Media Release: Future role of gas and net zero tech headline Federal Budget underpinned by oil and gas contribution

Tonight’s Federal Budget paves the way for much-needed new gas supply, recognises low-carbon hydrogen and carbon capture, utilisation and storage (CCUS) as crucial to net zero and confirms the growing economic contribution of the oil and gas industry to the nation’s finances.

Australian Petroleum Production & Exploration Association (APPEA) Chief Executive Samantha McCulloch said the new Future Gas Strategy showed the government had listened to industry concerns and recognised the urgent need for a strategy to secure new gas supply to avoid shortfalls in coming years.

“New gas supply is essential to keep the lights on, put downward pressure on prices and deliver substantial economic benefits in the transformation of our energy system for net zero,” Ms McCulloch said.

“The national strategy announced tonight is a response to independent reports and authorities warning of gas supply shortfalls and allows for a coordinated policy response.

“APPEA has been calling for a new supply strategy and looks forward to working constructively with the government as part of this process.”

The Budget allocates $2 billion to accelerate the development of low-carbon hydrogen in Australia and to catalyse clean energy industries.

Ms McCulloch said: “Low-carbon hydrogen has a critical role to play in reaching net zero, in particular in hard-to-abate industries and manufacturing.

“The oil and gas sector is pivotal in scaling up and rolling out low-carbon hydrogen in Australia and globally, with natural gas combined with carbon capture representing the most developed and lowest cost pathway to low-carbon hydrogen available today.”

The Budget also recognised the importance of CCUS, with a review of regulations to enable CCUS investment – as highlighted by APPEA in its 2023-24 Federal Budget Submission.

However, the Budget fell short of committing to a national CCUS roadmap in partnership with industry to provide the clear policy direction needed to promote Australia as a regional carbon storage leader.

Ms McCulloch said: “We share Australia’s commitment to reducing emissions to achieve net zero across the economy by 2050 and CCUS will be a key tool.

“Global momentum for CCUS is growing and Australia must not miss the emissions reduction and economic opportunity of an emerging CCUS industry that creates new jobs and investment.”

APPEA also welcomed the review of environmental management regulations for offshore energy to provide clarity for major supply projects.

Budget papers show that since the October budget Petroleum Resource Rent Tax receipts have been revised up $300 million in 2023-24 and $2 billion over the five years from 2022-23 to 2026-27.

The tax is only one part of the growing total industry economic contribution, which was forecast before the Budget to almost triple to $16.2 billion this year after steep rises in corporate income tax, PRRT, royalties and excise since last year.

“Tonight’s extra measures will deliver more revenue to the Budget earlier, again helping the government fund policies like cost-of-living relief and build important infrastructure like schools and hospitals,” Ms McCulloch said.

“Gas companies are among the biggest taxpayers in Australia and their role in delivering economic benefits across Australia is again shown in tonight’s Budget.”

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