Robertson said.
“They’ve simply flooded the market in the short term, responding to political pressure that has come on with the ridiculous prices that they were charging Australian consumers.”
The peak body for gas producers the Australian Petroleum Production & Exploration Association (APPEA), said prices had dropped because of planned maintenance on LNG export facilities.
“That’s meant more gas has been able to flow into the market because those facilities are down for scheduled maintenance,” Damian Dwyer, APPEA acting chief executive said.
“And that’s a regular thing that happens this time of year and we’ve also seen warmer weather conditions that have meant less draw on gas for heating and power generation purposes than we saw in May.”
Mr Dwyer said there had been no collusion between gas companies.
“There’s been no behavior of that kind going on, what we’ve got is a market that has been under significant pressure,” he said.
“And that’s the energy market more broadly, not the gas market, the invasion of Ukraine and the international geopolitical tensions and disruptions to the energy market that have arisen from that.”
Electricity prices are going up
Gas is known as a price-setter in the National Electricity Market because gas-fired power plants step in to “smooth” the demand for energy when aging coal power stations are down or renewables aren’t working.
“A fair proportion of the electricity we use is generated by gas power stations at the moment,” Mr Ogge said.
“And with the price of gas going up to $40-a-gigajoule it meant that some gas power stations couldn’t produce gas for under $500-a-megawatt-hour.
“Previously the wholesale price of electricity was around $80 MWh, and these enormously high prices will flow onto Australian households and businesses.”
Damian Dwyer, APPEA acting chief executive, says there is no east coast gas cartel.(ABC News: David Sciasci)
What’s the solution?
Unlike in Western Australia, which requires companies to reserve 15 per cent of gas for domestic use, there are no export limits or price caps on east coast gas.
Innes Willox from AiGroup said the longer the gas crisis drags on the more justification there was for an east coast reservation policy.
“It really is going to need government intervention, both at a federal and state level,” he said.
“And it’s going to need governments, quite frankly, to put their foot on the throat of gas producers to make sure they uphold their end of the bargain.
Mr Willox spent much of last year acting on behalf of industry trying to set up a code of conduct between gas producers and consumers – in the end, it fell over.
“Gas producers refused to touch issues around price, they wouldn’t go near it with a barge pole,” he said.
“They wouldn’t have price, content transparency as any part of a code of conduct, which rendered any sort of idea of a code of conduct completely useless, quite frankly.”
Innes Willox, AiGroup chief executive, says without energy at fair prices there will be no industry.
AiGroup does not support a “full blown reservation policy” but one that would only apply to new gas fields and take into consideration a “national interest test” on whether Australia had enough domestic supply.
Mr Robertson disagrees and argues that there should be no hesitation to apply a retrospective gas reservation policy with price controls, because gas companies have broken their original approval conditions by affecting the domestic market with exports.
“These players are now buying gas out of the domestic market, this is in direct contravention of their approval conditions,” Mr Robertson said.
“But law breaking just seems to go on and on in the gas industry in Australia and the government seems impotent.”
Windfall profits tax
Mr Ogge argues for a windfall profits tax, as the UK government has recently adopted in the face of soaring energy prices.
“A windfall profits tax is the only thing that we know will be effective,” he said.
“That’s because it would be very effective in reducing gas prices, because it removes the incentive for the LNG producers to export all their excess gas overseas to cash in on high gas prices.
“And it removes the incentive for them to charge Australian customers exorbitant prices for the gas that we use.
“On top of that, it provides funds for us to compensate Australian customers and businesses and households, and, money to actually help us electrify and get off gas so that we’re not permanently over the barrel of high international prices.”
tax time
According to analysis from the Australia Institute, five of the nation’s biggest gas producers haven’t paid income tax in at least seven years – despite combined earnings of $138 billion.
“It’s extraordinary when you think about it, that almost half the gas produced in Australia isn’t subject to any royalties at all – so they’re getting the gas for free,” Mr Ogge said.
“We’re getting a woefully inadequate return for Australians, and we’re paying huge additional energy costs.
“It’s high time the Australian government got onto this issue and fixed it.”
Mr Dwyer said the industry is paying its fair share of tax.
“The industry pays taxes or royalties to every jurisdiction. And the way in which that plays out just depends on the jurisdiction in question.”
The industry rejects the need for a reservation policy or price controls, arguing there is not a supply problem — at the same it wants to extract gas from new fields.
“We need is ongoing investment to bring more gas supply into the market, so we’re keen to talk with the government about their way forward,” Mr Dwyer said.
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The cost of living is set to soar as the gas crisis bites.
Canberra homes and businesses will be unable to install a gas connection from next year under the ACT government’s plan to ditch fossil fuels by 2045.
Key points:
Two-thirds of Canberra households currently have a gas connection
The ACT gas supply network will switch off for good in 2045
The government is offering incentives to replace gas appliances
Households are already leading the way, as natural gas prices convince them to switch to electricity to save money.
