Strategies in Action
Note: This page has not been updated in a while, but unfortunately not much has changed in the last few years, so the key points remain valid.
Victorian NMBI talking points
The talking points below delve into some of the implications of banning new climate-damaging projects in Victoria.
These talking points may be helpful when you are encouraging Victorian 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 Victorian government can control the types of projects it approves within Victoria regardless of federal policies. By banning new climate-damaging projects Victoria would be demonstrating climate-related ‘duty of care’, making it easier for other states and territories to do the same.more...
Climate impacts are already killing people and destroying ecosystems, so any government that allows new projects that increase carbon emissions is failing in its duty of care to its citizens.
Federal climate-related policies are far from adequate. 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 climate ethics and 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. Victoria doesn’t need any new coal or gas projects to ‘keep the lights on’. NMBI legislation would stop any new coal or gas-fired power stations being built, and stop any new fossil-fuel extraction projects, but the resultant market certainty would encourage new renewable energy generation and storage projects to quickly meet any potential future shortfall.more...
Even now all-electric households with solar panels are on the rise, meaning the demand for gas is likely to fall.
With NMBI legislation in place and carefull planning, taking into account likely closure dates of aging coal-fired power stations and potential depletion dates of current coal and gas sources, Victoria can have more renewable electricity generation and grid-level storage in place in plenty of time to ‘keep the lights on’.
From Dept of Energy, Innovation and Science (2017) (energy-update-report-2017): Australia’s domestic consumption of coal and gas has risen only slightly over the last 40 years. We now extract almost three times as much ‘energy’ as we need. We certainly don’t need any new coal mines or gas wells to have sufficient fossil fuel supply to keep existing power generators running while we transition to renewable electricity generation.
80% of the coal we dig up is exported. A 27% increase in gas extraction in 2015-16 resulted mainly from new CSG wells drilled in Queensland to support the expansion of LNG exports from Gladstone.
A floating LNG import facility in Victoria(http://www.theage.com.au/victoria/floating-offshore-gas-hub-proposed-to-tackle-victorias-energy-supply-crisis-20170605-gwkx67.html) is being proposed as a solution to a perceived domestic gas shortage caused by so much of our gas extraction being exported. Given that Victoria has adopted carbon reduction targets (Point 6 below), and given the need for urgent climate action, it makes no sense to invest in infrastructure that would assist and lock in continued gas use. It makes more sense to ban sales of new gas appliances and to stop installing gas distribution pipes in new housing areas now that very efficient electric alternatives are available and more and more households are installing solar PV.
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. We not only need to reach zero net carbon emissions but we also need to draw down excess carbon from the atmosphere in order to restore a safe climate. Forests play an important drawdown and carbon storage role, so it makes no sense to allow even more deforestation than has already occurred.more...
The Victorian parks network is a major carbon sink with at least 270 million tonnes of carbon stored in land-based parks.
NMBI legislation targets all new climate-damaging projects, and would include bans on new approvals and extensions to current permits for logging native forests, such as in the East Gippsland Kuark forest and Victoria’s Central Highlands (the area of the proposed Great Forest National Park).
6. The Victorian government has adopted emission reduction targets: a 2020 target of 15-20% below 2005 levels and zero net 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 climatetargets harder, particularly in cases where climate-safe alternatives are already available.
However, the Victorian government is encouraging new off-shore and conventional on-shore gas development (https://www.premier.vic.gov.au/federal-gas-scheme-a-fracking-disaster/). Won’t that make it hard to meet Victorian carbon reduction targets? According to official carbon accounting rules, it probably won’t!
Here’s why. As in Point 3 above, Australia currently extracts over twice as much ‘energy’ as we use within Australia, so it is highly likely that any new gas we allow to be extracted will simply increase the volume of gas we export. The carbon accounting rules adopted under the Paris Agreement only count the carbon emissions produced within a country’s own borders…despite the fact that the point of the exercise is to reduce carbon emissions everywhere.
Obviously burning the gas we export puts us all at increased climate risk regardless of where it is burned. It’s a (perhaps accidental) dangerous sleight of hand that enables Victoria to ‘meet’ its climate targets despite condemning us to a grim future. Even if Victoria meets its net zero emissions target, the actual climate benefit of doing so could be completely(?) wiped out by the climate harm caused by allowing NEW fossil fuel exports.
But, but…but!…if we don’t allow new fossil fuel exports, won’t some other country export more to meet demand, meaning our stance will bring no practical climate benefit? Maybe. But it would be a powerful demonstration that governments can ban new climate-damaging projects and refuse to make new fosil fuel export agreements on climate-ethical grounds. When one government shows that it is not only possible but relatively easy to do that, other states and nations are more likely to do the same.
