Angus Taylor steps on the gas, but how does that sit with emissions targets and carbon costs?

Federal Liberals leader Angus Taylor has rekindled calls for Australia to open up new gas fields to put “downward pressure” on energy bills but provided no detail on the plan’s effectiveness nor impact on greenhouse gas emissions.

The call for more fossil gas came as analysts, RepuTex, released a report estimating Australia’s carbon prices would have to top $220 per tonne of carbon dioxide by the early 2030s – or more than fivefold current levels – to ensure national emissions were compliant with a Paris 1.5-degree climate limit.

“Australia has gas under our feet, workers ready to develop it and families desperate for relief from high energy bills, yet Labor’s answer has been to make Australian energy harder to produce,” Taylor said in a statement.

The policy, released by the Liberals on Monday alongside Nationals leader Matt Canavan and energy spokesperson Dan Tehan, pledged to “unlock new supply and use state energy deals to deliver cheaper, more reliable energy for Australian families and businesses”.

“A state that is prepared to unlock new gas will have a willing partner in Canberra to help get that gas from the ground, through the pipeline and into Australian homes and businesses,” Taylor said.

“More Australian gas means stronger competition, more reliable electricity, more secure manufacturing jobs and downward pressure on the energy bills families and businesses pay.”

The Coalition statement claimed power bills have risen “close to 40 per cent since 2022”, ignoring the fact Taylor had, as then energy minister that year, delayed the release of projected default market offer prices until after the May 2022 elections.

While power prices have risen under the Albanese government, once those 2022 inherited price rises by the Australian Energy Regulator are excluded from Labor’s tally, the increases are more modest. NSW default residential prices, for instance, were up as much as 18.3% and small business prices around as much as 18% in both NSW and Queensland because of the AER’s 2022 determination alone.

The Coalition said its model for energy prices was “simple: states unlock the gas, Canberra helps deliver what is needed, and Commonwealth support is tied to action”.

“That could mean a state opening up new gas fields, getting a stalled project moving or removing unnecessary regulatory roadblocks,” the statement said. “In return, the Commonwealth could partner on pipelines, storage, gas-fired generation or other infrastructure needed to get more energy into the system.”

Australia’s gas policy has been a contested space for years. After eastern Australia’s gas was deliberately tethered to global markets to drive investment into LNG exports, prices have largely been set by international trading.

Federal Labor’s efforts to develop a reservation policy for the east – Western Australia has had one since 2006 – is aimed at diverting as much as a fifth of output from local fields to domestic users are aimed in part to create excessive supply to lower the price for businesses and residences.

Resources minister Madeleine King told ABC’s RN Breakfast on Tuesday that the government was “absolutely” on track to introduce the reservation scheme by next July.

“I know not everyone will be entirely happy with the whole of the end result, but the main thing is we are laser-light-focused on making sure Australians have, and Australian companies and businesses have, an affordable gas into the future and a good oversupply or good supply of that gas for Australian manufacturing,” King said.

Coalition energy and emissions reduction spokesperson, Dan Tehan, subsequently told RN Breakfast that Labor under energy minister Chris Bowen had “an ideologically driven, renewables-only approach” that was leading to “energy scarcity” rather than abundance in Australia.

In that Coalition’s statement, Tehan was also quoted as saying gas was “critical to that abundance, supporting our electricity grid, our manufacturers and Australian households”. 

Gas, though, has had a declining role in the power grid, particularly as storage – large and small – eats into evening electricity demand.

In the June quarter, for instance, expensive gas-fired power generation sank to a 23-year low, helping to roughly halve wholesale electricity prices in the main grid compared with a year earlier.

Indeed, greater clean energy penetration of the grid helped to drive greenhouse gas emissions to a new second-quarter low of 27.1 million tonnes of carbon dioxide equivalent, the Australia Energy Markets Operator said in its quarterly market dynamics report.

Emissions, often given scant attention in the political debates over gas use, have generally flatlined in the past two decades once land-use changes are excluded. Reductions in the electricity sector have largely been nullified by increases in carbon pollution from other sectors of the economy.

RepuTex said that current Australian Carbon Credit Unit (ACCU) prices were about $39 per tonne of CO2 eissions today, and were likely to rise toward $100/t by 2035 “under current and expected policy settings”.

However, were Australia’s policy settings to be compliant with global efforts to restrict global warming to 1.5 degrees – as agreed at the 2015 Paris climate talks, as the lower end of temperature increases – much higher carbon prices would be required for Australia.

“Modelling shows Australia’s current climate policy framework is tracking on a 2 degrees Celsius pathway, so moving to 1.5°C would require a significant step-up in policy ambition, and higher prices, as deeper decarbonisation technologies become necessary,” Hugh Grossman, RepuTex’s chief executive officer, said in a media release.

Those “materially stronger policy settings would see prices exceed $220/t under a 1.5°C pathway – more than 2x forecast levels – reflecting the need for higher-cost industrial decarbonisation to meet the tighter emissions constraint”, RepuTex said.

“The challenge is for policy to provide a stronger signal to unlock the deeper industrial decarbonisation technologies we need under a 1.5°C pathway,” Grossman said.

Australian companies would face a much tighter emissions constraint than under current policy, with Australia’s emissions budget shrinking by more than one third (35%) to support that greater climate ambition, RepuTex said.

Ben McLeod, a senior policy and advocacy adviser with the Climate Council, said the Liberals wanted to “cut renewable power, increase expensive and polluting coal, and scrap Australia’s industrial pollution law”.

“With those policies, you’d think Dan Tehan was the shadow minister for climate pollution,” McLeod said.

“Australians understand that gas is expensive,” McLeod added. “Increasing reliance on gas would push power prices up. It is a total fantasy to suggest otherwise.”

Renew Economy contacted Mr Tehan’s office for comment.

To join more than 29,000 others and get the latest clean energy news delivered straight to your inbox, for free, click here to subscribe to our free daily newsletter.

To support independent media, and help combat the spread of deliberate misinformation and disinformation about the energy transition, you can click here to make a one off donation or become a regular supporter of Renew Economy.