Queensland says it won't back Coalition's emissions reduction scheme without gas funds

Queensland has demanded federal funds for gas infrastructure in return for its co-operation with the Morrison government’s rebooted emissions reduction scheme.

The state’s energy minister, Anthony Lynham, will head to Western Australia for the energy Coag meeting later on Friday, pressing for Canberra’s financial support to expand its gas industry into the Galilee and Bowen basins.

Queensland also wants Angus Taylor to open the commonwealth coffers to partially electrify existing LNG facilities at Gladstone’s Curtis Island, enabling the gas which currently powers it to be redirected to the east coast energy market.

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If the requests are granted, Queensland would look at supporting Taylor’s call to back the $2.55bn rebadged emissions reduction fund and roll out new generation and transmission projects as part of a series of individual deals with the states, in place of the Turnbull-era national energy guarantee.

“If Minister Taylor is looking to invest in energy infrastructure, Queensland has options that will deliver gas to manufacturers and industry,” Lynham said. “That’s how you drive down gas prices and fuel jobs and investment; by delivering more gas and that’s what both of these infrastructure investments could do.”

The Morrison government has been urging the states to open up their gas fields to exploration as part of a solution for Australia’s energy woes.

As part of that bid, Scott Morrison announced a digital environmental approvals process and database would be established, in an effort to reduce current approval waiting times, a move welcomed by the oil and gas lobby group Appea.

Queensland has long argued it has ready deposits and potential investors but, much like the coal which sits in the Galilee and Bowen basins, without the necessary infrastructure to the Gladstone port, it has struggled to attract anything beyond initial interest.

“This is infrastructure that fits with both commonwealth and Queensland government priorities, delivering system strength, stabilising transmission loss factors and putting further downward pressure on Queensland’s electricity prices,” Lynham said.

Queensland’s demands follow Victoria’s request the government fast-track work on the KerangLink, which would increase the power transfer capability between the Snowy projects and Melbourne. NSW has asked the feds to help it transition to a post-Liddell power station future, including underwriting new generation projects, a deal which the government looks close to signing off n.

South Australia is expected to ask for assistance in expanding its burgeoning renewables industry, while WA, despite hosting the meeting, sits outside the national energy market and therefore outside the wheeling and dealing.

The main sticking point for Taylor remains the ACT, which has concerns over the lack of cohesive national plan in favour of individual deals with each state.

The ACT’s energy minister, Shane Rattenbury, also wants the expansion of the hydrogen energy market to be “green” focused, rather than a “backdoor means of propping up the coal sector”.

Its proposal includes the Coag energy states amend the national hydrogen strategy to only support energy produced from renewables, which would mean changing the definition of “clean hydrogen to exclude hydrogen generated using fossil fuels”.

If that proposal is rejected, the ACT hopes to convince the states to support an energy return on investment analysis, including the risk of stranded assets “associated with generating hydrogen from fossil fuels with carbon capture and storage”.

The ACT is also pushing for the meeting to adopt a minimum carbon capture rate of 90% as well as a certification and labelling scheme for domestic and international markets, which “clearly identifies he emissions intensity of hydrogen, including fugitive emissions”.

Top of Taylor’s agenda will be the reliability obligation, as the states enter what is expected to be another scorching summer, with questions already being raised over Victoria’s ability to meet demand.

No changes would be made in time for the coming summer but Victoria has indicated it is open to looking at proposed changes, which would need all states to agree in order to go ahead. A “robust” discussion is expected, but with the conversation still in its infancy stages no concrete decisions are likely.