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Changes to Australian laws after pressure from foreign and domestic fossil fuel giants highlight the success of lobbying by the industry’s biggest players. By Mike Seccombe.
Who sets Australia’s fossil fuels policy?
If you want to understand what is driving Australia’s headlong pursuit of new fossil fuel developments, a good place to start is with a transcript posted by the Japanese embassy in Canberra last March.
It was a speech given at a supposedly private function hosted by Resources Minister Madeleine King in Parliament House. In the speech, Takayuki Ueda, president and chief executive of the giant Japanese resources company Inpex, laid down the law to the Australian government.
Ueda began by expressing his displeasure with the government’s decision to cap the domestic gas price and prevent companies from diverting supplies offshore to take advantage of skyrocketing global coal and gas prices.
Such interventions in the market, he said, risked discouraging investment and “damaging Australia’s hard-earned international reputation as a premium trading partner”.
His complaints were far broader than just that. Ueda claimed the investment climate in Australia was “deteriorating”. He said Australia’s energy policy appeared to be driven “by ideology”. He said it threatened to “choke investment”. He demanded “certainty in policy direction and a stable regulatory framework”.
Ueda said Australia’s “hesitancy” to embrace carbon capture and storage (CCS) – the expensive and unreliable technology of burying carbon dioxide emissions that are an inevitable byproduct of mining and burning fossil fuels – “threatens this country’s aspiration to become a clean energy superpower and sacrifices the associated jobs, investment and revenue”. He dismissed as “ideologues” the proponents of green hydrogen, which is made with renewable energy – a zero emissions source – and argued for the use of gas instead.
He singled out the Albanese government’s planned safeguard mechanism reform, which was being debated at the time and would oblige big emitters of greenhouse gases to progressively cut them, saying it would “require all new gas fields tied to existing LNG facilities to be net zero on day one” and would be unworkable without CCS.
He accused Australia of a “quiet quitting of the LNG business” with “potentially very sinister consequences”.
“The question of who will replace Australian supply into the market is front and centre,” he said. “Alarmingly, the ‘inconvenient truth’ is most likely that Russia, China and Iran fill the void. I hope this point is obvious to all of you and that you appreciate that this outcome would represent a direct threat to the rules-based international order essential to the peace, stability and prosperity of the region, if not the world.”
Hyperbolic claims by fossil fuel company executives are not unprecedented, of course, as they push back against the science that says there can be no expansion of their industry if the world is to avoid runaway climate change. But Ueda is not just another company executive.
As he pointed out to his audience of policymakers, Inpex was founded as a state-owned company in the 1960s with a mandate to contribute to Japan’s energy security and, even after being floated on the sharemarket, it remains the only company in which the Japanese government maintains a “golden share” to prevent a takeover.
He was not just talking from his company’s book. He was speaking for the government of Australia’s second-biggest trading partner, a reality driven home when the embassy promptly put up the transcript. The was driven home further the following month, in a departure interview with Japan’s outgoing ambassador to Australia, Shingo Yamagami.
“There shouldn’t be any misunderstanding as to the depths of concern held by Japanese companies because on repeated occasions those concerns have been conveyed to the Australian government,” the ambassador told The Australian.
The interview went on to canvass the imposition of gas price caps, restrictions on gas extraction imposed by some state governments, the influence of the Greens, the safeguard mechanism and a government review of and likely increase in the tax on oil and gas mining companies.
Yamagami had a history of public meddling in Australian politics. He repeatedly railed against, for example, the decision by Queensland’s Labor government in its June 2022 budget to sharply increase coal royalties, to claw back some of the super-profits being made by miners.
In a speech to Queensland University students the following month, he said he feared “that this may have widespread effects on Japanese investment beyond the coal industry”.
He repeated these concerns to the state’s peak mining lobby group, the Queensland Resources Council, and to the Minerals Council of Australia’s annual conference.
Quiet diplomacy it was not.
No doubt Japan has reason to take a close interest in Australian energy policy. As Yamagami was fond of repeating, 70 per cent of its coal imports, 60 per cent of its iron ore and 40 per cent of its gas come from Australia, and without Australian energy “the neon lights of Tokyo’s world-famous streets would go dark”.
Yet even as Japan mounted its campaign to try to dictate Australian policy on climate and resources, Tokyo “dragged its feet on transitioning to cleaner energy”, in the words of the Lowy Institute’s James Bowen, failed to invest in offshore wind, continued to advocate for “clean coal” using CCS and “propped up” gas.
“It is difficult to uphold [Japan’s] complaints about Australian energy policies in light of these circumstances,” he wrote in Lowy’s The Interpreter.
Nonetheless, they yielded results. The immediate response from the government was a flurry of assurances from ministers that Australia would continue to be a reliable supplier of energy to Japan.
Japan’s public efforts to influence Australian policy – along with less-overt efforts by South Korea – greatly strengthened the broader fossil fuel lobby in its push for policy changes.
Shortly after Inpex’s Ueda gave his incendiary speech, Santos chief executive Kevin Gallagher wrote to the government, bluntly warning his company and its Japanese and Korean joint venture partners “could not accept” the government’s safeguard mechanism. He threatened to pull the plug on the $5 billion Barossa offshore gas project.
He first argued the project should be exempt from the new mechanism – which would have allowed it to vent an estimated 1.8 million tonnes of carbon dioxide a year – and when that proposal didn’t fly, he demanded new legislation allowing his company and others to sequester vast amounts of carbon dioxide in holes under the sea.
