Article: The heady days of a “gas-led recovery” are long gone. Good riddance!

By Agnes King

Scott Morrison’s post-COVID “gas led recovery” is possibly the greatest setback for the gas sector’s social license to operate in recent years, industry pundits lament.

On the one hand, having a then Prime Minister spruik gas as a transition fuel – an acceptable half-way house on the road to a low carbon economy – encouraged a level of complacency among producers.

On the other hand, it enraged what Joel Fitzgibbon, former Australian Labor Party Minister, describes as the “progressive left in the electorate”.

Community opposition a significant challenge

The gas sector has traversed eras when its reputation was worse, longtime lobbyists argue. But community opposition – particularly the growing sophistication of climate activist groups - is exacerbating approvals delays and creating financial and regulatory uncertainty for producers.

“Recent actions taken against certain Australian companies indicate a notable erosion of trust and disagreement regarding environmental claims,” regulatory risk consultant Nicholas Brischetto says.

Australia’s two largest gas companies, Woodside and Santos, are embroiled in legal actions for alleged “greenwashing” by exaggerating claims about their decarbonisation efforts.

Greenpeace launched the action against Woodside, while shareholder activist group the Australasian Centre for Corporate Responsibility (ACCR) is gunning for Santos.

Meanwhile, the Northern Territory suffered widespread power outages this month triggered by gas supply disruptions, inciting the NT chief minister to conduct a review into the incident.

Gas is now in a fight to win hearts and minds for its continued right to exist and flourish, against agents who don’t believe it should as a fossil fuel.

“When you’re a fossil fuel, you have to work at a rate of 110 per cent on your social license,” Fitzgibbon says.

“Social license should be [gas producers’] number one priority and will remain a significant challenge for them because there are too many out there prepared to misrepresent the facts, gather donations to take legal action, and make it difficult for politicians in their local electorates,” he says.

The battle for hearts and minds prompted a name change by the peak industry body last year, from Australian Petroleum Production & Exploration Association (APPEA) to Australian Energy Producers. The rebrand is designed to give the gas sector a platform to credibly participate in the energy transition debate.

Not a popularity contest

Against this backdrop, the gas sector is acutely aware of its guaranteed role in the energy mix.

It will play a big role for a long time. Even Labor’s ambitious target of 82 per cent renewables for the electricity grid by 2030 leaves a healthy 18 per cent of the heating, cooking, and industrial use to gas producers.

“Gas doesn’t need to be Australia’s most popular industry. It just needs to avoid being on the nose with the public to the extent that it becomes an issue for the political class in their electorates. That’s what leads to projects being delayed by inquires, regulatory regime changes, and slow approval processes,” explains an industry insider.

“It’s a simple fact that our energy system for a long time will be highly dependent on their product but there isn’t room for complacency,” Fitzgibbon says.

Swing in favour of gas?

A series of recent events have seen sentiment swing ever so slightly back in favour of gas, or at least hostility recede.

As companies unravel how they will feasibly meet net zero commitments, the criticality of gas has become clearer. This undercurrent surfaced in the resistance to a fossil-fuel phase out at COP28.

At the same time, groups such as AEP and Bioenergy Australia have stepped up efforts to improve punters' understanding of the importance of gas.

This is key to effectively address the sector’s loss of social license, says Bill Farren-Price, head of gas research at the Oxford Institute for Energy Studies.

“The gas industry needs to increase the general public’s understanding of the realities of the global energy system, its immense size, and gas’ role in it. This includes the role of energy in industrialisation, development, and wealth creation in democracies, he says.

“Like the US, Australia has huge gas resources that should give it a qualitative advantage for industry and manufacturing,” Bill Farren-Price says.

AEP launched the ‘Keeping The Country Running’ advertising campaign last June, highlighting the importance of natural gas to the nation beyond the 80,000 jobs it supports and the one third of primary energy it supplies.

“We will be continuing this work this year,” AEP Chief Executive Samantha McCulloch said.

Cost of living pressures have sidelined environmental concerns in some quarters and highlighted the relative cost effectiveness of gas. And scepticism about the ability of renewables to provide energy stability lingers.

Meanwhile, the dismissal of a federal court challenge by Tiwi Islanders holding up Santos’s $5.8bn Barossa offshore gas project, is being interpreted by some as a turning point in activists attempts to use traditional owners to block projects.

Meeting domestic gas needs

Social license is a bigger issue for Australian gas producers, according to Farren-Price.

“[It is] certainly less prominent in the UK, US, and Europe, where gas is widely used in power, industry and residential,” he says.

From an outsider’s perspective, Farren-Price says Australia’s role as a major LNG exporter doesn’t sit easily with its power sector challenges.

“If domestic gas needs were better met - and that is challenging given the geography - perhaps the social license to operate would be better secured,” he says.

“If it is a question of broad concern around the export of hydrocarbons, then coal should be the first focus – given that gas is likely to be present in the global energy mix for much longer if progress towards net zero is to happen,” Farren-Price says.

According to Brischetto, it is vital that the gas sector address criticisms of greenwashing and enhance the completeness and clarity of disclosures and representations to the market and consumers. This will build credibility and trust.

“Australian regulators have had plenty to say on this front. The Australian Competition and Consumer Commission’s recent sweep put a spotlight on the energy industry. More than half of energy companies scrutinised were found to have issues with their disclosures and claims. In a proactive move, the ACCC went a step further by releasing finalised guidance in late 2023 after consulting briefly with industry,” he says.

“The temptation to gloss over important issues whilst sidestepping legitimate debate needs to be resisted,” Brischetto says.

What lessons can renewable gas learn?

Farren-Price feels hydrogen and biogas can side-step social license issues experienced by gas producers because these industries do not operate at scale.

“It is so far, a very different story,” he says.

But is it?

Community resistance and weak policy settings have scuttled waste-to-energy facilities in Queensland and stalled them in Victoria.

Community education will be key to overcoming community resistance, Bioenergy Australia Chief Executive Officer, Shahana McKenzie, says.

She says the sector needs more projects on the ground to help people understand renewable gas is a thing, like Sydney Water’s Malabar Biomethane Injection Plant which is turning sewage into an energy source for homes.

Good policy also has a role to play here.

“We had two terms of government that did nothing on climate policy. And we’ve a current government trying to do the heavy lifting of a decade in the space of two years. It’s hard to be critical of the pace of policy has progressed in this space when so many things have had to be done in such a short span of time,” McKenzie says.

Join us at ADGO 2024 from 25-28 March to hear more from Shahana McKenzieNicholas Brischetto, Bill Farren-Price, Samantha McCulloch and a host of other domestic gas leaders. Learn more.

*Although Joel Fitzgibbon is no longer able to speak at ADGO, we are excited to have recently secured Hon Peter Tinley, who is chairing the ‘Inquiry into the WA Domestic Gas Policy’. He’ll add a vital perspective to the discussions at this year’s conference.*

To access the detailed conference program, download the brochure here.