APPEA: Oil and gas lobby warn $600m Albanese Government climate action plan ‘insufficient’

A proposed $600 million fund to support big industrial polluters through the Albanese Government’s signature climate action plan might not be enough to keep them competitive, the peak oil and gas lobby has warned.

The Federal Government risks deterring investment in new projects and even encouraging industries to move overseas if it doesn’t do enough to help emissions-intensive and trade-exposed sectors, according to the Australian Petroleum Production and Exploration Association.

The association has issued the warning in a submission to the Government’s proposed overhaul of the so-called safeguards mechanism.

The mechanism is designed to limit emissions at the nation’s heaviest polluting facilities.

Under a proposal unveiled earlier this year, emissions would be required to fall an average of 4.9 per cent each year across 215 facilities through the end of this decade.

The change, which has prompted criticism from both the Liberals and Greens, is crucial to Labor’s hopes of meeting its target of cutting emissions by 43 per cent by 2030.

The Liberals are opposed while the Greens’ support is conditional on a ban on new coal and gas projects, a step the Government has ruled out.

The Albanese Government doesn’t want to put heavy-emitting, trade-exposed sectors at a disadvantage, promising an initial $600 million to help those industries with the cost of decarbonising their operations.

The fossil fuel industry, including the oil and gas lobby, has broadly welcomed the commitment.

But in its submission, APPEA has warned that the support package “may be insufficient” to allow the sectors to remain competitive.

It noted that local industries were competing against countries with little or no climate policies, as well as others that were offering billions in incentives, such as the United States.

“Insufficient support to EITEs (trade-exposed facilities) not only risk reduced investment in critical resources in Australia but may also result in carbon leakage, by encouraging emissions-intensive industry to move to jurisdictions with less stringent climate policies and targets, undermining the core objective of the mechanism,” the submission stated.

The association urged the Government to do more to help the facilities, including through extra funding and cutting red tape.

The lobby group, which counts Woodside, Shell and BP among its members, also used its submission to push the Government to reconsider its opposition to international offsets.

Facilities would be able to continue using domestic offsets to meet their obligations but won’t be allowed to access them from overseas.

The submission has been published as the planned overhaul comes under the scrutiny of a parliamentary committee, which is examining legislation to create a new type of carbon credit for safeguard mechanism sites.

Grattan Institute energy director Tony Wood said it was important for new projects to be included in the overall emissions cap and for carbon offsets to have integrity for the mechanism to work.

“There can be no ‘get out of jail free’ cards on any of that, otherwise the whole thing falls over,” he told a parliamentary inquiry on Monday.

The Minerals Council of Australia and Inpex, which operates the Ichthys LNG project off the north-west coast of WA are scheduled to give evidence to the inquiry on Tuesday.

- With AAP