05/16/2023 | Press release | Distributed by Public on 05/16/2023 00:44
May 16, 2023
Thank you Sam for that kind introduction.
Welcome everyone to the 2023 APPEA conference.
I'd like to begin by acknowledging the Kaurna people, the Traditional Custodians of the land upon which we're meeting today and pay my respects to Elders past, present and emerging.
Let me also extend my thanks to Kuma Kaaru, for that wonderful Welcome to Country.
It was great to be embraced and learn a little bit more about the culture of the Aboriginal people from South Australia.
Let me also extend my respect to Aboriginal and Torres Strait Islander people here today and the First Nations people in the communities where our industry lives and works.
Let me thank Minister King and Minister Koutsantonis for your wonderful speeches.
It's really fantastic to see such strong support for the industry, both at a federal level and at a state level.
The passion that the two of you have, the recognition that you have for the role of the oil and gas sector in providing prosperity to everyday Australians, the role that we play in helping address Australia's future challenges, the opportunity that is in front of us, that this industry is so well positioned to seize, to be part of the decarbonisation solution.
Fantastic that we have leaders such as yourself who recognise that and are championing the opportunity for us to continue to support Australia's prosperity.
So thank you both.
I'm very pleased to be here delivering my first APPEA conference address as the Chair.
And we've certainly seen a lot of change since this time last year when my predecessor Ian Davies stood before you at the conference in Brisbane.
Change not just in APPEA and our industry but also nationally and internationally.
This time last year, we were just coming to grips with the impact of Russia's invasion of Ukraine.
Not just in terms of the horrible ramifications for the citizens of Ukraine but also the implications for the global energy system.
Within Australia, we were just four days out from what was expected to be a very closely contested federal election.
Roll the clock forward a year, we have new leadership and APPEA, we have a new federal government but we still have a world that is seeking safe, reliable, affordable energy.
We know households' and government budgets are stretched and this makes our industry's contribution through economic activity and tax payments to Australian governments, both state and federal, more important than ever.
Getting together at APPEA is a chance to reflect on that and I think it is important for us to acknowledge how much value we deliver.
This financial year alone, the gas industry is set to contribute $16.2 billion to state and federal revenue pools.
The money includes things like corporate income tax, Petroleum Resource Rent Tax. or PRRT, state royalties and excise.
Changes to PRRT that were announced by the Federal Government last week, in the budget, will see our industry contribute an additional $2.4 billion over the forward estimates.
And if you zoom out even further, APPEA commissioned research by Wood Mackenzie has found that Australian governments will collect $100 billion in tax from gas exports over the coming two decades.
This is an extraordinary contribution.
It will no doubt fund initiatives like the National Disability Insurance Scheme, which is so vital to improving the lives of many Australians.
Now on the Federal Budget, I'd like to take the opportunity to congratulate Minister King for announcing the development of the Future Gas Strategy, which she spoke about in her remarks.
In my view, this is a great opportunity to outline the ongoing role of gas in the energy transition.
The Strategy will guide a realistic pathway for Australia into the future, whereby responsible resource development is understood and can continue.
The Strategy will also send a strong signal and an important signal to our regional partners that Australia is open for business.
We very much look forward to working with the Government, industry, manufacturers and unions to make this vision a reality and this is just one of many policy areas where we see enormous potential to work collaboratively with the Government to deliver transformative change and secure future gas supply.
But to continue to invest and take risks, our industry needs fiscal and regulatory stability.
APPEA welcomes the certainty that the Government's announcement on PRRT offers as it ends, the long running process of review.
I was also pleased to see the Government indicate it wants to provide regulatory certainty for offshore carbon capture and storage projects and Minister King acknowledged that in her remarks as well.
If we look at other jurisdictions, in the United States, the Inflation Reduction Act is certainly providing this sort of assurance, as well as extremely strong incentives for investment in this technology.
Now the mention in Australia's Federal Budget and funding towards a review is certainly a good start.