And Canberra’s new suburbs have already been designed without gas connections.
However, the government tabled legislation today to end all connections to new builds — including in older suburbs — as of January 1.
Chief Minister Andrew Barr said the transition — far ahead of the rest of the country’s schedule — would be “gradual and gentle.”
He said cutting off new gas connections was the only way to meet the ACT’s target of eliminating greenhouse-gas emissions.
“The days of cheap gas in Australia appear to be over,” Mr Barr said.
“Renewable electricity is now the cheapest and cleanest way to power our homes and businesses.”
About two-thirds of Canberra homes have a gas connection, though the number has been shrinking.(Supplied: ACT government)
About two-thirds of Canberra homes use natural gas — for heating, water systems or cooking — and the fuel accounts for about 20 per cent of the ACT’s emissions.
The ACT already buys more electricity from renewable sources than it uses: it reached its 100 per cent target three years ago.
Most remaining emissions come from transport, and the government revealed plans last month to phase out petrol and diesel engines.
Mr Barr said the government would help Canberrans to turn off their gas entirely by 2045.
“We know we need to make this transition in a responsible and considered manner — a way that provides certainty to households and businesses but also supports them during the transition,” he said.
Market forces already encouraging Canberrans to switch
Each year, about one in 50 ACT households year switches from gas to electricity.(Supplied: ACT government)
Even before the Ukraine war worsened the global energy crisis, prices had been driving Canberrans to disconnect from mains gas.
In the two decades to 2020, gas costs for ACT households doubled after accounting for inflation.
They are expected to rise a further 19 per cent over the coming decade — about $220 a year more for a typical home.
Meanwhile, electricity prices are predicted to fall 3 per cent.
As a result of these pressures and environmental concerns, about 2 per cent of Canberra households each year have been cutting off their gas supply.
The government now expects that to increase to 2.5 per cent a year.
Its modeling also suggests that, without any policy interventions, market forces alone would reduce Canberra’s gas use by almost 60 per cent by 2045.
Change-over costs the biggest barrier: survey
Shane Rattenbury says induction electric cooktops are preferred even by chefs.(Unsplash: Conscious Design)
The government says a range of incentives will help people and businesses change over.
These include the existing interest-free household loans of up to $15,000 to improve energy efficiency or switch to electricity.
Lower-value homes are also eligible for direct subsidies of up to $5,000.
Climate Change Minister Shane Rattenbury said disconnecting from mains gas was a longer-term goal, and there was no need to hurry, though it made sense to avoid the annual connection fees.
“As your current gas devices come to the end of their life, our advice to you is: make your next one electric,” he said.
“As you go to replace your hot water or heating system, don’t put another gas one in: choose an electric one today.
“It’s better for the environment and it’ll be better for your bank account — and we’ll help you make that transition over the coming years.”
A recent government survey found cost was the biggest barrier preventing Canberrans from switching to electricity.
At present, removing a gas meter and supply pipes costs about $800 per household.
The government said it would work with the Australian Energy Regulator to reduce or abolish that charge.
Mr Rattenbury said the ACT gas network would be switched off in 2045, but the government would not stop people from buying gas in LPG tanks if they wanted to.
“But I would say to those people: those new induction cooktops perform like gas, and the chefs we’ve talked to who’ve tried it love it.”
The Resources Minister has put gas producers on notice that the federal government intends to pull the “gas trigger” to restrict their exports, unless they can provide the nation does not face gas shortfalls in 2023.
Key points:
The federal government has warned it will pull its “gas trigger” if supply for next year is not guaranteed
The gas industry says Australia does not face a gas shortfall, contrary to warnings
The government will attempt to reform the gas trigger and renew it to 2030
Madeleine King says she will issue a notice to suppliers, the first step towards enforcing the Domestic Gas Supply Mechanism, directing them to provide a detailed response on supply and export forecasts for next year.
The consumer watchdog has warned that despite Australia’s abundant gas supplies, the outlook for next year was “very concerning”, with most of that supply slated for export.
It warned the government to consider intervening or face the risk of gas shortfalls in 2023.
The federal government has the power to force gas producers to restrict exports of their excess supply to ensure supply for the domestic market, known colloquially as the “gas trigger”.
The trigger was due to expire next year, but Ms King says it will be renewed to 2030 and reformed so that it can be used at shorter notice.
The minister says she will make a decision in October on whether to proceed with imposing export controls.
If pulled, the gas trigger would come into effect from January next year.
Industry promises no gas shortfalls next year
The gas industry is attempting to ward off the threat of the government pulling the gas trigger, saying it has the supply to meet consumer demands next year.
The ACCC has projected a shortfall of about 10 per cent of the nation’s gas demand next year as producers withdraw more domestic supply for export, where it can sell for a better price.
But the industry argues three times as much uncontracted gas is available for supply into the domestic market than the projected shortfall, and producers understand their “obligations” to Australian households.
