Joint media release: New Gas Code secures supply at reasonable prices for Australian users
The Hon Jim Chalmers MP, Treasurer
The Hon Chris Bowen MP, Minister for Climate Change and Energy
The Hon Madeleine King MP, Minister for Resources, Minister for Northern Australia
The Hon Ed Husic MP, Minister for Industry and Science
The Albanese Government has now completed the design of the Mandatory Gas Code of Conduct (Gas Code), following close engagement with gas users and producers.
The Gas Code will ensure Australian gas is available for Australian users at reasonable prices, give producers the certainty they need to invest in supply, and ensure LNG producers meet their export commitments.
Producers have already offered indicative domestic supply commitments under the new framework of at least 260 PJ to 2027. These indicative commitments will reduce the risk of shortfalls as assessed by the ACCC and AEMO.
The final design of the Gas Code places a greater emphasis on:
- Securing additional domestic supply commitments in the short term to anchor prices at $12/GJ and shield east coast gas consumers from volatile international gas prices.
- Facilitating certainty for investment in new supply to avoid projected shortfalls and sustain reasonable domestic gas prices over the medium term.
The full Gas Code will be released in coming weeks once legal drafting has been completed and the Federal Executive Council has ratified the instrument.
It will ensure domestic prices are reasonable by establishing a price anchor, a mechanism to drag prices down - through the combination of:
1. A price cap, which is to be set at $12/GJ (with a review commencing by 1 July 2025);
2. A process for qualifying for exemptions from the price cap on the basis of making satisfactory ACCC and court enforceable supply commitments to the domestic market; and
3. Allowing small producers of gas to be exempt from the price cap if they supply only the domestic market.
In addition, it requires all participants to abide by standards of conduct to level the playing field in contract negotiations between users and producers and deliver a better functioning, more competitive gas market.
This is in contrast to the former Liberal National approach on gas and energy policy which saw average gas prices increasing by 250 per cent between the 2019 and 2022 elections, and persistent supply shortfalls forecast by the ACCC.
The Gas Code is supported by a strong enforcement regime delivered by the ACCC, with a review to be undertaken no later than two years after coming into effect, to ensure the Gas Code remains effective and fit for purpose.
The Albanese Government took immediate action to shield Australian gas users from skyrocketing prices by temporarily capping the price of gas in December 2022.
Coupled with price caps on coal for power generators, the Government’s actions nearly halved wholesale energy prices.
The Gas Code will deliver Australian gas at reasonable prices for Australian families and industry and provide certainty for our valued trading partners.
The Coalition have committed to repeal the Albanese Government’s action to deliver gas at more reasonable prices – including the Gas Code and caps.
Under the Coalition, Australian households and businesses would pay more for Australian gas.