If we look at the theme for this year's APPEA conference, it is lead shape, innovate, accelerating to net zero.
This week, we intend to double down on our message that the oil and gas industry is not a passive observer, or worse a casualty of the global and Australian race towards a net zero economy.
We are part of the solution.
We are an essential source of energy for every business, every household, every community and we are committed to working together to achieve the Paris targets.
Now I'd like to talk a little bit about the role that our state is playing on the road to net zero.
In 2021, coal made up more than 50% of Australia's power generation mix, with gas coming in second at about 18%.
When used to generate electricity, natural gas emits around half the lifecycle emissions of coal.
That's s a pretty strong argument for using more gas in my book.
Gas is also an essential feedstock for Australian manufacturing.
In fact, the latest Australian Energy Update from the Department of Climate Change says gas accounts for 42% of the energy that the sector uses.
We know through the development of the National Reconstruction fund that the Australian Government wants to turbocharge our manufacturing capabilities.
Using more gas can enable this.
We also know a lot of consumers are interested in buying electric vehicles and gas can fuel the manufacturing plants that make the batteries that go into those cars.
Let's tell that story.
Let's also tell people about the role that gas plays and making the things they need.
Take for example, the food that we're enjoying at the conference here this week and the wine that Minister Koutsantonis referenced in his remarks.
Australian farmers would have produced that using fertiliser, although maybe not some of the organic Barossa wines, that fertiliser is made from gas.
Gas can also play a critical role in Australia's energy security as a firming supply for electricity generation, when the sun isn't shining and the wind isn't blowing.
If you've been reading the press lately, you would have seen our Japanese customers and the Japanese Government, see gas as crucial to their energy security and their decarbonisation goals.
And I've been very pleased to hear endorsements from our political leaders here in Australia, about the role gas will play on the road to net zero.
In case you've missed it, I'd like to quote from the Prime Minister Anthony Albanese.
Last week, he said, quote, the gas industry is an important industry for Australia, in our national interest.
I think this was a welcome acknowledgement of our industry.
We'll hear at the conference on Thursday from the Opposition Leader Peter Dutton and ahead of that I'd like to acknowledge the Coalition's ongoing support of our industry.
But we know some in parliament, many in the community, including folks outside this venue, do not really appreciate the central role that natural gas plays in the Australian economy and everyday lives, the role, the vital role that natural gas is playing and will continue to play in reducing Australia's emissions.
This is an area where the industry recognises we need to do more.
And I'd like to show you a sneak peak of a national public awareness campaign that APPEA will be rolling out in the coming weeks.
This is really aimed at educating the community about the important role of gas in our lives and the industry's contribution to transforming our energy system.
Let's take a look.
(Campaign video played.)
This awareness campaign and it's focus on our industry's contribution to our economy and to emissions reduction is not a policy pivot or reset.
Rather it reflects our strength and resolve to be more forward leaning about our sector's strong future and critical role in the net zero economy, in Australia, in our region, and globally.
Many companies, many companies represented here, have set their own ambitious targets to achieve net zero and defined plans to invest billions of dollars in the technologies that will deliver real emissions reductions to get us there.
In short, we will lead, shape and innovate towards 2050 and a net zero emissions Australia.
Now as I've said, the oil and gas industry is not a passenger on the road to net zero, we are a driver and there is no better example of the role that we can play and must play, than Carbon Capture, Utilisation and Storage, or CCUS.
Now for those of you who aren't familiar with this technology, this involves capturing carbon dioxide, either from industrial facilities, or directly from the air and either permanently storing it deep underground or using it to make something else.
In previous years we've talked a lot about CCS, so Carbon Capture and Storage.
But now we're making sure we add the U, for utilisation, because there are a lot of things that we can use the captured carbon for.
And on CCS, in Australia, I believe this is a technology that has been judged too soon.
It does work.
The Sleipner project in Norway has been storing one million tonnes of CO2 per year, deep below the North Sea, since 1996.
The technology has been used in the US for decades.
