Promise of cheap gas called into question

Daniel McCulloch
·2-min read

Hopes of a gas-led recovery from the coronavirus pandemic have been called into question in a new report.

The Grattan Institute argues there is little prospect of the cost of gas dropping in a meaningful way.

It has encouraged the Morrison government to move away from burning natural gas.

"The idea there would be a gas-led recovery after the COVID pandemic, we think, was going far too far," Grattan's energy program director Tony Wood told the ABC on Monday.

"If you think about the consequences of high cost gas, and you think about gas contributing significantly to our greenhouse gas emissions, you're left with the unavoidable consequence that at some point, we're going to have to move away from burning natural gas.

"Now is the time to start planning for that."

The report supported some government policies including export restrictions and ensuring enough gas was available for use in Australia.

But it argued a national gas infrastructure plan and public funding for new gas basins would do little to reduce cost.

"On the east coast of Australia, we have pretty well exhausted our low cost gas supplies," Mr Wood said.

"Any gas that is being talked about now is more expensive than it was 10, 20 or 50 years ago.

"If we thought we could get low cost gas and it was going to somehow or other lead to a huge renaissance in manufacturing, if that was true, we would have done that years ago when we did have cheap gas."

Mr Wood said even if gas prices could be reduced, the companies that would benefit most only employed about 10,000 people.

Energy Minister Angus Taylor is standing by the gas plan.

"The government believes the Grattan Institute's analysis of gas' impact on the manufacturing sector is narrow, oversimplified and does not reflect industry's own views," his spokesman told AAP.

"The government does not agree with conclusions drawn in the report, particularly in relation to the impacts on the manufacturing sector jobs and the role of gas powered generation.

"This report continues the Grattan Institute's long-running opposition to the role of gas in Australia's energy system."