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The Looming Transport Crisis

December 22, 2021

A looming transport crisis has highlighted the continued failings in Australia’s approach to energy prices and the knock-on effect to our sovereign capability.

News emerged in December that Australia is running short of AdBlue, an essential diesel-fuel additive that reduces nitrous oxide and is required in most of the nation’s 1.5 million trucks, as well as in many smaller vehicles.

The shortage is mainly due to high international gas prices, with cheap gas a key element in the production of urea, which in turn is used to make AdBlue

Due to these high gas prices China – which provides 80% of Australia’s supply – has restricted urea exports and begun stockpiling it.

And the future looks grim here, with Incitec Pivot – Australia’s only AdBlue maker – saying that it will “reluctantly” stop manufacturing at its Brisbane-based Gibson Island facility in 2022, as it cannot secure an affordable, long-term gas supply from Australian producers.

Energy Minister Angus Taylor says AdBlue shipments are en route, and that there’s enough to last five weeks.

But Daniel Walton, AWU National Secretary, says that reveals the extent of the problem.

“Given how critical diesel fuel is to the operation of our transport and logistics, manufacturing, agriculture, and mining and resources sectors, this is shocking,” Mr Walton says.

“The Morrison Government talks of a gas-led recovery, yet a gas shortage means we have just a five-week supply of a product that is critical to the basic functioning of our society.

“We should never have had to rely on importing such an essential product – urea, which is also used in fertiliser – when we could have been making it here in large quantities.

“But while we are the world’s richest energy exporting nation we have utterly failed at providing affordable gas prices at home.

“So instead of being able to ramp up our domestic manufacturing to cover supply chain failings, we are about to see another local plant fold just as vital imports are squeezed.”

Trucking industry experts say operators are trying to get as much AdBlue as they can to keep their trucks running.

“Without trucks, as we know, Australia stops, and if you look at half of Australia’s truck fleet not being able to operate then we have serious concerns,” Road Freight NSW chief Simon O’Hara says.

Late last week Incitec Pivot answered a panicked Federal Government call to bolster local AdBlue supplies.

Incitec Pivot says it will rapidly design, trial and scale-up manufacturing of significant quantities of technical grade granular urea, a critical AdBlue component.

But there was still no announcement on the company’s long-term plan to end AdBlue production at Gibson Island due to high gas prices.

 

Daniel says that at a time when the nation’s focus is supposed to be on building strategic capability and sovereign capacity, the situation does not inspire confidence.

Instead, it starkly reveals the impact high gas prices have on our ability to kick-start new industries and protect existing ones – not just for industries relying on gas for energy, but for those relying on it as feedstock for essential inputs.

“Australia used to be a manufacturing powerhouse, but as gas prices have soared, our manufacturing industry has begun to contract and many of our remaining industries are struggling,” he says.

“Shoring up our gas supply and delivering affordable energy should be a no-brainer.

“Not only would it preserve jobs, it would lead to a manufacturing renaissance with many more highly skilled and highly paid jobs created across the country.

“There are new ventures, such as processing critical minerals and rare earths, where Australia declares great ambition.

“To do all these things we must leverage our abundant reserves of natural gas.”

But unlike every other gas exporting country in the world, Australia doesn’t reserve any gas for its domestic market.

“Australia has a gas export industry without a gas reservation policy, so multinational gas companies can export as much of our gas as they see fit overseas, driving up prices here,” he says.

“So Australian businesses and households find themselves paying more for our own gas than we charge our customers overseas. It’s crazy!”

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