Prime Minister Scott Morrison's energy deal with the New South Wales government seeks to benefit fossil fuel company Santos — a major political donor to the Coalition — under the guise of trading off increasing gas production for investment in renewable energy.
The clear losers in this deal will be drought-affected farming communities.
Under the $2 billion funding deal announced on January 31, NSW will commit to supplying an additional 70 petajoules worth of gas into the east coast market each year. This will most likely come from Santos’ controversial Narrabri coal seam gas (CSG) proposal.
NSW has also vowed to secure the operations of the Mount Piper coal-fired power station for at least another 20 years.
As a trade-off, the federal government will provide $960 million in funding for “emissions reductions initiatives” — more than half of which will come in the form of loans — while NSW has committed $1.01 billion of its own funds.
Speaking at the National Press Club on January 29, Morrison said: “I want households and businesses paying less for their electricity and I want to continue to get emissions down — this deal does both.”
“There is no credible plan to lower emissions and keep electricity prices down that does not involve the greater use of gas as an important transition fuel.”
There is no evidence that this deal will do either of those things.
Institute for Energy Economics and Financial Analysis (IEEFA) analyst Bruce Robertson told Renew Economy: “Gas has become an uncompetitive fuel source for power generation in Australia… The gas supply on the east coast of Australia has tripled since 2014 (primarily for export) and domestic gas prices have also tripled.
“Producing yet more high cost gas is no panacea to the gas pricing problem faced in Australia of high domestic prices in a low priced gas world.”
Meanwhile Lock the Gate Alliance condemned the deal in a January 31 media statement, saying it was “designed to unleash [CSG] drilling in north-west NSW, threatening drought-affected farmers and allowing Santos to drain 37 billion litres of groundwater.
“Crucially, it will do little to bring down greenhouse gas emissions due to its reliance on dirty, polluting unconventional gas.”
Lock the Gate NSW Coordinator Georgina Woods explained: “[CSG] is a heavily polluting industry that leaks vast amounts of methane and won’t do anything to bring down carbon emissions.
“As much as Morrison wants it to be so, it is not a transition fuel.”
Mullaley farmer Margaret Fleck, whose farm is not far from the proposed gasfield, said Santos’ project — which will require extensive dewatering of aquifers below the southern recharge of the Great Artesian Basin — was something drought affected farmers couldn’t afford.
“We’re just gutted by this betrayal from the [federal] and NSW governments,” she said.
“Santos has failed to get support from regional communities here for their dangerous gasfield and so the Commonwealth government has opted instead to flat-out bribe the NSW government.
“Morrison’s government is trying to force the Narrabri [CSG] project onto our region even as we face off against one of the worst droughts on record and despite widespread opposition to the proposal.”
The agreement was also slammed by Climate Council CEO Amanda McKenzie, who said a deal to increase gas production would further exacerbate the effects of bushfires, which have already devastated large parts of the state.
“Every dollar toward fossil fuel projects is a dollar toward making heatwaves worse and fires more damaging. It is just crazy, given everything we have lost this summer to even suggest opening new fossil fuel reserves,” McKenzie said.
“More gas isn’t a climate policy it is a pollution policy. While fires are still threatening lives and properties — why is the government investing in making the problem worse.”
Morrison is dead wrong when he says gas is the only credible alternative for lower electricity prices and emissions. There is a credible plan and it is not dependant on fossil fuels.
A transition plan based on renewable energy generation and storage is needed now. Such a plan would include the mass roll out of renewables, electrification of transport, secure employment for workers and communities affected by the transition, and reversing privatisations that have contributed to the current high prices of electricity.