Michael Slezak 

Natural gas lobby plans campaign to convince Australians of ‘long-term necessity’

Groups also plan to undermine government attempts to regulate parts of industry identified by the competition watchdog for price gouging
  
  

gas
The chief executive of the Australian Pipeline and Gas Association, Cheryl Cartwright, said industry needed to ‘improve the public perception of natural gas’. Photograph: Tim Wimborne/Reuters

A coalition of natural gas lobby groups are planning a coordinated campaign to convince Australians gas is “a long-term necessity”, top industry lobbyists have revealed.

They also disclosed plans to undermine government attempts to regulate sections of the industry that have been identified by the competition watchdog for price gouging by offering the federal environment minister “something he can announce” – but which would not amount to regulation.

The president of the Australian Pipeline and Gas Association, Shaun Reardon, told a meeting of the gas industry in Perth last month that the industry had agreed on a message to sell to the public, the industry website Energy News Bulletin reported.

“Our objective is to have gas acknowledged as a long-term necessity by policymakers and the public,” Reardon was reported as saying.

The chief executive of gas association, Cheryl Cartwright, told Guardian Australia that represenatatives of each of the industry lobby groups had “agreed to a united view regarding gas”.

Cartwright said the industry needed to “improve the public perception of natural gas”.

“Basically, we represent the gas industry,” she said. “Natural gas is an important part of the energy mix as we encourage Australia to reduce carbon emissions. It’s cleaner burning than coal, and is an appropriate back-up fuel for renewable energy sources.”

A report released last month found unmeasured “fugitive emissions” from the gas industry were likely to be as big as those emitted by the entire transport sector. Since fugitive emissions are rarely measured, they are not properly accounted for, and could jeopardise any attempt to meet emissions reduction pledges made in Paris.

If fugitive emissions from the coal seam gas industry in Australia were anywhere near what they are in the US, coal seam gas would be worse for the climate than coal.

Cartwright said the industry should fight attempts to regulate gas pipelines. In April the Australian Competition and Consumer Commission found evidence that “a large number of pipeline operators have been engaging in monopoly pricing”.

The ACCC pointed out that other countries, such as New Zealand and the US, imposed much stronger regulation. Since pipelines are natural monopolies, they are able to dictate prices.

“It is well recognised in these jurisdictions that pipelines can wield substantial market power even where producers and users have a number of transportation options,” the ACCC said.

Cartwright told the conference the federal minister for the environment and energy, Josh Frydenberg, had told her he wanted to regulate gas pipelines.

“Minister Frydenberg actually said to me, quote, ‘I know supply needs to be addressed but we’re going to fix pipelines first,’’’ Cartwright was reported saying in Energy News Bulletin.

“Basically, they are convinced there is something wrong and they want to be able to make an announcement,” Cartwright reportedly said.

Cartwright told the gas industry meeting they needed to give Frydenberg “something to announce”.

“So this is what we are up against,” she said. “Not only do we need to fight back, we have to do it in a way that gives them something to announce and actually I think we can do it.”

Cartwright told Guardian Australia she understood that looked like an attempt to give the minister a meaningless announcement but that was not the case.

She said she was trying to explain to members of the industry “who know nothing about politics … explaining to them that we can’t just fight back and say everything is working without demonstrating that we are actually doing something to tackle the perception of there being a problem”.

“We are taking action – not necessarily the action demanded by the regulator, but something that’ll actually work – and we need to explain that to the ministers so they can be part of the announcements when it’s ready to launch.”

Cartwright said the plan was to improve transparency of the gas pipeline market through reforms in “capacity trading”, where spare capacity in the pipelines is traded in a transparent process.

She said many members of the industry had fought that move “because it will be expensive”.

Responding to the industy lobbyists’ comments, Frydenberg told Guardian Australia: “The ACCC in a recent report raised its concerns with the current regulatory test as it applies to gas pipelines.

“That is why the [Council of Australian Governments] energy council has asked Dr Michael Vertigan, in consultation with stakeholders and working with the ACCC findings, to draw together what we need to do with the coverage criteria under the national gas law to address this issue.

“Ministers will consider Dr Vertigan’s report at the next Coag energy council meeting.”

The Coag energy council announced in August that it had agreed to ban secret pricing contracts in the gas industry. Frydenberg described the change as “the most significant reforms to the domestic gas market in two decades”.

It did not propose regulating prices, which other commentators have suggested, but which the gas industry strongly opposes.

“Of course, if you want to phase out oil and gas completely, you might like the idea of increasing economic regulation, which would stymie investment,” Cartwright told Guardian Australia.

Bruce Robertson, an analyst at the pro-renewable Institute for Energy Economics and Financial Analysis, said the industry was overdue for regulation.

“The pipeline companies are gouging the consumer,” he said. “They know it and are fearful that sensible regulation as to price and capacity will come in. Essentially gas transmission pipelines are natural monopolies and Australia is unique in the western world at not regulating them.

“The US has far better disclosure rules and still heavily regulates them. In Australia we need both far more comprehensive disclosure on a pipeline by pipeline basis and also strong regulation. Regulation of monopolies is not anti market. No market exists and hence the need for regulation.”

 

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