Australia getting fleeced by international fossil fuel companies

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This graph above shows the revenues from the oil and gas sectors (blue) for Australia (top left) and Norway (top right), and the government share of the revenue (orange). From Australia Institute.

Bandt says Australia is “petrol state” dealing with “last gasp” of gas lobby

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Federal Labor must make crucial decisions on the future role of gas in Australia – and of the powerful fossil fuel lobby pushing against the progress of the energy transition – or risk missing the opportunity of a generation to electrify the nation.

In a speech to the Smart Energy Conference in Sydney on Thursday, Greens leader Adam Bandt said Labor was faced with a number of increasingly urgent calls on gas that would determine the speed of electrification in Australia, which he said had been turned into a petrol state.

The Albanese government is coming under increasing pressure, both politically and from energy industry experts and heavyweights, to throw its full weight behind electrification – of homes, businesses and transport – as a huge economic and climate action opportunity.

According to Rewiring Australia chief scientist and co-founder Saul Griffith, electrifying everything and powering it with solar will remove 40 per cent of Australia’s domestic economy emissions and save the average household $3000-5000 per year – a major plus in a cost-of-living crisis.

But as Bandt put it on Thursday, the plan to get electrification into people’s homes also requires a plan for getting gas out, and that is where political progress is getting bogged.

“Australia’s opportunity is to electrify our homes and businesses and export our renewable energy overseas,” Bandt told the conference.

“The opportunity of a generation, to truly stand on our own two feet, and to tackle the climate crisis.

“But we may be about to blow it.”

As the Greens leader explained, that’s because despite repeated climate science warnings against any new fossil fuel exploration; despite the natural decline of gas in homes and the obvious climate and economic imperatives to getting off gas, there’s still a huge pull in the other direction from Australia’s powerful fossil fuel lobby groups.

“We’re witnessing the last gasp of gas. And like a cornered animal, they will fight tooth and nail to slow down the electrification transition,” Bandt told the conference.

As RenewEconomy has reported, this bid to slow down what now looks like an inevitable transition away from gas has included an electrification “cost shock” media offensive, based on highly questionable modelling.

“So now, the Greens, together with everyone in this room and everyone who wants to see electrification fast-tracked, needs to push Labor again to make the right decisions at this crucial inflection point.”

Bandt says this includes decisions about the future of the gas code of conduct, the gas tax, new gas fields and the level of support for businesses and households to get off gas, all of which are expected to be made in coming weeks and months.

“Labor promised to end the climate wars. But the climate wars are not between the Liberals and Labor, or between us and Labor. They never have been.

“The climate wars are the people, and the planet, against the coal and gas corporations and their political representatives.

“It must now be all shoulders to the wheel to ensure Labor picks the right side, and stops trying to walk both sides of the fence.”

Bandt pointed to data that shows that in 2020 Qatar collected approximately $26.6 billion in annual royalties from LNG, while Australia exporting about the same amount of gas only collected less than $1 billion from the PRRT.

He said that in one year, 27 big gas corporations brought in $77 billion of revenue but paid no tax. “I’m willing to wager that in many years, each of you individually in this room may have paid more tax than many gas multinationals,” he said.

Research conducted by Daniel Bleakley, now lead reporter at The Driven, while at The Australia Institute shows that Australia has reaped little from its fossil fuel exports, in sharp contract to Norway which has ensured its citizens have gained from the profits.

This graph above shows the revenues from the oil and gas sectors (blue) for Australia (top left) and Norway (top right), and the government share of the revenue (orange).

“Australia exports 75% of the gas that we produce – instead of new gas fields we need to tax the profits of the big coal and gas corporations and use it to drive the transition,” Bandt said.

“We do not need new gas to “keep the lights on”, as Labor likes to argue. We are the world’s third largest exporter of LNG, and there’s already enough uncontracted gas in the system. We need more renewables.

“Gas is as dirty as coal. It’s not a transition fuel. It’s poison. But yet, gas still calls the shots.”

The rallying cry from the Greens follows a similar call, on Wednesday, from the independent member for Wentworth, Allegra Spender, to establish “a one-stop shop” for electrification” to help households navigate the laborious process of electrifying and installing EV chargers.

Spender – who formed part of a powerful crossbench that pushed the government to include a cap on emissions or an explicit objective that they must come down under the Safeguard Mechanism – also called on the government to deliver on its promise of implementing fuel efficiency standards for light vehicles.

“Every day without a fuel efficiency standard in place families will continue to feel the pain of sky high fuel prices; transport emissions will continue to rise; and the queue of people who want to go electric but can’t will get longer,” Spender told the Smart Energy Conference.

“So let’s not pretend the government are out of the slow lane just yet.

“At best, they’ve got the indicators on – looking nervously in the rear-view mirror for the thumbs up from the fossil fuel lobby.”

