Emission Control: Here’s what the Federal Budget means for Australia’s climate

Emission Control is Stockhead’s fortnightly take on all the big news surrounding developments in renewable energy.

Building on recently passed climate laws which brought in a tougher 2030 emissions reduction target to put Australia on a trajectory for net-zero, there’s no doubt Labor’s first federal budget in nearly a decade has delivered a ‘refreshing’ welcome entrée in clean energy spending.

On Tuesday, the new government raised investment in climate action from virtually nothing in the May 2022 Budget to almost $25 billion, making a strong and critical downpayment on Australia’s climate and energy future.

But experts say there are miles and miles to go if we are to rapidly cut our emissions this decade and there are a few missed opportunities including ongoing fuel subsidies and failing to fix loopholes within the current Petroleum Resource Rent Tax (PRRT).

According to Bruce Robertson, gas/LNG analyst at the Institute for Energy Economics and Financial Analysis, the first thing that the budget makes starkly clear is that the Petroleum Resource Rent Tax (PRRT) isn’t making any revenue.

“The PRRT is designed to increase when the returns to the industry increase but it isn’t working and it’s not working because there is industrial scale tax evasion by the oil and gas companies,” he says.

“I’m looking at the general implications this budget has for the economy and the general implications for the economy in the budget are we are still going to face massive electricity increases on the east coast.

“Without a domestic gas reservation policy like they have in WA it is going to cause tremendous hardship.”

LNG exports smashing record heights

And the Australia Institute says this is happening while exports of LNG are hitting record heights.

“Unfortunately, the PRRT is so poorly structured that gas companies are able to avoid having to pay any of the tax through write-downs and profit shifting,” senior research fellow David Richardson reveals.

“In 2016-17 every $7.30 of exports in the petroleum resources sector equalled $1 of PRRT.

“In this current financial year, just $1 of PRRT is raised for every $13.30 of petroleum sector exports,” he says.

“If the ratio had remained steady, the PRRT would raise around $1.4 billion extra than is currently estimated.”

While the gas sector continues to increase Australia’s emissions, the country continues to miss out on revenue that could be further invested in the transition to a zero-emissions economy.

IEA forecasts fossil fuel demand to peak by mid 2020s

Adding more fuel to the fire is the recent release of the International Energy Agency’s (IEA) 2022 outlook, demonstrating global fossil fuel demand will peak by the mid 2020s.

Tim Buckley is director of independent think tank Climate Energy Finance, and former Australasian Director of the Institute for Energy Economics and Financial Analysis, focussing on Australian impacts of global energy transition.

He says Australia needs to use its current gas windfall wisely – including ensuring tax-avoiding multinational gas companies pay a fair share of royalties and corporate tax for exploiting our sovereign assets.

“The IEA highlights the massive pivot from reliance on Russian fossil gas, and how Australia benefits near to medium term as the world’s largest exporter of LNG.

“But it warns that the global peaking then structural decline in fossil gas is accelerated as a result, driven by demand destruction and the gas-to-renewables shift,” he adds.

“A huge increase in energy investment, to above $4 trillion per year, is essential to reduce the risks of future energy price spikes and volatility, and to get on track for net zero emissions by 2050.”

Climate Council’s top 3 budget lowlights

$1.9 billion for the polluting Middle Arm Project – which will be a petrochemicals and gas Carbon Capture and Storage hub used to process fracked gas from the Beetaloo Basin for export
$65 million for polluting gas – “Last year Australia exported 4,314 petajoules of gas – just under four times the amount actually consumed within Australia,” the Climate Council says. “There is not a shortage of gas supply in Australia, and demand will decline further over time as we transition to renewable energy.”
Ongoing fuel subsidies – The Federal Government’s first budget is a missed opportunity to start phasing out subsidies which sustain and underpin fossil fuel use, like the Fuel Tax Credit. “Continuing to subsidise fossil fuels – including by failing to phase down fuel tax credits and directly investing in projects like the Middle Arm Industrial Precinct – means Australia will continue to play an outsized role in fuelling the climate crisis globally,” the Climate Council says.

Climate Council’s top 3 budget highlights

Increased investment in renewables via – $20 billion to urgently upgrade Australia’s electricity grid, $102 million to establish a Community Solar Bank program to build community scale solar technologies, $224 million towards 400 community batteries, and $100 million to New Energy Apprenticeships and New Energy Skills programs
More support for the Pacific with $900 million allocated to rebuild its international development program
Investment in the Climate Change Authority which will see the continued restoration of the Climate Change Authority and its ability to provide credible science-backed advice to the Federal Government

Here’s how ASX renewable companies are tracking:

