Policy & Planning

Morrison spends another $250m on oil refineries, EVs ignored

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The Liberal Party has promised to pour $250 million in fresh subsidies into Australia’s oil industry, which critics say will keep Australia hooked on fossil fuels and delay the switch to electric vehicles.

The funding promise, announced on Wednesday, will be split between Australia’s two remaining oil refineries to undertake upgrades and increase the local production of liquid fuels.

Australia has just two domestic oil refineries, Ampol’s facility in Brisbane and Viva Energy’s refinery in Brisbane.

The funding had been included in last year’s mid-year economic update – as part of a controversial $16 billion election war-chest of ‘decisions made but not announced.’

It is on top of almost $2 billion in subsidies offered to the refineries last year – guaranteeing a minimum price for the fuels produced – as the Morrison government works to keep Australia’s two remaining refineries open.

BP and ExxonMobil closed their local plants in the space of a few months last year, after they were deemed to be no longer commercially viable.

Prime minister Scott Morrison said the funding was necessary due to potential fuel supply uncertainty triggered by the Russian invasion of Ukraine.

“COVID-19, the Russian war in Ukraine and trade restrictions have disrupted global supply chains, and Australia is not immune,” Morrison said.

“Oil refineries literally fuel a stronger economy, and these investments will help keep our truckies, miners, defence force and farmers moving across Australia.”

Australia has faced growing pressure to boost its energy security, including the International Energy Agency, who has long said Australia fails to meet its benchmarks for domestic energy reserves.

Clean energy and electric vehicle advocates have called for increased government support for the emerging electric vehicle sector, which has the potential to both reduce Australia’s overall reliance on imported fossil fuels while also lowering Australia’s greenhouse gas emissions.

However, the Morrison government has instead prioritised subsidies for fossil fuel producers – offering no new funding for electric vehicle infrastructure in the most recent federal budget.

CEO of the Electric Vehicle Council, Behyad Jafari, said Morrison was more interested in backing foreign oil producers rather than Australia’s fledging electric vehicle industries.

“Australia is capable of producing abundant clean electricity and that electricity could be powering our trucks and cars,” Jafari said.

“But we have a prime minister who’s more interested in subsidising foreign oil and that’s tragic.”

“Everyone knows that the future of Australian transport is electric. We should be doing everything possible to rapidly electrify not just consumer vehicles but trucks and commercial fleets.”

The announcement of the new subsidies to increase Australia’s fossil fuel production was also slammed by the Smart Energy Council, who said pouring additional taxpayer funds into propping up fossil fuel industries was not an effective way of boosting Australia’s long-term energy security.

“Providing $250 million to address a fuel security crisis is like putting $1 in the tank when you’re running out of petrol,” the chief executive of the Smart Energy Council, John Grimes, said.

“After nine years of inaction from the Federal Government, Australia is facing a genuine fuel security crisis. If Australia’s supply routes are blocked, we have at most three weeks of supply before we run out of petrol and diesel.”

“Australia needs to be investing in electric vehicles and zero emissions transport, renewable energy and renewable hydrogen, creating the jobs and industries of the future,” Grimes added.

Climate Energy Finance director Tim Buckley said the Morrison government had continued to neglect the potential of electric vehicles and renewable energy to provide significant improvements to Australia’s energy security without prolonging Australia’s use of polluting fossil fuels.

“The Federal Government is full of announcements and commitments to spend taxpayer monies on a multitude of fossil fuel projects in direct contravention of the climate science and economic interests of Australia,” Buckley said.

“Investing yet more subsidies in propping up the historic fossil fuel edifice even as rampant fossil fuel commodity price inflation is smashing consumers – is not the right path for Australia.”

“Australia will be a renewable energy and mining of the future superpower, despite our Federal Government,” Buckley added.

Michael Mazengarb is a Sydney-based reporter with RenewEconomy, writing on climate change, clean energy, electric vehicles and politics. Before joining RenewEconomy, Michael worked in climate and energy policy for more than a decade.
Michael Mazengarb

Michael Mazengarb is a Sydney-based reporter with RenewEconomy, writing on climate change, clean energy, electric vehicles and politics. Before joining RenewEconomy, Michael worked in climate and energy policy for more than a decade.

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