Government poised to tap $3b more from fossil fuel super profits

By Mike Foley and Nick Toscano in WA today
Treasurer Jim Chalmers is preparing to raise billions of dollars more in taxes from offshore oil and gas companies to spend on the cost-of-living crisis, as the energy industry makes windfall profits from record fossil fuel prices fanned by Russia’s war on Ukraine.

The Albanese government has been considering changing the settings of the $2 billion-a-year Petroleum Resources Rent Tax that applies to offshore oil and gas projects. Sources familiar with the looming changes, who are not authorised to speak publicly before next week’s budget, said the reforms would be designed to deliver around $3 billion more in tax revenue over the next four years.

Treasurer Jim Chalmers is considering changes to oil and gas taxes.
Treasurer Jim Chalmers is considering changes to oil and gas taxes.CREDIT: MICHELE MOSSOP, ALEX ELLINGHAUSEN

Liquified national gas, one of Australia’s most valuable exports, is forecast to hit $91 billion in export earnings this financial year – three times more than in 2020-21 – after a ban on Russian energy exports following its invasion of Ukraine.

Currently levied on offshore oil or gas projects at 40 per cent of their taxable profit, the PRRT allows generous deductions for capital investments, raising questions over the revenue the tax raises compared with the billions reaped in profits by gas giants including Woodside, Chevron and Santos.

A $3 billion boost in taxes will likely meet opposition both from an industry that has been hit with a raft of reforms since December and from the Greens, as the minor party uses its numbers in the Senate to lobby for a massive tax impost on the gas industry.

The 2022-23 federal budget papers show the PRRT is expected to raise $2.6 billion this financial year, but will thereafter decline steadily over the next four years to about $2 billion by 2025-26.

Cost-of-living crisis to worsen as households face major rise in gas bills

Treasurer Jim Chalmers said last month he had received a Treasury review of the PRRT but had not determined when the government would respond to the findings. He said he was concerned that the tax was “not up to scratch” and “the Australian community, I think, shares those concerns”.

Grattan Institute energy director Tony Wood said the Albanese and former Morrison governments have acknowledged the PRRT was outdated and was failing to deliver the same returns as other countries with major gas production in their jurisdiction.

“I think the government is of a mind to make changes right now,” Wood said. “It was a crazy thing in the first place and should have been addressed earlier.”

Wood said while the gas industry “will obviously feel that any changes are terrible”, public opinion backs tighter regulation on fossil fuels, which will eventually be replaced by the rise of renewable energy.

Wood said one option for government was to alter the settings to deliver greater returns over the next decade or more, but require companies to pay the majority of their future tax bill sooner to boost the budget bottom line.

“They [government] might bring forward revenue that would at least theoretically not be collected for some years,” he said.

“The government could argue you’re going to have to pay anyway, but we want it now.”

In a speech to the National Press Club last month, Woodside chief executive Meg O’Neill said “overreaching” on tax reforms could risk undermining future revenue.

Woodside and other oil and gas producers are resisting any new tax imposts.
Woodside and other oil and gas producers are resisting any new tax imposts.CREDIT: WOODSIDE

“We urge the government, in any changes to the tax framework, to consider the long term and preserve Australia’s ability to attract the next generation of investment, jobs and energy supply,” O’Neill said.

Australian Petroleum Production and Exploration Association chief executive Samantha McCulloch said the gas industry was already paying more to government and will nearly triple the sector’s tax payments within 12 months to $16 billion this financial year.

Significant reforms to the PRRT could net the federal budget $94.5 billion over the next 10 years, according to Parliamentary Budget Office modelling conducted for the Greens.

Greens leader Adam Bandt said he was concerned Labor’s proposed changes would be timid, and fail to make gas companies pay their “fair share of tax”.

“This is the best chance we’ll have in a generation to make these corporations actually pay the gas tax,” Bandt said.

A hike to the PRRT would follow a long list of extra regulations imposed on the industry. The government in December set a $12-a-gigajoule cap on the price of domestic gas sales, imposed a mandatory code of conduct for the industry, set compulsory emissions cuts under the safeguard mechanism, and tightened rules under the Australian Domestic Gas Security Mechanism to redirect exports back to Australia if supply runs short.

Rick Wilkinson, chief executive of Adelaide-based consultancy EnergyQuest, said hiking the PRRT, combined with other market interventions, could raise Australia’s “risk profile” and discourage much-needed international investment in both traditional fuels and renewables.

“Projects needed to get to net-zero are going to cost eye-watering sums of money and rely on overseas capital,” Wilkinson said.

“We need to understand that these are multinational energy companies who are involved in gas as well as renewables, and they will make note of how they are treated with foundation contracts and foundation projects.”

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