CODE	COMPANY	PRICE	% WEEK	% MONTH	% YEAR	MARKET CAP
AST	AusNet Services Ltd	0	-100%	-100%	-100%	$9,919,608,019
AVL	Aust Vanadium Ltd	0.034	-8%	0%	31%	$135,773,381
BSX	Blackstone Ltd	0.18	0%	0%	-74%	$82,814,414
DEL	Delorean Corporation	0.089	2%	16%	-56%	$20,493,487
ECT	Env Clean Tech Ltd.	0.015	-9%	-12%	0%	$25,743,775
FMG	Fortescue Metals Grp	16.07	-7%	1%	12%	$49,663,704,127
PV1	Provaris Energy Ltd	0.058	2%	-8%	-57%	$31,526,127
GNX	Genex Power Ltd	0.2	0%	-11%	-13%	$277,035,428
HXG	Hexagon Energy	0.016	7%	0%	-82%	$7,693,739
HZR	Hazer Group Limited	0.565	2%	-4%	-60%	$93,744,059
IFT	Infratil Limited	7.44	2%	-5%	-7%	$5,330,031,656
IRD	Iron Road Ltd	0.13	0%	-7%	-33%	$107,981,276
LIO	Lion Energy Limited	0.036	9%	24%	-52%	$14,913,858
MEZ	Meridian Energy	4.11	2%	-7%	-14%	$5,270,898,190
MPR	Mpower Group Limited	0.021	5%	0%	-68%	$6,167,769
NEW	NEW Energy Solar	0.975	-1%	3%	20%	$314,176,226
PGY	Pilot Energy Ltd	0.018	0%	13%	-75%	$11,617,319
PH2	Pure Hydrogen Corp	0.25	0%	6%	-31%	$87,047,514
PRL	Province Resources	0.083	-6%	6%	-48%	$102,789,903
PRM	Prominence Energy	0.0015	-25%	-25%	-88%	$3,636,913
QEM	QEM Limited	0.2	-7%	-7%	8%	$26,483,259
RFX	Redflow Limited	0.036	0%	-10%	-40%	$64,181,638
SKI	Spark Infrastructure	0	-100%	-100%	-100%	$5,036,718,784
VUL	Vulcan Energy	7.34	15%	0%	-51%	$1,042,047,638
CXL	Calix Limited	5.48	7%	-19%	4%	$997,919,469
KPO	Kalina Power Limited	0.019	12%	-5%	-32%	$27,273,524
RNE	Renu Energy Ltd	0.044	0%	13%	-25%	$16,040,905
NRZ	Neurizer Ltd	0.105	-13%	-22%	-16%	$120,976,110
LIT	Lithium Australia	0.05	-6%	-9%	-64%	$61,059,084
TNG	TNG Limited	0.08	-11%	-5%	-38%	$111,073,458
SRJ	SRJ Technologies	0.43	0%	0%	10%	$34,125,795
NMT	Neometals Ltd	1.125	1%	0%	11%	$599,295,961
MR1	Montem Resources	0.04	0%	0%	-51%	$12,766,020
FGR	First Graphene Ltd	0.115	5%	5%	-43%	$63,369,365
EGR	Ecograf Limited	0.355	3%	11%	-45%	$162,120,045
EDE	Eden Inv Ltd	0.0065	-7%	-35%	-68%	$16,267,374
CWY	Cleanaway Waste Ltd	2.64	-4%	-1%	-8%	$5,876,640,317
CPV	Clearvue Technologie	0.195	-3%	-15%	-28%	$40,481,657
CNQ	Clean Teq Water	0.43	-9%	-17%	-41%	$21,216,433
M8S	M8 Sustainable	0.008	14%	33%	-68%	$3,927,268
EOL	Energy One Limited	4.58	-3%	-6%	-27%	$141,998,595
LNR	Lanthanein Resources	0.031	-21%	-23%	63%	$33,698,895
FHE	Frontier Energy Ltd	0.45	0%	32%	246%	$116,627,220
LPE	Locality Planning	0.056	-7%	-5%	-66%	$9,837,449

Who’s got news out?

ZEOTECH (ASX:ZEO)

ZEO has executed a 12-month multi-stage targeted research program with Griffith University to develop and validate the application of Zeotech products for controlling landfill methane emissions.

The program will be undertaken in collaboration with Australian waste management company, Cleanaway Waste Management, and incorporate lab-based characterisation and infield trials aimed at establishing scientific and economic validation for potential Zeotech product applications for methane control.

It will also evaluate the potential for these products to be applied for measures across diverse industries such as mining and agriculture.

IRON ROAD (ASX:IRD)

IRD says the Australian Government has maintained the $25 million grant commitment to assist financing and development of the proposed Cape Hardy port and industrial precinct on Eyre Peninsula, South Australia.

The Cape Hardy development will bring together agriculture, mining, renewable hydrogen, green manufacturing and First Nations businesses into a multi-user, multi-commodity manufacturing and export hub in South Australia.

PROVINCE RESOURCES (ASX:PRL)

PRL has executed an agreement with the Western Australian Government for the grant of an additional land licence under section 91 of the State’s Land Administration Act.

The licence covers 1,035km2 of land south of Carnarvon and was obtained following the consent of relevant stakeholders including pastoralists and native title holders.

PRL says it continues to build its land interests in the Gascoyne region as it expands its footprint for the HyEnergy green hydrogen project – now holding a total area of more than 4,162km2 under licence.