Northern Territory Fracking

Recently I’ve been involved in some protests opposing the NT Governments decision to approve fracking in the Betaloo Basin. The current frack site is near a community called Marlinja. The video below shows what happened.

It seems rather clear it is companies like Origin energy and Santos that run government policy. This article from April last year says fracking in the Betaloo Basin is equivalent to fifty coal fired power plants and this article from 3 years ago says that those figures could be vastly underestimated. The other issue is the water used in fracking. Origin admits that one frack can use as much as 60million litres of water. That is water being used from one of the driest parts of the driest continent on earth. That information is from an article in the Centralian Advocate on 10 January, 2020 “Growing Gas Exports Cause for Concern” – It is paywalled though I have a physical copy.

One of the ‘positives’ governments talk about with these projects are the ‘economic incentives’. One of the hurdles progressives need to overcome is a neoliberal understanding of what constitutes the economy. Even those opposing fracking state things like

“….despite economic incentives, few Territorians would receive a significant benefit from current offshore gas exports as well as future fracking projects.”

‘Economic incentives’ are viewed in the sense of revenue or subsidies usually for corporations. The economy shouldn’t be distilled down to mere accounting statements.

Below are two different perceptions of ‘the economy’

Connors, L et al., Framing Modern Monetary Theory (2013), Centre of Full Employment and Equity, CDU, Casuarina NT

The neoliberal vision is the one envisioned of those wanting to frack. We need to sacrifice our own environment and wellbeing to serve it. The progressive vision is that any economic activity should be there to serve our environment and our wellbeing.

Two of the arguments used by Governments for these projects are job creation and revenue. It is stated we need the revenue to ‘pay for’ public services. At a State or Territory level, Governments do need revenue, they are currency users but that isn’t true at the Federal level.

As a monopolist over the currency, the Federal Government can always purchase whatever is for sale in the currency it issues (including idle labour). It faces no insolvency constraint. Taxes at that level serve to deprive the non-government sector of spending power, so it can control real resources.

A lot of the time our minds are buttressed by ‘The Government is like a household’ metaphor and that makes sense because we think about our own finances. Though at the Federal level, the Government is nothing like a household, it is a currency issuer. Its spending is not at all equivalent to a currency user who has to finance their expenditure from their income.

We are entirely correct to question the institutionalised arrangements around Local, State and Territory funding. It’s important to keep in mind that Local, State and Territory Governments are currency users and it is the Federal Government that is a currency issuer. Not making a distinction between a currency issuer and user leads to flawed proposals such as a renewable export industry because ‘we need the revenue’

Seperate in your mind the macro-level and micro-level. Think of the macro-level as three sectors – The Government, the private domestic sector and the foreign sector. The microlevel are the individual households, businesses and corporations that sit inside those macro-sectors.

At a macro-level an export is a cost, it is a real good or service that is delivered from the private domestic sector to the foreign sector. It is income generation for the exporter but never the less it is something we don’t use locally. Ask yourself the question who is benefiting in terms of the real resource usage and who is benefiting from the income generated.

Think tanks like beyond zero emissions write in their reports

“The global export market for renewable hydrogen is set to boom, driven by demand from East Asia. The NT is an ideal location for making renewable hydrogen, and could capture two-thirds of the national expansion of this industry by 2030.”

I had a friend pose the question on energy losses and the mode of transporting/transmitting that energy, especially in the case of hydrogen exports at a recent conference I attended.

“How would it be obtained? Splitting water molecules by electrolysis is very energy intensive, but more importantly whose water? Would the hydrogen be shipped using diesel powered ships or hydrogen (battery) powered ships adding further energy (efficiency) losses to the equation? Would any of these proposals require public funding?”

A progressive movement needs to use the opportunity of transition to move back to publicly owned electricity generation. It is entirely possible to deliver a free quota to every Australian household. What we need is massive public investment in replacing the NT fossil fuel power plants with renewables, cutting out the private retailers making electricity a public good. We need not ask the question “How will you pay for it?” but “How will you resource it?”

Are there currently unused resources (labour, raw materials) that can be purchased by the Federal Government? If yes then its spending is unconstrained and it can be deployed for a public purpose.

If the answer is no; what can the government do to remove those resources being used by the private domestic sector in a non-inflationary way.

Conclusion

It is disappointing the transition to renewables is stuck within a framework of private capital profiting off the transition with it controlling the supply of electricity generation. It is even more disappointing that Governments have tokenistic climate change policy where they leave renewable options to the private market while they allow more fossil fuel activity that does nothing to reduce our CO2 emissions.

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