Strategies in Action

South Australian NMBI talking points

The talking points below delve into some of the implications of banning new climate-damaging projects in South Australia.

These talking points may be helpful when you are encouraging SA state MPs to support adoption of the No More Bad Investments (NMBI) model legislation. These talking points assume that the person you are talking with accepts that at least some action is necessary to tackle the climate emergency.

1. The South Australian government can control the types of projects it approves within SA regardless of federal policies. By banning new climate-damaging projects SA can demonstrate that such as thing is possible, making it easier for other states and territories to do the same.more...

Federal climate-related policies are far from adequate for protecting people and ecosystems from extreme climate harm. However, if enough states and territories enact No More Bad Investments (NMBI) legislation as a first step in taking climate emergency action it will normalise the practice of governments passing legislation based on restoration of a safe climate.

2. Banning new climate-damaging projects before they start is relatively easy compared with phasing out existing sources of carbon emissions.more...

While equally necessary, closing existing fossil fuel activity would be much harder and take longer, involving transition programs for workers and possible compensation claims from affected corporations, and requiring rapid roll-out of replacement renewable energy infrastructure.

Adopting NMBI legislation is a logical and significant first step in taking climate emergency action even though much more is required.

3. South Australia doesn’t need any new gas projects to ‘keep the lights on’.more...

Renewable energy generation in SA is already at 58%, and a handful of new wind and solar projects will be coming online over the next few years. Gas-fired electricity generation is indeed very useful for filling in the gaps on days of low solar and wind generation, but we already have enough gas-fired generation to fill the current gaps, and the gaps will be smaller in future as a more diversified mix of new wind, solar, and grid-level storage projects are completed.

The new gas extraction projects in the south-east of SA should also not be necessary to meet demand. Gas-fired eletricity generation will be declining, and all-electric households with solar panels are on the rise.

So why is the SA government encouraging new gas wells in the south-east? See the points below if you are thinking it is for the jobs or the royalties or for the sake of foreign investment.

From Dept of Energy, Innovation and Science (2016) (
Australia’s domestic consumption of coal and gas has risen only slightly over the last 40 years. We now extract over twice as much ‘energy’ as we need.

70% of the coal we dig up is exported, and a 50% increase in gas extraction in 2014-15, mainly from fracking in Queensland, was primarily for the LNG export market.

4. It will give market certainty to assist the rapid roll-out of climate-safe alternatives if new climate-damaging projects are banned in spheres where climate-safe alternatives already exist, and timelines for future bans are set in other cases.more...

Investment in new renewable energy generation and storage will flow in if new fossil fuel projects are banned. Electric vehicles and charging stations will expand if a timeline is set for banning new fossil fuelled vehicles.

When stringent new lighting efficiency standards were adopted, in effect banning sale of incandescent lamps, they were quickly replaced by a range of compact fluorescent lamps. This soon led to the development of even more efficient LED lamps. This transition was accomplished with minimal disruption and very little opposition from the general public simply because better alternatives quickly became available as a result of the tighter efficiency standards.

5. The SA government has adopted a target of net zero carbon emissions by 2050. Continuing to allow new climate-damaging projects is a bit like frantically trying to bail water out quickly enough to stop a boat sinking without doing anything to stop a person at the other end of the boat who is merrily tipping more water in.more...

In practice, climate impacts are already threatening lives and our well-being, so a more realistic target would be to reach net zero emissions absolutely as quickly as possible and to go beyond net zero emissions by drawing down the excess carbon already in the atmosphere.

It makes no sense to continue to allow new climate-damaging projects that will make achieving climate targets harder, particularly in cases where climate-safe alternatives are already available.

However, the SA government has encouraged new gas drilling in the South East and appears to be ignoring the potential climate impacts of burning the oil potentially to be extracted from The Bight.

6. Extracting oil from The Bight will negate the climate benefits of SA’s renewable electricity success story, currently at 58% with even more coming online over the next few years. If drilling for oil in The Bight goes ahead, burning that oil will potentially wipe out any climate benefit of SA’s wonderful renewable electricity achievements.more...

