The Australian Greens support the introduction of a levy on offshore oil and gas production to recover decommissioning costs for the Laminaria and Corallina oil fields and associated infrastructure. However, as demonstrated through evidence to the committee, there are several ways in which this legislation needs to be strengthened.
These bills represent a significant opportunity to set strong standards for best practice decommissioning. In light of the significant decommissioning challenges facing Australia, it is essential that the gas and oil industry are responsible for full costs of decommissioning.
As noted by the Australia Institute, the oil and gas industry will try to defer the costs of decommissioning indefinitely and pass these costs onto smaller companies or the taxpayer, as demonstrated through the Northern Endeavour. In this context, it is essential that we have strong regulatory and legislative frameworks in place to counter the preference of gas companies to push costs, externalities and risks onto others.
The bill provides the Minister for Resources with the power to reduce the rate of the levy, or terminate the levy early. The Australian Greens echo the concerns raised by stakeholders that the government could submit to pressure from industry to use this power prematurely before decommissioning is fully complete. As noted by Mr Adrian Evans, Assistant National Secretary, Maritime Division, Construction, Forestry, Maritime, Mining and Energy Union:
The Resources Minister has the unilateral ability to reduce the amount of the levy and end it early, and we are quite sure that they will be under significant pressure from industry to do so.
In place of a temporary levy, the Wilderness Society called for the levy to be made permanent to ensure industry meets the costs of decommissioning challenges coming down the line. As explained by Ms Jess Lerch, National Corporate Campaign Manager, Wilderness Society:
My strong view is that, by maintaining this levy in a permanent way, we can do two things. One is that we can provide some real financial assurance into the future for the Treasury and the Australian taxpayer, for problems in the future. We don't want to deal with them all on a case-by-case basis as they come up—and we have had to deal with the Northern Endeavour. I also think it means that we could potentially use any additional funds available to build the capacity that is going to be required to actually do this work, which the industry and the regulator have both identified is a significant challenge.
Friends of the Earth Australia further noted:
We recommend an adjustment to this clause, establishing a permanent extension of the levy in order to finance all future decommissioning. Doing this will ensure that decommissioning is done, jobs are secured to do the work and that it will be financed by the industry that has created the problem, not the taxpayer.
The Australian Greens support the need for a permanent levy to ensure that decommissioning is undertaken according to best practice environmental and social standards, and safeguarded from cost-cutting.
The committee heard wide-ranging concerns about the definition of decommissioning used in the bill, which deviates from the Offshore Petroleum and Greenhouse Gas Storage Act 2006 and the National Offshore Petroleum Safety and Environmental Management Authority's policies that refer to the full removal of infrastructure. The Australian Petroleum Production and Exploration Association claimed that 'in some instances, the best environmental outcome may be to leave some of those assets in situ.'
However, the Australasian Centre for Corporate Responsibility noted in its submission that 'there is a lack of independent and peer-reviewed research into the environmental benefits of leaving oil and gas structures in Australian waters'.
The Wilderness Society further noted:
We consider that any decision to leave any structure, equipment or property in situ must only occur in the most extreme of situations (ie. in a theoretical instance in which it provides critical habitat for a listed threatened species) and as a very limited exception, if ever, given the marine pollution risks associated with much offshore petroleum infrastructure and the impact that the dumping or abandonment of industrial structures and equipment has on the wilderness values of our marine environments.
The Australian Greens have strong concerns about the option of 'any other treatment' being applied to the decommissioning of the Laminaria and Corallina oil fields and the risks this will pose to the environment. We are also concerned that the government has not yet determined how it will measure when the removal and remediation of the oil fields are complete.
The bills also highlight the significant accountability and transparency gaps around decommissioning in Australia. There is little to no public reporting on the costs of decommissioning or decommissioning liabilities by industry or government.
As noted by Publish What You Pay Australia:
The risk of further stranded assets related to the energy transition, including offshore gas and oil infrastructure, will require greater transparency and accountability from the federal government and companies. This includes adequately informing communities of the economic, social and environmental impacts and costs.
There are also no requirements for the government to publish how much money the levy will generate:
Noting that the levy is payable to the Commissioner of Taxation annually, is not clear on how companies or the government will report on payments related to levy. Whilst the end date is set at 2029, we are not sure on the exact amount required for this specific decommissioning. This lack of transparency risks keeping companies, communities and government unsure as to the effectiveness and quantum of the levy and the workings of the oil, gas and mining sectors more broadly.
The Australian Greens believe these bills should be used as an opportunity to strengthen the appalling lack of transparency around the realities of offshore decommissioning in Australia. Public reporting on financial, environmental, and social outcomes is essential to improving transparency and accountability in the area of decommissioning.
Finally, in light of the fact that the Laminaria-Corallina fields are due to be transferred to Timor-Leste, it is imperative that the Australian Government ensures decommissioning is undertaken 'in a manner that is adequately resourced, adequately regulated, and adequately funded'.
Recommendation
That the government undertake public reporting on the amount of the levy that is collected each year.
Recommendation
That the government require gas and oil companies to publicly report on their decommissioning liabilities each year.
Recommendation
That the government makes the levy permanent to ensure industry are responsible for the full costs of decommissioning now and into the future.
Recommendation
That the government implements a long-term solution to ensure industry covers the full cost of offshore decommissioning, informed by overseas models that are underpinned by transparency and accountability.
Senator Dorinda Cox
Participating Member
Greens Senator for Western Australia