Key Takeaways
- Australia’s need for new gas fields is a false narrative, as most gas is exported or used for processing exports, not power generation.
- Labor’s energy plans claim more gas is needed to back up renewables, but models show less future gas use than historical peaks.
- The 2025 budget favors gas industry with tax benefits, while neglecting climate action, showing political support for coal and gas industries.
A persistent trope within the political debate around gas in Australia is the false narrative that Australia needs to open up a swathe of new fossil gas fields to supply power stations during the energy transition, to ‘back up’ wind and solar.
Gas as a ‘transition fuel’ has a long history, and it is no surprise how frequently it turns up in Australia’s energy debate.
In a recent ABC News article, Jacob Greber writes on the energetic debate around where gas dug up in Australia ends up. Currently, most of it ends up either being directly sent overseas, or being used to process gas being sent overseas. Only a small proportion ends up being used in power generation.
This is important context for a claim that’s made in the ABC article: “Labor’s energy plans have their own need for more gas, which the government says will be needed to “firm” or back up intermittent wind and solar power”.
Labor is aiming to hit a proportion of 82% non-fossil energy in National Electricity Market by 2030, and even the Labor party actively justifies new gas extraction projects on the grounds of being ‘needed’ for the power sector.
The Australian Energy Market Operator (AEMO) publishes a well-respected model of the energy system if those targets were to be hit (the ‘Integrated system plan’, or ISP), and for some time these models have shown quite simply that while fossil gas might be useful as backup for rare stretches of low wind and sun, the net volume of gas used is far lower than the historical reliance on gas in the power system:
In the ISP, gas in the future never exceeds its historical peak for the NEM. Over the next twenty five years, less gas is burned in the NEM that has been burned in the past sixteen years.
None of this is a guaranteed future – the ISP simply lays out a range of possibilities limited to the physical constraints of the system and minimising costs. But there is no “need” for massive volumes of fossil gas in a clean power grid.
This is before we even get to the problem of trying to buy gas turbines as they’re being eaten up by the US to power data centres.
Gas windfall in the budget
Climate barely featured in Labor’s 2025 budget, delivered on Tuesday night, but The Australia Institute points out that a clear winner is the gas industry, which is projected to pay far less ‘petroleum resources rent tax’, or PRRT, over the next four years.
“As a result, beer drinkers…will still pay $4.8 billion more than gas companies do on PRRT,” the TAI notes.
The Australian Conservation Foundation pointed out the ‘Fuel tax credits scheme’, which subsidises diesel fuels, is substantially larger than all funding for nature in the budget. Labor’s keeping quiet on climate, but no so quiet that they end up dropping perks for the coal and gas industries.
Grim.
