23 Mar 2024

Transcript: Samantha McCulloch talks to 4BC Drive about east coast gas supply

4BC Drive with Peter Gleeson

Peter Gleeson: And around this we start we start finding out how much the summer energy costs have been and as I said I got mine in the mail last night and if you think we raised a sweat over December well, we could be in for another rude shock if this ongoing gas shortages is anything to go by. It comes as our energy regulators warned that we might have to use diesel to power our electricity because there’s a gas shortage. Samantha McCulloch is the CEO of Australian Energy Producers. She’s here to explain more. Samantha, good afternoon.

Samantha McCulloch: Good afternoon, Peter. Thanks for having me on.

PG: Pleasure. Now how worried are you about this situation that confronts us now in relation to gas?

SM: Yeah, well, unfortunately, this is not new. We’ve actually had a series of warnings from the energy market operator from the ACCC after some time now about looming gas supply shortages on the east coast of Australia. Just yesterday, the Australian Energy Market Operator or AEMO released its latest report that highlights that we’re expecting a structural shortfall from 2028 and that means annual supply can’t meet demand but also shortages on peak demand days from next year. So that you know having enough gas to actually meet those moments where everyone comes home and turns on their heater or fires up their stove for example. So it really is a key concern and AEMO also really underscored the importance of urgent investment in new gas supply. That’s going to be the key to ensuring that you know we have adequate supply and also simultaneously putting downward pressure on those household energy bills.

PG: Samantha, why are we so short on gas?

SM: Well, gas is playing such an important role in the Australian economy and as we transition to Net Zero so you know, particularly in power generation we’re looking to phase out coal, deploy more renewables and gas is playing such an important role. It’s a flexible, reliable fuel that can be turned on or off when demand is there. So we’re relying on gas heavily but we haven’t seen the investment that we need in new supply and there are a few reasons for that and in particular, over the past 12 to 18 months there’s been a lot of regulatory interventions and policy uncertainty that has meant that projects that are due to supply the domestic market that are set to come online, have just been tied up they’ve either been stalled or they’ve been tied up in regulatory approval processes.

PG: Can I can I ask you about that? I mean, are we talking about Federal Government intervention? I know in Victoria, I know Dan Andrews has had a set when he was Premier anyway, he had a set against gas. What is it? Is it Government regulatory roadblocks? Is it the fact that they are making the investment climate so fraught with disincentives that people are not going there anymore? What’s going on?

SM: I mean, it’s all of the above Peter and it’s at both a State and a Federal level, particularly in Victoria and New South Wales. I mean when we look at Victoria, the energy market operator yesterday highlighted that Victoria’s energy or gas supply is going to halve between now and 2028. Victoria is a key demand centre for gas and has the highest household gas use in Australia, but the Government is not encouraging that investment in new supply, near where that demand is and so that’s why States like Victoria are really looking to Queensland to support their own energy security and resolve their own gas supply problems.

PG: This is gonna sound like a dumb question but I think it’s a question that many of 4BC Drive listeners would expect me to ask, why would Governments knowing that reliable energy supply is crucial to keep their constituents warm in winter and cool in summer, why would Governments intervene in a regulatory fashion to stop production of gas? Is there some sort of ideological funk that I’m missing here?

SM: Look it is a very difficult question to answer. I think in some States there is certainly some ideological drivers for the position that’s being taken but the fact is that when we look at the transition and look at trying to achieve Net Zero reduce emissions, we’re all on board with the target of Net Zero by 2050. That actually requires gas to support the transition. It requires gas for power generation, again, to be that backup for renewables and to support the phase out of coal. We need gas for our manufacturing, 42% of manufacturing’s energy needs are actually supplied by gas and they’ll continue to rely on gas for decades to come. So, gas is an important part of the transition and its consistent with reducing emissions. I mean, you mentioned before AEMO’s warning that if we don’t have enough gas, we turn back to diesel and may have to look running diesel in power generation, which is not good for the economy, it’s not good for bills and it’s certainly not good for the environment and globally you know, when there’s insufficient gas supply, our country’s shifted back to coal and that’s why we had record emission 2022 and 2023.

PG: Samantha, this is, I lament this, we are one of the most resource rich countries in the world, we export billions and billions of dollars worth of coal in particular, to trading partners like China and India who continue to pump out their electricity through coal fired production, yet, our energy prices are among the most expensive in the world. And now we are getting real questions around the reliability of our grids because of some of these interventionist policies. Why?

SM: Well, I think we’re now starting to, like other countries, really appreciate the challenges involved in the transition. This is not an easy undertaking. You’re fundamentally changing the economy and the energy system in a relatively short amount of time and what’s really key is that we maintain that reliability that we maintain affordability, and that actually requires keeping, you know, options on the table and in the case of gas, we know we’ll actually need more gas to support the transition because currently on the East Coast, we’re still heavily reliant on coal for our power generation.

PG: Alright, Samantha I really appreciate you joining us you’ve been most enlightening. I think a lot of people would be listening to this interview or this conversation, scratching their heads but I guess at the end of the day, we elect our political leaders to make decisions and in some instances, they get it right and in some they don’t get it right, but I appreciate your time.

SM: Thanks so much, Peter.

PG: There she is Samantha McCulloch she’s the CEO of the Australian Energy Producers. What did you think of that? I mean, basically what Samantha, and I’ll paraphrase here, she’s basically come out and said that we have interventionist policies by some Governments in this country to scale back on gas production and she didn’t say that it was ideological, but I’ll say it’s ideological and we keep electing these people, this is what frustrates me. We keep electing these irresponsible politicians who in 5, 10, 15 years time sign are going to consign this country to the poor house while monster goliaths like India and China continue to pump out greenhouse emissions that are going to pollute the planet. And because we pump out 1% of the world’s greenhouse emissions, our political leaders are committed to zealotry renewable targets that are going to send this country broke – not only send this country broke, it makes sure that in winter, you’re going to be freezing and in summer, you’re going to be sweating, because the electricity won’t be working. Now, if that’s an oversimplification, call me up and we’ll debate it.