Australia’s largest commercial bank has stated it is not “anti-gas” in response to concerns about the impact of its climate change policy on the country’s gas supply.
During a parliamentary inquiry on Aug. 29, representatives from the Commonwealth Bank of Australia (CBA) faced questions about the change in its lending policy for energy companies.
In addition, the bank said it would only provide loans to coal, oil, or gas companies committed to the goals of the Paris Agreement on climate change and who had plans to transition away from fossil fuels.
Concerns Over Impacts of CBA’s Climate Change Policy
Liberal MP Garth Hamilton, the deputy chair of the Standing Committee on Economics, expressed concerns that the CBA’s transition plan requirement would increase costs for energy companies and render their projects unfeasible.“I’m going to make the point [that] when the cost increases to certain points, some projects stop becoming viable,” he said.
“Is the intent of your policy a reduction of investment in gas in Australia?”
In response, CBA CEO Matt Comyn said that was not the case.
“It’s certainly not the intent. We believe that gas is going to play a very important role for a long period of time,” he said.
Additionally, Comyn said his company was aware of the risk of gas shortages in Australia.
“One of the stakeholders that we meet with is the Australian Energy Market Operator (AEMO). They’ve been calling risks around gas shortfalls [and] the need for [more] infrastructure,” he said.
Pointing to sharp rises (33 percent) in gas prices in the past two years, Hamilton also questioned whether CBA’s climate change policy was out of touch with Australia’s cost of living crisis.
“Should the priority now be more towards reducing the cost of gas in a household?” he asked.
“Should the priority be more towards further investment in gas as is requested by AEMO’s 2024 statement?”
While Comyn acknowledged the need for Australia to ensure energy security and meet its net zero commitments, he said these goals were not always in tandem.
At the same time, the CEO said the CBA had the most appropriate policy.
“We are not anti-gas. We are very constructive,” he said.
“We would be prepared to continue to finance that industry, but it has to be consistent.
“We can’t simply waive other commitments that we’ve made, which I think would erode trust.”
Gas Shortage Forecasts
Comyn’s remarks follow a recent report by the Australian Competition and Consumer Commission (ACCC), which indicated that the country could experience gas shortages as early as 2027 if new supply sources are not secured.While the report predicted that there would be sufficient supply to meet demand in the east coast gas market in the short term, it expected the situation to worsen significantly by 2027.
“Forecasts indicate that the East Coast gas market may experience gas supply shortfalls as early as 2027 unless new sources of supply are made available,” the report said.
“This predicted shortfall is likely to take place one year earlier than what previous reports have forecast, with the extended operation of Eraring Power Station improving the outlook for 2027 but not altering the fundamental trajectory of supply.”
The consumer watchdog said this was due to an increase in forecast gas consumption for power generation and a fall in forecast supply caused by delays in new gas projects and production problems in legacy gas fields.
The ACCC urged the government to take urgent action to develop new supply sources.
