Coleman said the McGowan government deserved some credit for a quick resolution, but he still warned that Australia can’t afford to keep shooting itself in the foot and that the whole episode has rocked industry and investor confidence unnecessarily.
“It’s now up to the government and the regulators to ensure they go through proper processes and consultation to give us the confidence we can get back to making the investments we need to make,” he said.
Woodside had been particularly savage about the impact of the EPA guidelines given the final investment decision is due next year for the $US11.5 billion ($16.3 billion) Scarborough LNG project followed by the Browse $US20 billion project in early 2021.
Not surprisingly, Coleman and other business leaders had been unconvinced by the initial airy dismissals of the effect of the EPA guidelines from the WA government. According to the Premier and Energy Minister Bill Johnstone, there was no need to worry because the minister made the final decision and would not follow the guidelines from an independent EPA anyway.
Business has seen too often how quickly the political climate changes when there is concerted political pressure from well-funded environmental groups, both nationally and internationally. The guidelines would have been used to try to challenge and delay big projects in the courts as well as whipping up internal opposition in the party. It was also immediately obvious it would further spook international investors and financiers. Verbal political assurances can evaporate a lot more quickly than gas.
That was the background to the emergency meeting with the Premier and senior ministers. The meeting included all companies with LNG projects on the West Australian coast, including Woodside, Shell, Chevron and Santos, as well as the Australian Petroleum Production and Exploration Association and the state Chamber of Minerals and Energy. Although the LNG industry has been loudest in its condemnations over the past week, the guidelines would also have affected any new iron ore projects by mining giants such as Rio Tinto, BHP and Fortescue, as well as businesses like Alcoa.
The state Labor government has been relatively popular with business, especially because the Barnett government was well past its use-by date when it lost the 2017 election. McGowan insists his No. 1 priority is jobs – given the state unemployment rate is 6.8 per cent in an economy only just struggling out of the contraction caused by the ending of the resources construction boom.
The meeting convinced McGowan it would badly strain relations – and the state economy – unless the EPA requirement for companies to “avoid, reduce, offset” carbon emissions in order to reduce them to zero was headed off ASAP. McGowan had told the meeting that legislation would take at least a year and could be amended in the upper house with all sorts of unintended consequences.
‘Recipe for chaos’
A possible compromise discussed was for the companies and industry bodies to write a letter asking for current applications to be assessed under existing guidelines. Future applications would then be assessed under the state government’s climate change policy due in December.
One hope was a federal Labor government would by then have instituted a national approach on emissions, with the LNG industry expecting to get a carve-out from Labor’s intention to reset and toughen up baselines for pollution. The federal government was also prepared to step in given the massive economic damage threatened.
In the end, this proved unnecessary in this case after a conversation between McGowan and EPA chairman Tom Hatton. But various other state authorities are taking their own actions on curbing emissions, which Coleman calls a “recipe for chaos”.
So not only is the Queensland Labor government doing all it can to block the Adani coal mine, for example, a landmark judgment in the NSW Land and Environment Court last month rejected a new metallurgical coal mine near Gloucester in the Hunter Valley. In another shock to the mining industry, one of the reasons cited by Chief Judge Brian Preston in refusing Rocky Hill’s application was its potential contribution to climate change.
The resources industry has won one battle in WA. The war continues.