ENVIRONMENT and Energy Minister Josh Frydenberg says the big difference between the Australian and US gas industries is landholders being able to claim royalties from extraction activities.
Mr Frydenberg answered questions today on the hot topic of farmers and landholders being given a percentage of earnings from gas mining, when speaking at the launch of a new industry report outlining the Australian gas’s industry 2050 vision.
He accepted the report - that talks about developing gas production in cost effective and environmentally friendly ways - along with Resources and Northern Australia Minister Matt Canavan.
Both ministers said they backed the recent push by the SA government to pay landholders a 10 per cent royalty for new gas production conducted on their lands, as revealed by Premier Jay Weatherill.
“We’re very positive about that; in fact the Prime Minister has been talking about it for some time and the Deputy Prime Minister, Matt and myself,” Mr Frydenberg said.
“Obviously that is the big difference between the United States (where royalties are paid) and Australia.
“In the US it’s the landholder who owns the resources in Australia it has been the states.
“And so it is very much within their domain - the states’ domain.
“I’ve said to the Weatherill government that that announcement about 10pc royalties is a really positive one that should be taken note of in other capital cities.”
Asked if all states and territories should pay farmers and landholders 10pc for gas extraction activities, Mr Frydenberg was non-comital, saying “That’s for the states to work out”.
“But certainly it needs to be a sufficient incentive for the to enable landowners to feel they’re getting more of a slice of the pie,” he said.
Senator Canavan said the Australian gas industry needed to sell itself better but he also understood a difficult environment currently existed, to do that.
He said there also needed to be alternative ways to renumerate land holders and there should be “a much more commercial approach to this”.
“We want to see the gas developed - it’s like any business deal - and if you want to be sustainable in business, and if you want to have a long term relationship with your suppliers and customers, everybody around the table needs to take some sugar away from it,” he said.
“Everybody around the table deserves to have a return and landholders and communities are a legitimate member around that table in the development of our resources.”
Last week the National Farmers’ Federation backed Agriculture and Water Resources Minister Barnaby Joyce’s call – following the SA government move – to give farmers and landholders a fair share of royalties from gas mining.
“We need to have a national discussion on how to give landholders a greater say and greater share in the hydrocarbon resources on their land,” Mr Joyce said.
“Landholders have a right to a greater annuity from their land.
“By paying a royalty it means the value of a farmer’s land increases as a result of gas extraction, rather than decreasing.”
Mr Joyce said lifting gas restrictions should not result in carte-blanche development.
“We must protect prime agricultural land and we must protect productive aquifers,” he said.
The 2050 gas vision compiled by five peak industry groups including APPEA did not detail any specific agricultural goals within its plan.
But it said technology can strengthen the role Australian gas plays in the diverse energy mix beyond 2030.
Energy Networks Australia Gas Committee Chairman Ben Wilson said three transformational technologies – biogas, hydrogen and carbon capture and storage – could provide new zero-emission and low emission fuels that can deliver power to Australian homes, businesses and vehicles using the existing distribution network.
Mr Wilson said biogas, for example, can make use of landfill to produce net-zero emission fuel for mainstream use and that in the future, zero-carbon hydrogen from renewables can also be delivered in the gas network.
“This has the potential to further reduce the carbon footprint of gas and complement the vital support gas already provides to intermittent renewables for power generation,” he said.
“Australia’s gas infrastructure can store the same amount of energy as six billion Powerwall batteries.”