Federal election 2019: Labor, Coalition vow to cut emissions while supporting NT fracking. Is that possible?

Updated

Michael Kutschki hates the idea of his former employer coming to his hometown.

Key points: Both major political parties support a new fracking industry in the Territory

The industry has been labelled "one of the largest potential sources of carbon pollution in the world"

It has been reported that global demand for gas will surpass coal by 2030

The former Inpex and Curtis Island gas sector worker fears the impact hydraulic fracturing would have on the water table, fishing resources and Mataranka's growing tourist trade.

But Sally Sullivan, who has lived at the nearby Cave Creek station for 30 years, thinks with the right science and regulation behind it those risks can be managed, allowing the region to reap economic stimulus and flow-on benefits it would certainly bring.

It has been a year since the Territory Government lifted a moratorium on fracking — a decision that continues to polarise its residents.

On one hand, its Government is broke, population is falling and opportunities for economic stimulus look slim.

But on the other hand, the current downturn has some weary of wading back into another boom and bust cycle and instead want the Territory to focus on building its renewables sector.

Meanwhile, extracting gas by fracking in the Northern Territory has been labelled "one of the largest potential sources of carbon pollution in the world" by a prominent think tank, prompting many to wonder how the development can be justified.

The environment and energy have emerged as two of the biggest issues ahead of Saturday's federal election.

But while that has seen the spotlight shone on Adani's proposed Carmichael Coal Mine, the Northern Territory's evolving fracking sector has flown quietly under the public's radar.

Both major parties have pledged their full support to it, with the ALP pledging to build $1.5 billion worth of pipelines across the NT and Queensland.

But some have questioned how Labor plans to show that support, while also following through on its pledge to reduce pollution by 45 per cent of 2005 levels by 2030.

According to one expert, it is simply not possible to do both.

Would fracking really save the Territory's economy?

The Northern Territory might be broke, but there are untapped riches underfoot.

For that reason, developing the fracking industry makes perfect sense to many, particularly after the NT budget forecast a $6.2 billion debt by the end of the next financial year.

That dire outlook came as 10,000 jobs were nixed with the conclusion of the Inpex gas project's construction phase, less than a year after AACo's Darwin abattoir was mothballed and as its tourism sector struggled despite a $103 million government stimulus.

Matt Doman, from Australian Petroleum Production and Exploration Association (APPEA), forecast that fracking would bring 6,000 local jobs and a $2 billion-a-year revenue hit.

"We do believe that in the Beetaloo Basin we have the largest untapped natural gas resource in onshore Australia, so it's a very significant potential gas resource that would be developed," he said.

"The economic benefits of doing that in the Northern Territory would be considerable."

But others are sceptical, saying the current economic climate should serve as a warning against industries subject to bust.

According to a report from the Institute of Energy Economics and Financial Analysis, LNG prices are dropping due to a global oversupply and demand for renewables.

It was a point also raised by prominent climate scientist Bill Hare, who said investing in new gas projects would risk creating stranded assets.

"[Natural gas] is being outcompeted now on a competitive bidding basis in the United States and other markets [by renewables]," he said.

"Because Australia has such cheap renewable energy, that natural gas is going to have an even harder time ultimately competing."

But financial news outlet Bloomberg said while LNG prices were collapsing presently, it forecast that glut was set to turn in coming years.

Other analysts pointed to the bizarre situation that has left Australia's eastern regions with a looming gas shortage, despite being the world's largest LNG exporter, and suggested Territory gas could be used to fill that shortfall.

But a report from the Institute of Energy Economics and Financial Analysis said Territory gas would be expensive and importing gas from overseas would make more economic sense for east-coast consumers.

At the end of April, New South Wales approved a $250 million LNG import terminal at Port Kembla and others are on the cards.

Mr Doman said APPEA would prefer to see gas resources developed in eastern states to fill that demand, but believed Territory gas could also be sent east at a competitive price.

"There's significant gas resources in the Northern Territory and we do believe that they will be able to be delivered into east Australia at a competitive and an affordable price, albeit a higher price than would be associated with developing those states own gas resources," he said.

Any equation about the impact of fracking on the Northern Territory's finances would also have to factor in the cost of offsets, as the NT Government vowed to ensure any emissions created by the industry were countered by carbon offset activities.

