More should be done to ensure the emerging gas boom in Australia benefits the general population, according to a new report into the benefits and potential costs associated with the boom, according to a report released by the Australian Industry Group (Ai Group) and the Plastics and Chemicals Industries Association (PAICA).

 

Prepared by the National Institute of Economic and Industry Research (NIEIR), the report was delivered to industry associations in a bid to stimulate a broader discussion over the ramifications of the emerging gas boom.

 

Among the report's findings:

  • Gas supply may be insufficient to avoid constraining domestic use;
  • Each petajoule of gas shifted away from industrial use towards exports means giving up $255 million in lost industrial output for a $12 million gain in export output. That is, for every dollar gained $21 is lost;
  • Secure local gas supply is fundamentally important to a number of industries including non-ferrous metals and basic chemicals, plastics, pharmaceuticals and paints;
  • Gas exports are predicted to rise from 2 million tonnes in 2015 to up to 24 million tonnes in 2023;
  • Long term gas supply contracts have evaporated for local industry as a consequence of export commitments;
  • East coast gas prices will rise, potentially to as much as triple the current $3-$4 per gigajoule; this increase would be several times larger than the costs related to carbon pricing; and
  • Current policy settings favour exports over domestic gas sales.

 

"There are no easy solutions, and indeed obvious practical economic difficulties, but all ideas should be on the table. Australia needs a competitive gas market and affordable energy will play an increasingly important role for the success of our industries including by creating long-term, sustainable employment. We need to get the parameters right," Ai Group’s Chief Executive Innes Willox said.

 

PACIA Chief Executive Margaret Donnan said: "NIEIR's report raises doubts that the supply of natural gas will be sufficient in coming years to meet both export commitments and domestic needs. Like the Prime Ministers' Task Force on Manufacturing and the Queensland Government's recent Gas Market Review, the report highlights that major gas users currently face great difficulty in securing supply. NIEIR questions whether production and proven reserves will expand fast enough to provide confidence in secure long-term supply to all users.

 

 

 

The report is available at www.aigroup.com.au/policy/reports and at www.pacia.org.au/reports.