The Coalition has outlined a set of conditions it wants met for bipartisan support of the Albanese government’s proposed domestic gas reservation scheme, emphasizing the need for increased gas production and greater investment while maintaining respect for existing state-level arrangements. The government is currently consulting industry stakeholders on the plan, which would require liquefied natural gas (LNG) exporters to allocate 20 percent of their exportable volumes to the domestic market starting in July.
Opposition energy and emissions reduction spokesperson Dan Tehan urged the Labor government to engage in genuine negotiations in the national interest, citing recent bipartisan cooperation on reforms related to gambling and the National Disability Insurance Scheme. Tehan warned against repeating what he described as Labor’s past attempts to pit the Coalition against the Greens on environmental legislation, which he said undermined effective policy development.
The Coalition’s concerns center on ensuring the scheme does not stifle future investment in the gas sector. Tehan and resources spokeswoman Senator Susan McDonald argued Labor’s gas policy approach over the past four years has created industry uncertainty and frozen investment, diverting long-term supply agreements to competitors such as Canada, the United States, and Qatar. McDonald criticized the government’s current plan for lacking measures to encourage increased gas production and supply, stressing the need for lower domestic prices to benefit both Australian consumers and trading partners.
The Coalition’s proposed principles for the reservation scheme include provisions to guarantee new gas production for domestic use and LNG exports, demonstrate enhanced future investment, avoid disruption to existing contracts, and uphold current state and territory schemes. Their proposal also aims to support domestic producers and manufacturers by targeting domestic gas prices aligned with the long-run marginal cost of production, strengthen the Australian Domestic Gas Security Mechanism to prevent supply shortfalls, and require government agencies to confirm these criteria are met.
Labor’s plan has sparked debate as the government maintains it will create a moderate surplus of gas, lowering prices for manufacturers and other domestic users. However, some industry groups warn the policy could lead to artificially suppressed prices that may render new gas projects commercially unviable.
Energy Minister Chris Bowen’s office emphasized that the reservation scheme is designed as a balanced market solution that secures Australian gas supplies, respects existing contracts, and protects households and businesses from volatile global gas prices. The government stated it continues to work collaboratively with industry to finalize a policy seen as essential for maintaining the sector’s social license in Australia.
A notable element under consideration is valuing biomethane—a renewable gas derived from organic waste, including sewage—more favorably than conventional natural gas within the scheme. This approach would allow LNG exporters to fulfill a greater share of their domestic supply obligations using a smaller volume of biomethane, effectively creating a financial incentive to support the emerging renewable gas industry. Skeptics caution that biomethane remains too immature to fully address Australia’s gas supply challenges, but proponents argue it could play a valuable role in the transition. The government is expected to release an exposure draft of the legislation establishing the reservation framework in the coming weeks.