Nadia Mitsopoulos: You’ve been saying the deal will ultimately make it harder for Australia to meet its climate change targets, how do you come to that conclusion?
Samantha McCulloch: The industry is committed to net zero emissions and we’re investing in the technologies to really implement very significant emissions reductions, but it’s clear that we need more gas for the transition to net zero. So, what we’re already seeing is we need more gas to support renewables deployment in power generation, we need more gas to support that shift away from coal, and putting obstacles in the path to new investment in gas is of a concern because it will actually slow down, and lead to a more disruptive transition. So, while we as an industry, are committed to net zero and many of APPEA’s members have even targeted earlier dates than 2050 for their own net zero emissions ambitions, we need to see certainty and stability for new investment in new supply that will be key to putting Australia on that path to net zero.
Mitsopoulos: Can you explain why is that would need more gas, is it that the transition is too slow?
McCulloch: No, it’s because gas is an important fuel for the transition, because as we want to shift away from coal, on the east coast we’re still heavily reliant on coal-fired power generation, about two-thirds of the energy mix. As we shift away from coal, as we seek to deploy more renewables, we need gas as that reliable back-up fuel, we also continue to need gas to power our manufacturing sector. So there are many applications of gas where there really are no alternatives and we need to supply gas for cement, steel and other heavy industry, and gas will also play an important role in the processing of critical minerals and rare earths, that are so important to developing new technologies for net zero. So, gas is a key part of the mix today, and will continue to be a key part of the mix to net zero and beyond. That’s why we want to ensure there is still a framework is place that can encourage and facilitate the new supply that’s needed. We’ve seen the Prime Minister, the ACCC, the Australian Energy Market Operator, all calling for investment in new supply, because that’s also the key to putting downward pressure on prices.
Mitsopoulos: But do you think this will actually have an impact on that investment – because they’re saying that more than 100 projects may not go ahead, because of this but isn’t the price point part of the problem too, probably more so on the east coast?
McCulloch: Well, when we look at oil and gas investments, and gas investments in particular, very large, multi-million, multi-billion dollar investments, and they are long-lived, so we need policy stability and certainty to facilitate that investment and there’s been far-reaching interventions on the east coast by the government, and changes to the rules, that are making that investment environment very challenging. The stability is important there and just ensuring we remain internationally competitive for that investment, that we can encourage investment, because capital is mobile and it can go to different locations, other countries are racing to produce their own gas resources and meet growing global demand for gas, and Australia needs to ensure it is really positioned with a stable and competitive policy environment.
Mitsopoulos: You say you’re committed to net zero by 2050, what did you want to see instead?
McCulloch: Well, I think even the announcement that we saw yesterday really underscores the critical importance of technology in things like carbon capture and storage. We’ve already got a very successful project in WA at the Gorgon LNG facility, that’s storing millions of tonnes of CO2 every year, we need more project like this, we need the policy support and APPEA has called for a national strategy around carbon capture and storage which is a key technology to reaching net zero, it’s key for our industry but it’s also key for other heavy industry sectors like cement where we don’t have technology options beyond CCS currently that can deliver the very significant emissions reductions that we will need to see for net zero.
Mitsopoulos: The government did not agree to an outright ban on new oil and projects and surely that would’ve been much worse for your industry, so you’ve got the better part of that deal surely?
McCulloch: That would’ve had devastating consequences for Australia. We need more gas, domestically to meet demand, as we were already discussing the growing demand for gas means we need a continued stream of investment in new gas supply to meet existing and growing demand.
Mitsopoulos: (inaudible) Most of that gas goes overseas…
McCulloch: We have a thriving export industry, and we also have a strong domestic demand for gas, we’re seeing that in WA, particularly at the moment, as coal-fired power generation is coming off and gas is fuelling the mining sector in WA and other industries such as processing of critical minerals. We’ve built an enormous amount of wealth off our energy resources and we’ll continue to do that, it accounts for 80,000 jobs around Australia, so this is a really key industry for Australia and to be implementing bans on a fuel that is so important for the energy transition and so important for our economy, would be irresponsible.
Mitsopoulos: There isn’t a ban, and at the end of the day it’s still a fossil fuel and this is what it’s about…
McCulloch: We need to look at the energy transition in a pragmatic way and understand that even in a net zero pathway, so if you take analysis by the International Energy Agency for example, a global net zero pathway still has around 20% of the energy mix in 2050, being fossil energy and most of that is gas, and it’s because we will continue to rely on gas for reliable, secure supplies of energy to net zero and beyond, and that holds true in Australia as well as internationally.
Mitsopoulos: Energy and Climate Change Minister Chris Bowen has also said keeping to the emissions cap will depend on advice and conditions at the time, so that does give you some assurance or some flexibility for decisions on investments in gas projects to meet our energy needs, so again, you’ve got some flexibility there.
McCulloch: We’re still working through some of the detail of what was announced yesterday, some of the detail is still emerging in terms of how the cap will be implemented and how future projects will be considered within the context of that cap. We just urge that we do need certainty for investment and really recgonise the critical role of gas in meeting net zero, in continuing to power our manufacturing sector, to keep the lights on as that reliable partner for renewables. As a country we need to ensure that we have the policy settings that provide the certainty for that investment in gas that is needed.