In due course, the government complied. The Environment Protection (Sea Dumping) Amendment (Using New Technologies to Fight Climate Change) Act 2023 came into force on November 27 last year. Gallagher’s belligerent missives to the government did not come to light until December, pursuant to an order from the Senate.
It was not just a big win for Santos. It was a win for Ueda, Japan and Korea, as was revealed by Foreign Affairs Minister Penny Wong, who at one point berated a reluctant opposition: “You said no to Santos, you then said no to Woodside, you’ve said no to Inpex, you’ve said no to Korea, you said no to Japan.”
Another example, reported in this paper just last week: buried in proposed amendments to the Offshore Petroleum and Greenhouse Gas Storage Act 2006 is a provision that would remove the federal environment minister’s responsibility for overseeing the offshore oil and gas industry’s operations where their activities fall under the Environment Protection and Biodiversity Conservation Act 1999.
Once again, this action follows a letter from Santos’s Gallagher, co-signed by Japanese and Korean industry leaders, this time complaining “events of the last 18 months have eroded confidence in the current regulatory approvals regime as it fails to deliver certainty of cost, schedule and ultimately the ability to complete a sanctioned project”.
The clear subtext is the industry wants an end to delays imposed by project opponents, particularly Indigenous ones.
Assuming the changes pass, the approvals power would move to the minister for resources. Under current ministerial arrangements, that would mean Western Australian Labor Right faction member Madeleine King, rather than New South Wales Labor Left member Tanya Plibersek.
At a personal political level, this might be seen to suit them both. If Plibersek were seen to approve new gas projects it would not go down well in her very green Sydney electorate. That’s far less of a problem in the resource-dependent west.
But it worries opponents of further gas developments.
“This makes Madeleine King the most powerful woman nobody’s heard of,” says Polly Hemming, the climate and energy program director with The Australia Institute.
King is but the latest in a long series of resources ministers from Queensland and Western Australia. Over the past quarter-century, all but two have come from those states, and one of those was a climate change denier, South Australian Liberal Senator Nick Minchin.
Under the Coalition there were three other noted climate change sceptics: Keith Pitt, Matt Canavan and Barnaby Joyce.
Previous energy ministers also have been notable for their personal ties to industry. After leaving politics, the Coalition’s Ian Macfarlane became an industry lobbyist and chief executive of the Queensland Resources Council. Labor’s Martin Ferguson took up a post as chairman of the Australian Petroleum Production and Exploration Association’s advisory committee only six months after leaving politics.
Another Labor resources minister, Gary Gray, worked in the fossil fuel industry before politics and returned to work in the resources sector afterwards.
Madeleine King is not a climate change denier, nor does she have any employment background in the industry, but she is a strong advocate for it. The gas industry warmly welcomed the prospect that she, rather than the environment minister, would oversee approvals.
The broader point here is that the fossil fuel sector is accustomed to having significant influence on government. The revolving door between industry and politics spins fast.
Former National Party leaders Mark Vaile and John Anderson became chairmen of a coal and a gas company, respectively. Numerous other senior ministers from both major parties, state and federal, have taken up lucrative positions advising or lobbying for fossil fuel interests.
Then there are the ministerial staff. To cite just a couple of stand-out examples: Stephen Galilee worked as chief of staff to former NSW treasurer Mike Baird, then became chief executive of the state’s minerals council, which provided the lump of coal Scott Morrison famously waved around in parliament. John Kunkel, the former deputy chief executive of the Minerals Council of Australia, became Scott Morrison’s chief of staff. The impressive résumé of Anthony Albanese’s newly announced private secretary, David Epstein, includes a stint with BHP.
None of this is to suggest these people have done anything wrong or corrupt, but to underline the reality that the mining industry, and in particular the fossil fuel industry, is probably the most politically connected sector in the country.
Last November in a speech to mining executives, Australia’s richest person, Gina Rinehart, urged more miners to get into politics and remove environmental regulations.
Rinehart has a long record of climate scepticism and opposition to renewable energy. Last December she made the extraordinary claim that a third of Australia’s agricultural land could be taken over by wind and solar projects. (The Clean Energy Council notes that replacing all of Australia’s coal-fired power stations with solar farms would take less than 0.016 per cent of the country’s land.)
Rinehart’s source was the Institute for Public Affairs, an organisation to which she has reportedly contributed millions of dollars and which has a long record of propagandising against renewable energy.
Another way the fossil fuel industry exercises influence is via donations. In the decade to 2017, according to The Australia Institute’s analysis of electoral commission records, the mining industry disclosed donations of $49.9 million to federal political parties, of which 81 per cent went to the Coalition.
The real figure was undoubtedly much higher, because Australia’s donations laws are riddled with loopholes. In any case, the total has grown enormously since 2017, mostly due to one man: Clive Palmer.
Over the past two election cycles the right-wing, anti-renewables, pro-fossil fuels mining magnate has spent about $200 million on campaigning. Despite this, none of his candidates were elected in 2019 and just one in 2022. Still, as the law stands, there is nothing to stop mega-donors effectively buying their way into office.
The federal government is now considering electoral law changes to prevent this, but the suspicion is the real intention of the mooted changes is to cut off funding to the minor parties and independents who present an increasing threat to the current major party duopoly.
The change of government at the 2022 election has resulted in greater action to limit domestic greenhouse emissions, but when it comes to selling gas and coal to be burnt overseas, not much has changed. Except for a couple of policies that might as well bear a sticker: Made in Japan.
Mike Seccombe first wrote for The Saturday Paper in March 2014.
This article was first published in the print edition of The Saturday Paper on March 2, 2024 as "Who sets Australia’s fossil fuels policy?".
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