MELBOURNE, Sept 15 (Reuters) - Australia's government set
out a strategy on Tuesday to boost gas supplies and drive down
energy prices, including a possible state-funded gas-fired power
plant, as part of an effort to drive economic recovery after
The proposals follow pressure from parts of the
manufacturing sector to increase gas supply and lower prices,
but were criticised by the power industry and green groups as
heading in the wrong direction.
The conservative government hopes to develop new gas basins
in northern Australia and has set up a panel to map out
pipelines that would bring that gas to market, with construction
by the private sector or state backing.
"We must unlock new sources of supply, we must get
additional gas to market as efficiently as possible, and we must
empower domestic gas customers," Prime Minister Scott Morrison
said in a speech on Tuesday.
The strategy was welcomed as a "good first step" by gas
producers, while major energy users such as chemical, fertiliser
and explosive manufacturers also cautioned that implementing the
plans would need "tough negotiations" on market reforms.
"The package can help limit the risk of future price surges,
though gas prices are likely to remain driven by international
factors," said Australian Industry Group Chief Executive Innes
The government also told the power industry to make final
investment decisions by the end of April to build 1,000
megawatts of flexible power capacity to replace an ageing
coal-fired plant, Liddell, set to shut in 2023, or else the
government would build a gas-fired plant to prevent blackouts.
The industry attacked the plan saying it would deter private
investment in both renewable and flexible power if the
government becomes a competitor in the market.
"There are no material reliability concerns that would
warrant this kind of interventionist approach," said Sara
McNamara, head of the Australian Energy Council.
AGL Energy, owner of the Liddell plant, in a
statement made no commitment to investment decisions by April,
but reiterated plans to build 850 MW of battery storage by 2024.
Green groups said it made no sense for the government to
promote gas at a time when Australia needs to cut its carbon
"If we are to have any chance of meeting our Paris goals, we
simply cannot develop any new gas fields, let alone five new
basins," said Dan Gocher, climate and environment head at the
Australasian Centre for Corporate Responsibility.
(Reporting by Sonali Paul; editing by Richard Pullin)