State versus state, gas mate versus gas mate, a fossil fuels bonanza with a planet on the line

by | Jan 19, 2022 | Energy & Environment

Emissions targets are dead. Corrupt governments in hock to their corporate donors are accelerating fossil fuel projects despite international condemnation, economic logic and the future of the planet. Michael West reports on Kurri Kurri gas plant and the slew of new projects.

They snuck it through just before Christmas, as they do; it’s the best time to “bring out yer dead”, put out the garbage. There’s nobody watching, few caring.

Kurri Kurri gas plant approval for one; the most bizarre and useless bit of fossil fuel infrastructure which they could possibly have devised, unless of course you happened to be the Liberal Party donor who bought the land on which it is to be built. Or the gas pipeline mob which will connect it to Santos’s Narrabri equally venal gasfields development.

This despite the International Energy Agency warning that no new gas infrastructure should be built if Australia is serious about meeting 2050 emissions targets, there’s a new one proposed for every state and territory.

Welcome to the state versus state, mate versus mate of stupidity and corruption, the fossil fuels State of Origin clash:

  • South Australia has its Venice Energy gas import terminal,
  • NSW, its Kurri Kurri gas peaking plant,
  • Queensland forked out fracking leases to mate Origin Energy just before Christmas too,
  • WA has its Scarborough carbon bomb,
  • Northern Territory is fracking up the Beetaloo Basin and developing the most carbon dioxide intensive LNG development on the globe, Santos’ Barossa project,
  • Even Tasmania is in the game with its plans for Bass Strait

To be fair, the ACT and the Jervis Bay Territory, Australia’s two tiniest administrative zones don’t have any known fossil fuel projects on the boil. They are the stand-outs, sitting alone on the State of Origin fossil fuel bench.

We don’t have a climate policy, only an anti-climate policy. Environment minister Sussan Ley has been busy knocking back renewables and approving coal mines.

When it comes to fossil fuel projects and Australian governments, the same three questions arise every time: is it corruption, is it incompetence, or is it a bit of both?

There is no economic sense in our energy policy, let alone climate sense. For a country this rich, the slather of new fossil fuel projects is simply climate crime.

“It’s literally like importing iron ore to Port Hedland or oil to Saudi Arabia. It’s that stupid,” says IEEFA gas analyst Bruce Robertson of plans to import gas back into Australia. This country is the biggest Liquefied Natural Gas (LNG) exporter in the world but we are building gas import terminals.

Kurri Kurri though probably takes out the State of Origin match for stupidity.

AEMO says we don’t need it, IEA says no new fossil fuel projects, the poor residents of Kurri Kurri will be inhaling its fumes. It is a snow machine factory for Eskimoes.

And as gas prices go through the roof globally – they spiked again over Christmas – Australians get nothing from this fossil fuel fiesta. We fork out $10bn a year in subsidies to fossil fuel corporations. Yet the failed PRRT resources rent tax is slated to fall. The players of the gas cartel themselves – Santos, Origin, Chevron and Exxon – have been paying no income tax either for years – although there might be a bit this year as profits accelerate.

No market, just a cartel

“The more gas we produce the higher the gas prices go,” says Robertson. “I’s been that way since 2014 when the [LNG] export plants opened up on the east coast”.

How can more gas supply equal higher prices? It is economic nonsense. Only in Australia. And that’s because there is no gas market, only the gas cartel, a small group of large corporations to which governments are in hock.

Profiteering from the Australian public, ripping us all off, the gas cartel controls the price and ensure it remains nice and high. At present, global spot gas prices are at stratospheric levels and the cartel is producing and exporting gas as fast as it can, locking in its supply and production before the party stops.

“Gas-fired recovery”

The same is not true in electricity, although our government is doing its best to ensure that high gas prices feed through to higher electricity bills. As part of the “gas fired recovery”, Snowy Hydro, which is now 100% owned by the federal government, is building the Kurri Kurri diesel/gas-fired power plant. 

Kurri Kurri is an poorly sited gas power plant as the gas line which supplies it is simply too small. To get around that problem they are making a big pipe to connect the plant to the gas grid (at vast expense but who cares because the politicians are not funding it, we are via our power bills.

“This pipe will act like a gas bottle and be able to run the plant for 10 hours,” says Robertson. “After which the good people of Kurri Kurri will choke on diesel fumes for the following 14 hours until the gas “bottle” is refilled. Truly a 1950’s solution to a 2020 problem … as if there is a problem at all, because we simply don’t need this fired power plant“.

The Kurri Kurri plant owned by Snowy Hydro. It entrenches the power of Snowy Hydro in the peaking power market. Snowy Hydro dominates that market with its gas peaking plants and its eponymous Snowy Hydro scheme and Snowy Hydro 2 pumped hydro scheme.

Working at 1% capacity 

Last year we saw this power at work when Snowy Hydro did not operate its Colongra gas peaking plant until wholesale prices were at nosebleed levels.  Colongra is located just south of Newcastle not far from Kurri Kurri. It was operated for just 0.9% of the year for the latest 12-month period. 

“Its a bit like a supermodel, it simply won’t get out of bed unless prices are very high. Some months it virtually didn’t get out of bed at all,” says Robertson. “It’s a very lazy supermodel. Colongra’s average price for last year was $424/MWh. The average prices demanded by Colongra are some five times the average wholesale price for electricity in the National Electricity Market in the latest 12 months of $81/MWh.”

More expensive gas power in the electricity system means higher electricity prices. It’s a lose-lose situation, unless you are a political donor chasing a turbo-charged buck.

All of which brings us to the “why”?

One word, money. Not money for Australians, money for political parties. Both of them. When it comes to gas, Labor is every bit as culpable. This is why we hear not a squeak from the Opposition across the floor. This on Kurri Kurri thanks to Georgia Wilkins at Crikey (the same pattern of lobbying and donations occurs nationwide):

  • Liberal donor Jeff McCloy bought the site in 2020,
  • Santos, Narrabri pipeline developers Hilton Grugeon and Graham Burns have both been Liberal donors,
  • Santos, the Kurri Kurri gas supplier, is one of the biggest donors to both parties,
  • Snowy Hydro board includes former National Party director and lobbyist Scott Mitchell

The $600m public subsidy for the Kurri Kurri plant is therefore straight-out corruption; money paid to political parties by private interests in return for our money, public money.

 

Michael West established michaelwest.com.au to focus on journalism of high public interest, particularly the rising power of corporations over democracy. Formerly a journalist and editor at Fairfax newspapers and a columnist at News Corp, West was appointed Adjunct Associate Professor at the University of Sydney’s School of Social and Political Sciences. You can follow Michael on Twitter @MichaelWestBiz.

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