More than $1bn of Coalition’s climate funding could go to fossil fuel projects, analysis finds

The Coalition has announced more than $1bn in climate funding that could go to fossil fuel developments since setting a target of reaching net zero emissions by 2050 last year, an analysis has found.

The bulk of the funding promised during the election campaign has been to develop "clean" hydrogen - a term often used to refer to hydrogen made with gas, a fossil fuel - and carbon capture and storage (CCS), which has had little success to date but oil and gas executives say will need to play a massive role if the world is to slash emissions.

The progressive thinktank the Australia Institute tallied pledges to develop clean hydrogen and CCS including $300m for the Northern Territory, $158m in Queensland, and at least $140m for Western Australia. Up to $40m has been promised to help gas giant Woodside build a CCS hub in the Pilbara.

The institute's climate and energy program director, Richie Merzian, said it illustrated the extent to which the government was supporting fossil fuel industries while promising to act on the climate crisis.

Merzian said hydrogen made with gas could only have low emissions if CCS proved economically viable, and that had not yet happened at scale despite billions of dollars in commitments from Australian governments.

He said clean hydrogen was "a marketing term, not a climate solution", and that other countries were putting significant support into zero-emissions green hydrogen made with renewable energy.

"If hydrogen is supposed to be a climate solution and act as an alternative to fossil fuels, it can't be based on fossil fuels in any way," he said.

Oil and gas executives expressed optimism at a conference in Brisbane this week about CCS and clean hydrogen allowing the industry to expand while trying to reduce emissions.

The conference heard Australia was home to the biggest CCS project in the world - Chevron's Gorgon development in the Pilbara, which the company says has captured and injected underground about 6m tonnes of emissions since belatedly starting operation nearly three years ago. To put that into context, Australia alone emits about 500m tonnes a year.

The Coalition did not respond to questions, including on why it believed investing clean hydrogen made with gas and CCS projects would lead to significant emissions reductions.

It has previously said it was "strongly committed to a gas-fired recovery", including opening up the potentially vast Beetaloo gas basin in the NT, and has argued that support for hydrogen and CCS can reduce emissions while creating jobs. It has dismissed a warning from the International Energy Agency that no new oil and gas fields should be opened if the world is to keep the possibility of limiting global heating to 1.5C alive.

The Australia Institute estimated the government had committed up to $1.7bn in climate funding that could go to fossil fuel projects since Scott Morrison set a net zero target in October. The pledges included:

The institute also included the November announcement of a $500m "low emissions technology commercialisation fund" to back government priority areas, which include hydrogen, CCS, energy storage and "ultra low-cost solar". The future of the proposed fund is uncertain: the government promised legislation in the last term of parliament to set up the fund as part of the national green bank, the Clean Energy Finance Corporation (CEFC), but no bill was introduced.

Labor backed all energy commitments in the budget, and has matched government green hydrogen commitments during the campaign, including up to $44.9m for a development in Queensland, but has expressed scepticism about the strength of government support for CCS. With the crossbench, Labor opposed government attempts to re-cast two clean energy agencies, the CEFC and the Australian Renewable Energy Agency, so they could fund CCS and gas projects.

A Labor spokesperson said it would support "any emissions reduction technology that stacks up scientifically and commercially".

"What Labor doesn't support is the diversion of scarce renewable energy funding to non-renewables, which the government has consistently tried to do," they said.

A separate analysis examined what it would mean for Australia's national emissions if all new coal and gas projects on a government department list of proposed developments went ahead.

The chief executive and senior scientist at Climate Analytics, Bill Hare, found they would add 8.3% to Australia's annual emissions by 2030.

It would mean the country would probably easily miss the Coalition's 2030 target of a 26% to 28% cut in emissions compared with 2005 levels unless new policies were introduced. Labor has a target of a 43% cut over the timeframe.

If all emissions from the coal and gas developments were counted, including those from burning the fossil fuels after they were sold overseas, Hare said it would add the equivalent of 170% of Australia's current emissions to the global total.

He said while not all of the more than 100 coal and gas proposals were likely to go ahead, their potential emissions would be a significant issue for the next government.

"The outlook for Australia if these projects are not rolled back is really quite disastrous," Hare said. "It would add to our pariah status internationally."

The Coalition and Labor say new coal and gas developments should be allowed to go ahead while businesses want to invest and if they meet local environmental standards.

The Greens want a moratorium on all new coal and gas developments and thermal coal to be phased out by 2030.