Labor’s gas scheme shouldn’t choke new LNG terminals - AFR

The Australian Financial Review reports that Labor's gas reservation scheme, designed to secure domestic supply, risks deterring investment in new liquefied natural gas (LNG) export terminals. The scheme would require gas producers to set aside a portion of output for the local market before exporting. Industry concerns centre on reduced returns and project certainty for new capacity.

Where this fits

This story cuts to the reliability and sovereignty question that sits at the heart of Australia's energy transition. A renewables-only grid needs gas for firming on windless, sunless days. That gas must come from somewhere. Australia has substantial reserves but needs investment to develop them. A policy that discourages new LNG terminal construction narrows the options: either gas supply tightens, prices rise, or Australia becomes more dependent on imported LNG when domestic production cannot meet both domestic and export demand. The firming gas that a high-renewables grid depends on becomes either scarcer or costlier.

What it means

Australia is gambling that wind and solar will cover most demand most of the time. When they don't, gas fills the gap. If the cost or availability of that gas worsens, the whole grid becomes more fragile and expensive. New LNG terminals represent productive capital that locks in supply for decades. Deterring that investment trades a short-term policy win for a longer exposure: higher energy costs, tighter supply during peak demand, and reliance on imports during crisis. A grid that cannot afford to lose its gas backbone cannot afford to make gas harder to secure.