According to left-wing think tank the Australia Institute this could cost $4.3b a year by 2030, although this figure was rejected by industry.

Mr Hare argued the policy was ineffective, as it added a deadweight cost to industry when that money would be better spent investing in sustainable technologies and expertise.

Many advocates said the Territory would be better off building up its renewables sector, particularly given its wealth of sunshine and proximity to Asia.

The two main opportunities have been said to lie in exporting green hydrogen gas — created using solar power and water — and solar electricity through underwater high-speed cable.

Already, the Queensland Government is investing in a pilot project aimed at producing hydrogen, while a company in Western Australia's Pilbara is investigating an undersea cable to transport solar power to Java.

Shar Molloy from the NT Environment Centre said it was working with Beyond Zero Emissions on a research report that would help the NT bring renewables to the heart of its economy.

"If you don't start now — as these kinds of industries are unfolding worldwide — then the Northern Territory really misses out on capturing the advantage that we have from having such high solar radiation here in the Northern Territory," she said.

What impact will fracking in the Territory have on emissions?

Extracting gas from the Northern Territory via fracking is "one of the largest potential sources of carbon pollution in the world", according to the Australia Institute.

It could contribute about 4.5 per cent to Australian greenhouse gas emissions and 0.05 per cent to greenhouse gas emissions globally, the independent report into fracking found last year.

That comes as Australia's greenhouse gas emissions rose 0.9 per cent in the year to September 2018, fuelled largely by a 19.7 per cent increase in LNG exports.

But the industry maintains gas has a critical role to play in lowering Australia's carbon footprint.

Mr Doman said not only did gas burn more cleanly than coal but it would enable more renewable energy sources to take off.

"The use of gas for power generation in place of coal is one of the most significant steps we can take to lower the carbon emissions from electricity generation," he said.

"The other critical thing about natural gas is that it is a key enabler of renewable energy by supporting the introduction of intermittent renewable energy sources into the energy mix."

Bloomberg reported that gas was expected to surpass coal as the world's second-largest energy source, after oil, by 2030 — amid a push to cut emissions.

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But while Mr Hare said he would have agreed with this point five years ago, he said that was no longer the case, because the evolution of renewable technology had happened so quickly.

He said while it may take a little longer to provide processed heat for industry through renewables at a competitive price, that would eventually become decarbonised as well.

Asked how Labor planned to balance the industry with emissions targets, a party campaign spokesman said large emitters would be covered under an expanded safeguards mechanism.

"The safeguards mechanism will be properly implemented to cap and bring down pollution, and Labor will work with EITE (emissions-intensive trade-exposed) industries to cut pollution while protecting competitiveness and jobs, including through our $300 million Strategic Industries Reserve Fund," the spokesperson said.

Emissions aren't the only concerns raised by the proposed development: advocates are just as worried about the environmental impacts on rivers and aquifers.

"I think those concerns are also very strong and could provide a stronger argument in some cases than even the greenhouse gas argument," Mr Hare said.

Curious policy positions

Mr Hare said Labor's plans to reduce emissions and support the fracking industry would "not really" be possible to balance.

But he was buoyed to see a major party commit to an emissions reduction target that was in line with Australia's Paris Agreement commitment, saying "the 45 per cent reduction policy is at the edge of what's needed".

He had also analysed the Coalition's policies regarding the environment and concluded there was "basically nothing there".

While it vowed to cut emissions by 26 per cent of 2005 levels by 2030, it would do so using carry-over carbon credits from the Kyoto Protocol period.

Mr Doman said his industry was also keen to see policy certainty regarding climate change, the environment and emissions.

"There's been a complete lack of certainty in our climate change and energy policy over the last decade and we're looking forward to that being addressed, regardless of the outcomes of [the] election," he said.

"We've seen the policy position of both major parties. We certainly have welcomed the commitment that Labor has made to further consultation on its climate change action plan. We look forward to the discussion and development of the Coalition's plan in this space."

Topics: oil-and-gas, industry, business-economics-and-finance, federal-government, government-and-politics, climate-change, environment, darwin-0800, nt, mataranka-0852, elliott-0862, katherine-0850, alice-springs-0870

First posted