National cabinet passes gas and coal price cap legislation

Industrial gas pipeline at Mereenie gas fields (shell australia coal cap)
Image: Shutterstock

The government has passed a bill to introduce domestic price caps on coal and gas, with the Greens agreeing to back the law in exchange for funds to support electrification.

Related article: Federal and state ministers agree on gas and coal cap

The bill sailed through cabinet with 85 votes for and 41 votes against.

Climate and Energy Minister Chris Bowen said details of the “substantial package” would be developed ahead of next May’s budget and would include a role for the Clean Energy Finance Corporation and the Australian Renewable Energy Agency. He declined to provide further details.

The move to put a cap on gas and coal prices, announced by Prime Minister Anthony Albanese last week, comes amid soaring energy prices largely due to Russia’s war in Ukraine that has resulted in windfall profits for miners and gas producers.

The bill will cap gas prices at $12 per gigajoule and coal prices for power producers at $125 per tonne.

The legislation will also include provisions opening the door for new regulations that will dictate a “reasonable price” for gas sales to domestic buyers after the price cap expires.

The Greens had said it would oppose the bill if it included proposals to compensate companies for any revenue loss from the price cap. Albanese has said the legislation would not contain any clauses on compensation.

Related article: bp takes over Australia’s largest renewable energy project

Meanwhile, Woodside Energy has joined Shell and other east coast gas suppliers in calling off talks with customers for new supply contracts in the wake of the government’s plan to cap prices, in a move labelled as “blackmail” by at least one environmental group.

Previous articleAustralia needs much more solar and wind power, but where are the best sites?
Next articleHB11 sets sights on Australian petawatt-class laser facility