Gas prices in Victorian factories have doubled over the past year, posing a significant challenge for manufacturers, according to Stephanie Saliba, director of corporate and government affairs at Mondelēz Australia and New Zealand.
Saliba was speaking before the Senate Committee on the “Future Made in Australia” bill on Aug. 29.
The proposed legislation follows in the stead of the Biden Administration’s U.S. Inflation Reduction Act, and is aimed at establishing local renewable energy industries with government assistance.
Saliba reaffirmed Mondelēz’s commitment to Australian manufacturing, noting that 90 percent of the local company’s products were made domestically. However, she highlighted that the “rising cost of manufacturing” is becoming a major challenge.
“Gas prices have increased by 100 percent between last year and this year in our Victorian factories,” she said at the hearing.
“While we’re making strides to reduce our carbon footprint, the cost to transition equipment to more sustainable energy sources will require significant investment, and for some investments, it’s actually cost prohibitive at the moment.”
Scott McGrath, director of media relations at the Australian Food and Grocery Council, echoed these concerns.
“Extensive energy costs, labour shortages, ineffective transport infrastructure, and other input costs are some of the pressures suppliers are facing in their efforts to bounce back post-pandemic,” he said.
Saliba highlighted that Mondelēz has significantly reduced energy use, including signing a Power Purchase Agreement for Victorian plants and exploring heat pump technology.
Despite these efforts, achieving net zero remained a challenge due to the size of investment needed. Rising input costs and challenging domestic logistics, particularly freight transport, have added to the burden.
“It’s essential for policymakers to recognise that gas remains a critical ingredient in both Australian manufacturing and the net zero transition,” she said.
Increasing regulatory complexity, including climate disclosures and packaging requirements, also adds substantial compliance costs and operational challenges.
“Streamlining these regulations is critical for maintaining cost competitiveness,” Saliba said.
Stakeholders have called for tax incentives to support food and grocery manufacturing.
“It will help us remain globally competitive and contribute to Australia’s economic prosperity as well as its net zero transition,” Saliba said.
She further advocated for policy reforms prioritising renewable energy to reduce costs and increase sustainability.
“We recommend that the Future Made in Australia bill explicitly supports funding for manufacturing infrastructure, sustainable farming practices, and circular economy projects, which are vital for reducing emissions and supporting net zero in food manufacturing,” she concluded.
Aligning the ‘Future Made in Australia’ Bill with Gas Strategy: Chevron
Industry representatives have called for greater alignment between the government’s “Future Made in Australia” policy and its gas strategy.David Fallon, general manager of energy transmission at Chevron, emphasised the need for consistent and predictable policy frameworks to support long-term investments in Australia’s energy sector.
“We see a strong role for gas in the long term, and believe that the Future Gas Strategy and the Future Made in Australia policy should coexist harmoniously,” he told the committee.
Shahana McKenzie, CEO of Bioenergy Australia, highlighted the absence of renewable gas, including biogas and biomethane, in the current policy as a “missed opportunity.”
She noted that members such as PepsiCo are strong advocates for renewable gas, which she frames as the “lowest cost option” for Australia’s manufacturing sector to reduce carbon emissions, urging the government to incorporate it into the broader energy strategy.
Despite concerns about the lack of renewable gas, both Fallon and McKenzie expressed support for the “Future Made in Australia” bill.
“We are supportive of the bill, but we want to ensure it works in concert with the Future Gas Strategy,” Fallon said.
Another concern is ensuring that emerging industries do not overshadow long-standing sectors.
“Our members have been household names for nearly 100 years, and we are concerned that with the excitement and the need to invest in critical minerals or other emerging industries, we might lose sight of the existing and essential ones that have played a significant role for some time,” McGrath said.
