"Extending the gas export control trigger to 2030 is prudent but just one of the steps needed given the range of threats facing gas users," Innes Willox, Chief Executive of national employer association Ai Group, said today.
"Gas users face unprecedently high prices today, and likely for years to come, given the impacts of the invasion of Ukraine. Further out, there is an increasing risk of short supply that could see local scarcity drive prices above high international levels. A broad strategy is needed to navigate those risks, and emergency export control powers – while not desirable to have to use – belong in the toolbox.
"Today's gas trigger was originally designed to respond to the risk of actual local scarcity driven by East Coast export overcommitment. The current design makes it impossible to use in response to the extreme and damaging prices now facing gas users. It's appropriate that the Government will consider redesigning the trigger to be more useful with respect to extreme prices. In the meantime, extending the current trigger gives a modicum of comfort given the potential for future expected supply to fall below demand.
"Future supply risks involve a small chance of brief shortfalls in the next couple of winters; expected heavy reliance from 2027 onward of LNG imports that may not be available or affordable given geopolitics; and the central-scenario expectation of shortfalls from 2030 if there are no new supply- or demand-side developments.
"Export controls are not a great solution to these risks. They would be disruptive to invoke, with consequences for our allies and our reputation. But they are important to maintain as an emergency response option if all else fails. That should include rewriting them so they could be invoked rapidly if necessary in response to a wider range of supply threats and extreme price conditions. An extended and reformed trigger can be a useful part of a broader strategy to meet energy users' needs.
"For the medium and longer terms that strategy needs a strong emphasis on reducing our economic reliance on gas. Biogas, efficiency, electrification and hydrogen will all compete to solve the needs that gas meets today. We should go as fast down those paths as we can, given the atrocious gas prices facing us this decade.
"Even as we taper our gas reliance, supply adequacy remains essential. Export controls do not bring new supply into existence, but they are an important last resort. The gas supply sector should help ensure that resort is never needed," Mr Willox said.
Tony Melville – 0419 190 347