The consultancy, ACIL Allen, has been found to have pocketed a contract worth almost $275,000 to advice the Albanese government on its Future Gas Strategy without disclosing it had just wrapped up giving advice to the fossil gas industry.
The claim is contained in a report by investigation group, Climate Integrity, dubbed “Working both sides of the fence”, that obtained documents under freedom of information and analysed open-sourced material.
Renew Economy has sought comment from ACIL Allen, from ministers Chris Bowen and Murray Watt, and the Department of Climate Change, Energy, the Environment and Water (DCCEEW) that had issued the company with the $273,713 contract.
“ACIL Allen did not declare any conflicts of interest in the procurement process,” was DCCEEW’s confirmation.
Consultants’ relations with governments have been under closer scrutiny after the 2023 revelations that PwC had disclosed confidential information to clients while also serving as a tax advisor to Treasury and Australian Board of Taxation.
According to the report, ACIL Allen was covered by the Supplier Code of Conduct during the time it failed to disclose its service to both sides of the gas coin.
“Despite being paid by gas industry and lobby groups to produce reports that were then used to lobby decision-makers on the same policy, ACIL Allen did not declare this conflict of interest to the government – a serious omission, given these companies and industry bodies have a direct financial interest in the Strategy’s outcomes,” the report argued.
Climate Integrity’s research focussed on 2023 and 2024, years that ACIL Allen worked for both the federal government and the fossil gas sector.
The consultants provided three reports for industry groups, including the Business Council of Australia, the Australian Pipelines and Gas Association and the Energy Networks Australia.
The report noted that material from the report commissioned by Gas Energy Australia was later quoted in the government’s Future Gas Strategy final report and attributed to ACIL Allen without a mention of which organisation had commissioned the work.
ACIL Allen also produced two reports for DCCEEW, one advising on east coast gas market reform and the another – delivered in two parts – explicitly to “inform the development of the Government’s Future Gas Strategy for consideration by Government in Q1 and Q2 2024 and the Energy and Electricity Sector Plan”, the report noted.
“By working on gas policy both for the government and for gas industry clients, ACIL Allen has a conflict of interest,” the report said.
“Its clients in the gas industry have a direct financial interest in the outcomes of government policy, on which it is also advising,” it said. Neither DCCEEW nor the Department of Industry, Science and Resources (DISR) – which led the Future Gas Strategy – responded to Climate Integrity’s questions about how the reports were used within the government.
The report, for instance, cited an email exchange between DISR staff at the time that stated gas-powered electricity generation was “a bit of a blind spot, so this analysis is meant to provide a more detailed understanding … This will inform an understanding of energy security, whether other sources of firming can perform this role and whether government action is needed”.
Climate Integrity also highlighted ACIL Allen’s consistent over-estimation of the cost of zero-emissions alternatives to fossil gas.
In the BCA’s submission to the Future Gas Strategy, the consultancy supplied the modelling in a November 2023 report that claimed the cost of zero emissions energy storage options – lithium-ion batteries and pumped hydro energy storage – were “much higher than gas generation firming”.
“[T]heir capital cost disadvantage is a critical barrier to their use for long-duration seasonal firming,” ACIL Allen concluded, calling for further investment in Australia’s fossil gas supply was necessary and claiming that would help Australia to achieve its net zero targets.
Among the questionable assumptions ACIL Allen used was to exclude the ongoing operational cost of gas as a fuel, drawing it to conclude “the ongoing use of natural gas in the power system will provide significant economic value for a very small volume of emissions”.
As one example of ACIL Allen’s advice influencing the Future Gas Strategy, Climate Integrity examined the consultancy’s commissioned work from DCCEEW to compare the costs of gas firming generation to that of zero emissions alternatives that it delivered in July 2024.
ACIL Allen’s report compared the cost of the continued use of gas generation to firm up the national electricity market against two narrowly constructed alternative scenarios: fossil gas being replaced only by pumped hydro projects by 2050; or, all gas firming being replaced by only hydrogen-fuelled generators by 2050.
Climate Integrity described such scenarios “unrealistic”, and counter to forecasting of an optimal future grid used by the Australian Energy Market Operations that relied on a mix of firming technologies.
In its Future Gas Strategy, however, the government ended up adopting the view gas generation would serve as a “transition fuel” and remain necessary to form renewable electricity generation beyond 2050.
Gas power generation “will underpin Australia’s electricity supply in the transition to a net zero economy”, the strategy states. “It is likely that gas will still play a role in electricity generation up to and beyond 2050.”
ACIL Allen, though, was at least consistent, downplaying the importance of emissions, among other points.
“Throughout all of the ACIL Allen reports we analysed, there is a consistent adoption of assumptions and modelling methods that support the case for more fossil gas,” Climate Integrity said.
“Based on the conclusions of this analysis, ACIL Allen advocates for the introduction of policies that support the gas sector.”
- The report concludes that “[w]hile the Future Gas Strategy was informed by a broad range of inputs, many of the gas industry’s submissions to consultation
- on the development of the report drew upon various ACIL Allen reports, and much of the Future Gas Strategy’s conclusions – which includes a recommendation that Australia continue to develop new gas supplies beyond 2050 – are consistent with ACIL Allen’s conclusions.”
Among Climate Integrity’s recommendations, was a call for all government departments and agencies commissioning research and analysis from consultancies to “seek guarantees that conflicts of interests will be declared and mitigated”.
“This is particularly important when a consultancy’s clients have a particular interest in the government adopting particular policy positions,” it said.
It also suggested that ACIL Allen and other consultancies “should assess the climate impacts of their work against stated commitments to climate targets or goals, including ensuring their work is consistent with [their] own climate commitments”.
“This includes a calculation and disclosure of their ‘serviced or advised emissions’.”
Steph Hodgins-May, the new deputy leader of the Australian Greens, said the process had “no integrity.”
“You cannot develop a gas strategy with consultants who are simultaneously working for the gas industry,” Hodgins-May said.
“This looks like a closed shop between government, gas companies and their consultants,” she said. “It’s little wonder the government won’t act on a gas tax that delivers a fair return to Australians when it’s relying on the same consultants the gas industry uses.”
“The government must have known what it was getting when it hired ACIL Allen for this work,” Hodgins-May said. “But there are serious questions about why it failed to do proper due diligence, and why ACIL Allen failed to disclose information that was clearly in the public interest.”
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