The Victorian government also supports Kawasaki’s Latrobe Valley coal-to-hydrogen proposal on the condition that it is no more carbon-intensive than the best gas-fired power generation (https://www.premier.vic.gov.au/future-uses-of-coal-in-victoria/). A hydrogen export market would be good, but it makes more sense climate-wise to use renewable electricity to produce hydrogen when there is excess wind power.
7. NOPSEMA has authority over off-shore oil and gas projects, but state governments have some powers too. ExxonMobil is planning to extract gas from the Gippsland Basin in Commonwealth waters off the Victorian coast, and Cooper Energy has plans to extract more gas from the offshore Otway and Gippsland Basins. The National Offshore Petroleum Safety and Environmental Management Authority (NOPSEMA) has the ultimate authority, but Victoria could refuse approval for any on-shore infrastructure required for these projects. Constitutionally state governments can also block a project by showing potential negative onshore impacts from off-shore projects.more...
According to this article, ExxonMobil (Esso) has bought the Dory gasfield in the Gippsland Basin which could contain up to 2 trillion cubic feet of gas, and has contracted a rig to drill the deep water off the coast of Victoria in the third quarter of 2018. Their current application (by Esso Deepwater Gippsland) being considered by NOPSEMA is for the adjacent Baldfish area.
Cooper Energy is currently drilling in the Otway Basin and has plans to expand in both the Otway Basin and Gippsland Basin over the next couple of years.
It would be interesting to see if a state government could block an off-shore oil or gas project solely on the basis of climate-related onshore impacts (for Victorians and the rest of the world).
8. Will Victoria become rich from allowing new gas extraction projects? 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 Victorian state coffers nor the federal government coffers stands to reap much in the way of financial benefit from the Dory gas extraction project.
According to the 2017-2018 Vic government budget papers, Victoria expects to receive only $95 million in royalties from ALL sources (including minerals) in that year, so even if new onshore conventional gas extraction projects were approved the potential royalties are not likely to be huge.
The federal Petroleum Resource Rent Tax (PRRT) has replaced state royalties for new offshore oil and gas, so Victoria would not receive any royalty income from the new Dory gas project.
Since 2012 the PRRT applies to both onshore and offshore oil and gas, but it 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.
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.
9. 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...
For example, Windlab’s nine-turbine Kiata Wind Farm was built using wind turbines manufactured by Keppel Prince in Portland. It is just one of the renewable energy success stories delivering jobs and investment to regional Victoria.
Is it just that fossil fuel companies are more successful at lobbying 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. 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.
10. Australia can develop new climate-safe exports to make up for forgoing potential future export income that might accrue from new fossil fuel extraction projects. Note that NMBI legislation would ban NEW fossil fuel extraction projects and the resultant new export agreements, but adoption of NMBI legislation would not affect current export income. So, just how much or how little will NMBI legislation affect future export income potential? Probably less than most people might think.more...
Banning new fossil fuel extraction projects would indeed affect future export income since virtually all new extraction would be for export. Australia’s domestic energy consumption has been close to flat for the last 40 years, and over half of what we extract is exported (Point 3 above). Various states have carbon reduction targets which, if met, will mean we need less and less extraction to meet domestic demand as time progresses. Assuming our current mines and wells are not depleted any time soon, we should need no new extraction projects to meet a falling domestic demand (and if they are depleted, new renewable energy projects can be built to meet demand rather than allowing new extraction projects).
But, export income is important to Australia’s economy. The majority of companies wanting to extract and export Australian fossil fuels are likely to be foreign-owned, meaning the income from selling the actual commodity stays outside Australia. However, we do receive an injection of foreign funds to the extent that foreign companies pay wages and buy goods and services within Australia.
Other potential sources of foreign funds from foreign-owned companies are company tax, royalties, and Petroleum Resource Rent Tax (PRRT). However, for a new offshore project, Australia does not charge royalties, is likely to receive nothing in PRRT for a decade or more, and for some years will receive nothing in company tax either due to PRRT ‘credits’ (see Point 7 above).
New coal and onshore gas extraction would attract state royalties, but based on historical figures (see Point 7 above) the amounts are likely to be less than one might expect, partidularly since new extraction projects tend to receive more in subsidies and other state government assistance than established projects.
So, yes, it is important to maintain Australia’s future export income, but given the small amount of export income we actually receive from fossil fuel exports, it should be relatively easy to replace that with new climate-safe exports and new foreign investment in local renewable energy projects provided we plan and prepare accordingly.
Of course we need to stop new fossil projects of all types for climate reasons regardless of what it might cost us, but it seems we are not as dependent on fossil fuel exports for our prosperity anywhere as much as the fossil fuel industry tends to imply.
11. 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 Victorian government deals with endless submissions and appeals related to threats to groundwater, endangered species, soils, native title, etc., whenever it receives an application for a new fossil fuel or logging project. Under NMBI legislation, there would be no new fossil fuel project or native forest logging applications.