The Federal Budget allows for increased gas supply, acknowledges low-carbon hydrogen and carbon capture, utilisation, and storage (CCUS) as essential to net zero, and recognises the oil and gas industry’s rising economic contribution to the nation, according to the Australian Petroleum Production & Exploration Association (APPEA).
APPEA Chief Executive Samantha McCulloch stated that the new Future Gas Strategy demonstrated the Australian Government had listened to industry concerns and accepted the urgent need to secure new gas supplies to avert deficits in the coming years.
“New gas supply is essential to keep the lights on, put downward pressure on prices and deliver substantial economic benefits in the transformation of our energy system for net zero,” McCulloch said.
According to McCulloch, the presented national approach is a coordinated policy response to independent reports and authorities’ warnings of gas supply shortfalls.
“APPEA has been calling for a new supply strategy and looks forward to working constructively with the government as part of this process,” she added.
The Federal Budget includes $2 billion in funding to help Australia expedite the development of low-carbon hydrogen and catalyse renewable energy sectors.
McCulloch stated that low-carbon hydrogen is crucial to attaining net zero, particularly in difficult-to-abate sectors like manufacturing.
“The oil and gas sector is pivotal in scaling up and rolling out low-carbon hydrogen in Australia and globally, with natural gas combined with carbon capture representing the most developed and lowest cost pathway to low-carbon hydrogen available today,” McCulloch said.
The Budget also acknowledged the importance of CCUS, including a revision of rules to facilitate CCUS investment, as APPEA underlined in its 2023–24 Federal Budget Submission.
According to APPEA, the Federal Budget, however, fell short of committing to a national CCUS roadmap in collaboration with industry to offer the clear policy direction required to position Australia as a regional carbon storage leader.
“We share Australia’s commitment to reducing emissions to achieve net zero across the economy by 2050 and CCUS will be a key tool. Global momentum for CCUS is growing and Australia must not miss the emissions reduction and economic opportunity of an emerging CCUS industry that creates new jobs and investment,” McCulloch said.
APPEA also welcomed the review of offshore energy environmental management laws, which would give certainty for significant supply projects.
According to Budget documents, since the October budget, Petroleum Resource Rent Tax (PRRT) collections have been revised up by $300 million in 2023–24 and $2 billion over the five years from 2022–23 to 2026–27, before accounting for the additional $2.4 billion in PRRT expected to be collected as a result of modifications to the regime.
The tax is only one component of the expanding overall industry economic contribution, which was expected to nearly triple to $16.2 billion this year before the Budget due to high increases in corporate income tax, PRRT, royalties, and excise since last year.
“Tonight’s extra measures will deliver more revenue to the Budget earlier, again helping the government fund policies like cost-of-living relief and build important infrastructure like schools and hospitals,” McCulloch said.
She added, “Gas companies are among the biggest taxpayers in Australia and their role in delivering economic benefits across Australia is again shown in tonight’s Budget.”
