THE IAC HEARINGS DAY 3 – BY JANE CARNEGIE

DAY 3 was a gruelling technical day focusing on the gas market and the ‘rationale’ for the project.

The hearings covered the expert evidence of Richard Bolt, Jerome Fahrer and Owen Kelp on behalf of the proponents.

Their expert reports and presentations can be found in the Tabled Documents – Nos:
• Bolt -66 & 189
• Fahrer – 67 & 190
• Kelp – 87 & 190.

In addition, Dr Fahrer did a submission in reply to Bruce Robertson’s expert evidence (for us) @ Document 167 and this was also addressed in the hearings.

The day opened with Counsel for the proponents introducing their experts emphasizing that Richard Bolt was focusing on the strategic policy context and Fahrer and Kelp were focused on ‘an independent’ overview of the energy market and impact of the Crib point terminal.

Mr Townshend, in his opening remarks for the proponents, also once again tried to narrow the focus of this aspect of the EES by stating it had to be ‘kept under control’ and should not stray into a wider ambit including environmental sustainable development and broader policy matters. The Chair did not respond. Mr Townsend then went on to give an overview of the expert evidence focusing on energy security in the policy context and that it will be a market decision to proceed. He also emphasized that this is a ‘light intervention’ in the market because the ship can be sailed away and is a transition energy policy.

Richard Bolt then went through his presentation. Mr Watters for the MPSC then undertook cross-examination and did an amazing job, examining different aspects of Mr Bolt’s evidence. Particular aspects included questioning and drilling down into:
• Total gas domestic supply v all supply (and LNG export components)
• Deficiencies in AEMO data and new COAG requirements for mandatory surveys to better base projections on
• Forecasted shortfalls up to 2024 and what they really mean
• Efficiencies in the energy market through decarbonisation policies
• Emphasis in Bolt report on gas powered generation when this is not a big user of gas
• The Victorian Emissions reductions targets and Report of expert panel which Bolt was not familiar with but he agreed energy regulatory changes were sound policy
• Discussion of domestic reserve policies which Bolt did not address in his policy context report and which Watters said had stopped the shortfall originally predicted in 2017
• The PM’s energy statement including support for initiatives for domestic gas and pipeline initiatives to which Bolt said these are all options but they lock in infrastructure whereas FSRU is ‘light touch’ approach to which MPSC counsel replied that this infrastructure could be used for green hydrogen.

Mr McArdle for our combined group then further cross-examined Mr Bolt focusing on:
• Policy context is not one overarching document but comprise many of which Bolt has synthesized only some and that Bolt focused only on supply side with an emphasis that more gas is good and that he did not address climate side policies
• Gas helps decarbonise but only in respect of gas powered generation so very narrow as ‘transition fuel
• Bolt said this Crib point was best option but when questioned he hadn’t properly examined other options such as pipeline upgrades.

Mr Kane, Counsel assisting then asked about when is greatest GPG peaks and this was identified as summer when gas demand generally is down.

Dr Fahrer and Mr Kelp then gave their presentation jointly. Cross examination by MPSC then addressed the following aspects:
• The modeling does not factor in current climate policy settings including Vic Interim target or on sustainable development as IEA does (see The Age today front page) re IEA on renewables
• In the absence of the project it was agreed gas consumption will be lower (but the they say prices will be higher) but they also said that the market will sort itself out so no actual shortfall
• Modeling is hypothetical and as such the claims made re Crib Point could also apply to another import terminal in Vic such as Viva energy – no comment
• Technical discussion on double counting of demand side initiatives (their view) but they couldn’t say what they were
• Their model does not address negative effects – very one sided
• Manufacturing claims demolished by MPSC.

Our Counsel then followed focusing on:
• The negative impacts are more consumption of fossil fuel – they agreed that b/c of lower cost there will be more consumption
• Reinforced position in previous cross-examination re other alternatives and plenty of gas in Australia.
• That modeling shows plenty of gas for Vic without the project until 2030 and that it would enable Vic to continue to be a net exporter until at least 2032 and that the modeling shows peak imports not until 2040.

Jason Kane, Counsel assisting IAC also asked questions and was able to clarify that the modeling suggest no gas imports in summer months until 2040 (really!!) Except for operational reasons and then it would only be about 2pjs

In summary in our view the cross-examination showed many weak aspects of the expert witnesses.