It is a technology that is backed by the International Energy Agency and the Intergovernmental Panel on Climate Change.
Both of those agencies say CCS will be critical in getting to net zero.
This is why we want to work with the Australian Government on the development of a national CCUS strategy, to provide policy direction, to progress priority carbon management hubs and to promote Australia as a regional CO2 storage leader.
Countries in the region with limited CO2 storage potential, such as Japan and South Korea, are looking for partners to establish hubs to meet their own net zero commitments.
Our gas industry is extremely well placed to be that partner and develop CCUS, given our expertise in geological storage and large infrastructure projects.
We should also work together as APPEA members, where possible, to do this.
I say this because analysis that was commissioned by APPEA has found that when you look at a map, most of Australia's hard to abate sectors operate near each other.
It shows these places could effectively be grouped into nine regional zones.
The Pilbara, in Western Australia, could be one, as could Central Queensland and the Cooper Basin, right here in South Australia.
Each of these regions requires the same four building blocks to reach net zero.
Those building blocks are renewable energy, natural gas CCUS and low carbon hydrogen.
By prioritising the development of CCUS projects across these nine regions, in partnership with energy producers, manufacturers and government, our industry can play a leading role in decarbonising hard to abate sectors across the economy.
In a way it's like carpooling emissions, with the goal of reaching net zero as quickly and cost efficiently as we can.
But this will only happen if Australia gets the investment environment right.
And at the moment other countries are leading the way.
About two thirds of planned CCUS investments globally are in the United States, Canada and Europe.
They're supported by mechanisms such as the Inflation Reduction Act in the US, which offers $394 billion worth of incentives and acts in the UK that offer 20 billion pounds of investment incentives.
Hydrogen production also offers another significant opportunity for our sector.
Hydrogen can be used in transport and power generation, and complements LNG as an energy export in our region.
The challenge we face of course is scaling up from where we are today, with less than one million tonnes of lower carbon hydrogen currently being produced worldwide.
Now we know there's strong demand for hydrogen and the oil and gas sector has the technical and commercial expertise to meet that demand.
All production pathways need to be on the table, with the emissions intensity of the hydrogen produced being really the most important metric to consider.
The International Energy Agency estimates that by 2030, approximately 60% of hydrogen production will come from renewable energy and 40% will come from natural gas with CCUS.
The IEA further highlights 80% of the largest renewable base hydrogen projects under construction globally, are being developed by oil and gas companies or will supply hydrogen to refineries.
The further proof point that our sector is core to this transition.
Now the $2 billion Hydrogen Headstart program, announced by the Federal Government last week, recognises the importance of hydrogen to reaching net zero across Australia.
And I'd also like to acknowledge the investment that the South Australian Government has made in the sector, as mentioned by Minister Koutsantonis.
These certainly are great starts but it would be strengthened by the inclusion of low carbon hydrogen from natural gas with CCUS, which today represents the lowest cost and most advanced pathway available.
So to wrap up, if the Australian industry represented by APPEA is to reach our business objectives and fulfill our purpose, we need policy certainty.
We need a regulatory framework that provides stability and transparency required to encourage the long-term investment in new gas supply that Australia needs.
Australia is uniquely placed to succeed in the energy transition.
We have plenty of natural resources, the right workforce, and a strategic location close to customers in Asia.
Our industry wants to work constructively and proactively with state and federal governments and oppositions, on charting Australia's pathway to a reliable, affordable and lower carbon future.
I want to thank you for your time today.
It's been an honour and a privilege to address you in my first conference speech, as the APPEA Chair.
Please enjoy the coming days with your fellow delegates, as you discuss how we can lead, shape and innovate, as we accelerate towards net zero.
And please take some time to reflect how we can better tell the story of the great contribution we make to the Australian way of life and to our community and our nation's goal to decarbonise.
I look forward to meeting as many of you as possible over the coming days, hearing your ideas and collaborating.
Enjoy the rest of the conference, thank you.