Conflicting Calls for Energy Focus As Federal Budget Looms

A stock image of the 2021-2022 Australian Budget is seen on the ground at Parliament House in Canberra, Australia, on May 12, 2021. (Sam Mooy/Getty Images)

A peak oil and gas lobby group has asked the federal government for more tax incentives for the industry in the next federal budget amid calls from conservation groups to abolish fossil fuel subsidies.

The Australian Petroleum Production and Exploration Association (APPEA), which represents the interests of the oil and gas industry, wants the Australian government to provide more support for controversial technologies that capture, store and use carbon by modifying the Offshore Petroleum and Greenhouse Gas Storage Act.

In a budget submission on Jan. 31, the organisation said that the support would help the oil and gas industry decarbonise and reduce emissions.

“Australia and its government have a massive, once-in-a-generation opportunity to make policy decisions to provide foundations for the future growth of our economy,” APPEA chief executive Andrew McConville said.

The APPEA has called for several changes, including but not limited to making salary and wages immediately deductible, increasing incentives for smaller oil and gas companies, and eliminating inefficiencies and duplication in the Environmental Protection and Biodiversity Conservation Act.

The Shell Oil refinery in Parramatta is seen in Sydney, Australia, on June 2, 2007. (Ian Waldie/Getty Images)

The call from the industry group comes after research (pdf) from the independent thinktank the Australia Institute in 2021 found that fossil fuel subsidies cost Australians $10.3 billion in FY 2020-21, with one commonwealth tax break alone providing the industry with $7.84 billion-which exceeds the federal government’s funding of the Australian Army ($7.82 billion).

Additionally, the research showed that all but one Australian state government spent an estimated $1.2 billion subsidising the fossil fuel industry, including Queensland providing assistance measures worth $744 million, the Northern Territory providing $5 billion in subsidies for offshore gas and pipelines, Western Australia spending hundreds of millions on coal-fired power stations, and Victoria $100 million to turn brown coal into hydrogen.

According to the Institute, the Australian Capital Territory is the only jurisdiction in Australia with no subsidies for fossil fuels, along with the most ambitious climate targets in the country.

Meanwhile, the Australian Conservation Foundation (ACF), a national environmental organisation, wants the federal government to cut down on fossil fuel subsidies and make significant investments in clean export and land restoration.

The investments proposed by the foundation include $10 billion (US$ 7.1 billion) in clean export industries, $5 billion (US$ 3.5 billion) in setting up a regional energy transition authority, and $2 billion (US$ 1.4 billion) in three-yearly spending on conservation and land management.

“Australia can become a global clean energy superpower in the next decade by replacing our exports of coal, gas and uranium with renewable-powered products like green hydrogen, steel and aluminium,” the ACF’s Matt Rose said.

“Our clean air and water, land and resources underpin Australia’s health and prosperity. We must do more to protect and restore our natural capital, especially following bushfires and droughts and decades of over-clearing.”

As for the source of funding for those activities, the ACF said that the Australian government could slash subsidies for the fossil fuel industry, which include a tax credits scheme worth $7.8 billion (US$ 5.5 billion) in the 2020/21 financial year.