Discussion paper

Gas fired backfire

Why a “gas fired recovery” would increase emissions and energy costs and squander our recovery spending
Government subsidies Economic stimulus Manufacturing Natural gas Australia
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Australia will spend many billions of dollars on economic recovery from the COVID-19 crisis. The core purpose is to create jobs to tackle expected record unemployment.

However the gas industry is one of the least labour intensive industries in Australia, providing around one eighth as many jobs per dollar spent as the average for all Australian industries. Investing recovery funds in virtually any other industry would create more jobs.

Subsidising gas will also displace renewable energy and lower cost efficient electrical alternatives to gas for our households, businesses and industry that can be run off renewable energy. This will lock Australia into both higher emissions and higher energy prices for decades to come.

Few of the multinational oil and gas companies operating in Australia pay any company tax at all in Australia. As such, recovery funds used to subsidise the gas industry are unlikely to provide any lasting benefit to Australia. A significant proportion of any taxpayers’ money given to the industry is likely to be expatriated to shareholders overseas.

Recovery funding assistance provides Australian manufacturing with a unique opportunity to shift to electrification of many processes, providing clean, efficient, cheaper and more reliable alternatives to gas. If the government locks Australian industry into dependence on this outdated fuel, on the basis of a temporary fall in gas prices, it will undermine Australian manufacturing for decades to come.

Assisting the manufacturing industry to electrify its processes will also help achieve one of Australia’s key strategic priorities, to reduce greenhouse gas emissions to tackle climate change which represents an even greater threat to Australia than the COVID-19 pandemic.

Spending recovery money on “gas fired recovery” will squander these opportunities.

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