In a statement, the head of the industry’s peak body, the Australian Petroleum Production and Exploration Association (APPEA), said there was no gas shortfall and no shortfall coming.
“There has never been an actual shortfall and there will not be one next year – this is the ACCC signaling that action is needed, and the industry will act,” APPEA’s chief executive Damian Dwyer said.
“Gas customers can be assured supply will be adequate next year so households and businesses can continue uninterrupted.”
The ACCC said while exporters had been “technically compliant”, some exporters have been unwilling to negotiate with the domestic market and honor a handshake agreement to engage in fair price negotiations to ensure domestic supply.
Ms King says the government will revisit those agreements with exporters, which were due to expire next year.
Mr Dwyer said pressure on the system was due to the war in Ukraine, coal-fired generation outages and “renewable energy not stepping up when required due to bad weather”, and not the gas industry.
He said prices for 2023 have increased, but Australian prices remained below international rates.
“The industry stood up when the east coast needed us this winter and we will do so again now as we have done for decades, providing safe and reliable energy supply,” he said.
The Australian Energy Market Operator was forced to intervene in the east coast market earlier this winter to cap prices and compel electricity generators to produce power.
AEMO at the time said the industry was “not able to deal” with the issues it faced and required the regulator to seize control to prevent blackouts across several states.
The Federal government has been urged to consider intervening in the energy market, amid concerns of a gas shortage that could lead to higher prices, according to the latest report by the consumer watchdog.
Key points:
The ACCC’s report projects the largest supply shortfall of domestic gas since 2017
The projected shortfall could place further upward pressure on prices
Concerns are raised that some manufacturers could shut down
The Australian Competition and Consumer Commission (ACCC) has released an interim report of its inquiry into gas supply along the east coast.
It noted that while Australia has “relatively abundant gas resources”, most of it is produced for export and substantial volumes were required for the domestic market next year to avoid a shortfall.
“The outlook for 2023 is very concerning and is likely to place further upward pressure on prices, which could result in some commercial and industrial users no longer being able to operate,” the report said.
“This is a significant deterioration in conditions relative to what we projected for 2022 at the same time last year and presents a real risk to Australia’s energy security.”
It has recommended that the government consider intervening in the market, by pulling what’s known as the “gas trigger” to ensure there is enough supply.
The Gorgon project in Western Australia has been supplying gas since 2017.(Chevron)
The ACCC has predicted a shortfall of 56PJ next year, which is equivalent to about 10 per cent of domestic demand, the largest projected supply shortfall since 2017.
“This represents a further [almost tenfold] deterioration in conditions relative to what was forecast for 2022 at an equivalent time last year,” the report said.
The ACCC has partly pointed the blame at liquefied natural gas (LNG) exporters.
“LNG exporters are expected to contribute to the shortfall in 2023 by withdrawing 58 PJ more gas from the domestic market than they expect to supply into the market,” the report said.
The shortfall is expected to mainly affect New South Wales, Victoria, South Australia, Tasmania and the Australian Capital Territory, with less significant consequences for Queensland.
How to fix the problem
To avoid the gas shortage, the ACCC has encouraged LNG exporters to act immediately to increase domestic supply and has recommended the government work with exporters to ensure they supply more into the domestic market.
“LNG producers will need to divert a significant proportion of their excess gas into the domestic market,” the report stated.
It has also recommended the federal government go further and initiate the first step of the Australian Domestic Gas Security Mechanism (ADGSM), more commonly known as the ‘gas trigger,’ and formally determine if 2023 will be a shortfall year.
The gas trigger is an emergency provision, which allows the Resources Minister to directly intervene in the gas market and impose export controls to ensure there are adequate supplies for use in Australia.
Treasurer Jim Chalmers says the report highlights “alarming” elements of the east coast gas market.(ABC News: Adam Kennedy)
The government is yet to outline whether it will follow the recommendations but in a statement, Federal Treasurer Jim Chalmers said he was concerned by the findings.
“The ACCC’s latest gas inquiry report highlights some alarming features of the east coast gas market,” he said.
“The government takes these findings extremely seriously and will shortly respond to the ACCC’s recommendations.
“I urge gas producers to do the right thing by Australians.”
The ACCC said other measures that could also help with supply issues include sourcing additional gas from the Northern Territory and withdrawing gas from storage.
Long-term plans
The government has an agreement with LNG exporters that aims to ensure there is enough reasonably priced gas supplied to the domestic market, known as the Heads of Agreement.
However that deal ends next year, and the ACCC has recommended the government strengthen the stipulations which include reporting obligations.
It has also made a similar recommendation on strengthening the ADGSM.
The ACCC has also pointed to supply issues being resolved in the medium to long term through the expansion of gas projects in the Gippsland Basin, the south-west pipeline in Victoria and further progress on LNG import terminals.
However the report notes the growing focus on other energy supplies, as Australia tries to reduce its emissions, and has acknowledged federal funding will help further support natural gas, carbon capture and storage, and hydrogen projects.
