The Howard government believed in the promise of hundreds of thousands of jobs from the emerging LNG industry in the face of official advice warning that the cheapest way to cut greenhouse emissions could be compromised by a special deal for the sector.

Cabinet documents from 2000 released by the National Archives on Friday reveal how the Howard government accepted the argument that it could promote LNG as a “greenhouse beneficial transition fuel” while trying to protect other industries which could increase Australian emissions.

A Woodside Petroleum platform on the North West Shelf. Cabinet papers from 2000 show the Howard government's battle to balance support for the industry and its greenhouse gas reduction policy.
A Woodside Petroleum platform on the North West Shelf. Cabinet papers from 2000 show the Howard government’s battle to balance support for the industry and its greenhouse gas reduction policy.CREDIT:WOODSIDE PETROLEUM

At the time, the environment department under then minister Robert Hill was considering the design of an emissions trading scheme as a way to reduce the nation’s greenhouse footprint.

While concerns over greenhouse emissions were growing, the industry department under then minister Nick Minchin was seeking to boost the LNG industry which at the time was restricted to WA’s North-West Shelf.

In a paper that would become the government’s “Vision for the LNG industry”, ministers were told a new, fully operational LNG plant worth between $8 billion and $10 billion would increase national GDP by $4 billion and total employment by 40,000 while delivering $1.5 billion in revenues to federal and state governments.

At present, the entire oil and gas extraction industry which includes 3 east coast LNG plants, another 3 in WA and one in Darwin, directly employs 32,000 people. In 2000, it had just 6000 workers.

While eager to promote the economic benefits of LNG, the government recognised the growing environment debate. In more than one cabinet paper that year, LNG was promoted as a way to move away from “dirtier” forms of energy.

“Given that greenhouse is a global problem requiring global solutions, Australian governments and industry, in their international and domestic pronouncements and strategies, will promote LNG as a greenhouse beneficial transitional fuel,” one document noted.

The battle between LNG and the environment came to a head in June of 2000 when cabinet was asked to sign off on the LNG vision document which included a series of recommendations from then treasurer Peter Costello and then senator Nick Minchin, plus separate proposals from the industry minister.

Senator Minchin sought to effectively protect LNG plus other heavy greenhouse emitting sectors from any emissions trading scheme.

But there was a sharp rebuke from a series of government departments which raised substantial concerns about Senator Minchin’s suggestions, particularly how they would limit Australia’s future efforts to reduce greenhouse emissions.

John Howard’s own department said it had severe reservations about Senator Minchin’s proposals which included not putting in place a domestic emissions trading scheme unless Australia signed the Kyoto Protocol. He also wanted senior industry representatives including those from the LNG sector involved in any trading scheme design.

The department said while it supported the intent of the LNG policy, the proposals if adopted would restrict future efforts to reduce greenhouse emissions and shift the cost of doing so on to households.

“Providing greenhouse relief for any sector – particularly those with high emissions – increases the greenhouse compliance and cost burden on other industries and on Australian households,” the department said.

“Providing relief to all industries involves shifting the potential burden for emitters that produce around three-quarters of greenhouse gas emissions to households.”

The Australian Greenhouse Office was even more critical, saying the proposals would send a signal to industry that the government was not serious about its Kyoto commitments.

“A guarantee to all industries that none of them would be rendered uncompetitive by development of future greenhouse policies in effect underwrites the economic viability of all industries, by transferring risk to the government and hence to the taxpaying community at large,” it said.

The Department of Foreign Affairs also noted that the Kyoto Protocol was likely to boost demand for LNG and its production.

It also warned protection of the LNG sector would increase the cost of reducing greenhouse emissions on other industries, particularly manufacturing and agriculture.

Ministers Hill and Minchin would spar for the rest of the year as they sought to direct the government’s overall greenhouse policy including whether to sign up to the Kyoto Protocol.

In late 2006, John Howard announced a panel would investigate an emissions trading scheme. Both the Howard government and the Kevin Rudd-led ALP would take a trading scheme policy to the following year’s election.

The bipartisan support for a trading scheme ended with the election of Tony Abbott as Liberal leader in late 2009.

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