Greens could sink Labor’s gas industry scheme over concerns it supports fossil fuel expansion

The Albanese government’s mandatory code for the gas industry could be at risk, with the Greens vowing to disallow the scheme because it supports new gasfields even as the climate crisis worsens.

The Greens will move a disallowance vote in the Senate next Monday, saying the code with its $12 a gigajoule price cap had benefited big gas users. Uncontracted supplies of the fossil fuel had also been diverted to the domestic market.

But other elements of the code, including ministerial exemptions to “promote investment in, and production of new gasfields” were provisions the Greens “could not endorse”.

“In a time of climate crisis, Labor is approving new coalmines and giving financial incentives to open new gasfields,” said the Greens leader, Adam Bandt. “Gas is as dirty as coal and the Greens will do whatever we can to stop Labor opening more coal and gas and making the climate crisis worse.

“Labor should be helping business, industry and households get off gas, not opening up new giant climate bombs.”

The government initially intervened in December 2022 to impose price limits for domestic use of black coal and gas to counter a jump in wholesale power prices in eastern Australia.

In April the government extended the price cap on gas alone until at least mid-2025, citing the need to keep a lid on electricity prices that were soon to jump by a quarter or more. At the time ministers said the code would “give producers the certainty they need to invest in supply”, among other outcomes.

Guardian Australia approached the energy minister, Chris Bowen, for comment.

Speaking at a Lowy Institute event on Tuesday evening, Bowen said gas was “fundamental” to the energy transition because gas plants could be switched on or off within minutes to support variable renewable energy sources.

“Gas use is coming down [and] gas supply is coming down faster,” he said. “We’ll have a shortfall in [20]26–27 … and we’re going to need to fill the gap.”

The Greens are hopeful for support from the Coalition. Liberal senators, including Andrew Bragg and Dean Smith, have released a dissenting report on the gas code, saying government interventions “have caused significant damage to Australia’s reputation as an energy supplier”.

The Greens said they would back a modified code provided it no longer encouraged new gas supplies, arguing that any east coast gas shortfall was four years off.

Instead, the government could use that time to expedite the electrification of gas appliances in homes and businesses to reduce demand. It could also deploy export control powers to stop gas going overseas and instead restrict it for domestic use, they said.

Photograph: Mick Tsikas/AAP