Since the proposed drilling sites in The Bight are in Commonwealth waters, NOPSEMA approval is required for drilling to go ahead. However, the SA government can use its powers over related works approvals and its lobbying power with NOPSEMA to stop drilling in The Bight on climate grounds.

The Statoil website does not say what it plans to do with the oil it hopes to extract from The Bight. Will it be refined, perhaps at Geelong, and used within Australia, or will it be exported?

According to IPCC carbon accounting conventions, the carbon emissions from burning exported fossil fuels are assigned to the country where they are burned. So, if Statoil exports that oil, it won’t make it harder for SA to achieve its carbon reduction targets…despite the fact that extracting and burning that oil puts everyone at greater climate risk regardless of where it is burned.

7. Will SA become rich from gas and oil royalties?. The short answer is no, although even if allowing new gas and oil projects were to earn a lot in royalties, for climate reasons it would be very shortsighted to allow them.more...

It seems neither the SA state coffers nor the federal government coffers stands to reap much in the way of financial benefit from allowing oil to be extracted from The Bight.

The state government receives all the royalty revenue from onshore extraction of fossil fuels and and other minerals, and in 2016-17, SA received $71.5 million in gas royalties (from this SA govt site).

The federal Petroleum Resource Rent Tax (PRRT) has replaced state royalties for new offshore oil and gas, so SA would not receive any royalty income from oil extracted from The Bight. What’s more, the PRRT is set up as a tax on profits after all the exploration and extraction costs have been recouped, so it is usually many years before there is any benefit to Australia from the PRRT.

To add insult to injury, if an oil spill were to occur, the cleanup expense (like all other expenses) would be deducted from the amount of PRRT to be paid, or if no PRRT is yet being paid, would be added to the PRRT ‘credits’ that reduce any future PRRT payments. In effect, the Australian taxpaper would foot the cleanup bill.

According to this article in The Conversation, “Five new offshore gas projects are coming online: Gorgon, Wheatstone, Ichthys, Pluto and Prelude. When these are running at full production capacity they are unlikely to pay any PRRT for many years to come – the companies themselves concede it will be 2029 – and no royalties apply.”

“Unless prices spike higher, however, these five monster projects may never pay a cent in royalties or Petroleum Resource Rent Tax (PRRT). Unless the aggressive tax structuring of the oil majors is met with equally aggressive enforcement by government, the world’s biggest oil companies – Chevron, Exxon, BP and Shell – will pay very little in income tax too.” That is because current rules allow the companies to offset enormous amounts in PRRT ‘credits’ against their income tax liability.

What about royalties from the new onshore gas wells recently started in the south-east? According to this March 2017 article, the Queensland state government collected $36 million in royalty payments from the state’s 5,127 producing gas wells. If similar figures apply, SA would receive around $7,000/year per well in royalties.

8. Expansion of distributed renewable energy infrastructure will create jobs. Fossil fuel companies like to stress that their projects create local direct and indirect jobs and follow-on economic activity. True! But new renewable energy projects and other climate-safe projects do the same, possibly in even greater numbers. more...

Perhaps the most relevant difference is that fossil fuel companies are asking the state government to approve new projects. All the government has to do is say yes to the proposed project and the jobs and benefits of the increased economic activity will happen. In contrast, the state government may have to put some effort into strategies to encourage new clean-tech or other climate-safe projects. However, if there were a legislated ban on new climate-damaging projects, that in itself would give market certainty and encourage new renewable energy and other safe projects.

9. NMBI legislation would stop all new climate-damaging projects once and for all. Currently, as soon as one proposed new coal mine, gasfield, or oil well is successfully stopped as a result of community opposition based around local environmental impacts or other non-climate reasons, another similar proposal nearby or elsewhere takes its place.more...

Currently the SA government deals with endless submissions and appeals related to environmental threats whenever a new company applies to drill for gas or oil, for example. Under NMBI legislation, there would be no new fossil fuel project applications.