Not long after the First Fleet arrived in Sydney in 1788, a government farm was established where the Botanical Gardens now are. The first Australian farm was a failure, less grain was harvested than sown, mainly due to the poor soils.
Australian farming recovered from its botched beginning. Australia has not been short of food since the days of the early settlers, and we now grow enough to feed double our population.
Much of this is due to the wonders of modern fertilisers. Urea (a nitrogen based fertiliser) is the most important. Last week, the Australian fertiliser company, Incitec Pivot, announced that Australia’s last urea production facility would shut next year costing 170 jobs in Brisbane. We will then become completely reliant on imported urea supplies to grow food.
Urea is made from ammonia and carbon dioxide, and these are made from natural gas. The Brisbane urea plant is shutting down because of the lack of affordable gas in Australia.
Over the last two weeks, much of our political discussion has been dominated by the need to reach “net zero” carbon emissions by 2050. There has been almost no discussion about how we will feed ourselves if we cannot use carbon dioxide to make fertilisers in 2050.
Other countries are not as naively distracted as us. China and Russia have banned the export of urea because they realise how important it is for their food security.
Over the past decade Australia has become the largest exporter of liquefied gas. We made a huge mistake though in not reserving any of this for domestic use.
The consequence of this became apparent in 2017 when domestic gas prices hit record levels. As the then Resources Minister, I introduced a new power for the government to restrict gas exports to prevent domestic shortages.
The gas exporting companies were not happy. Instead of using the power, we came to an agreement with them, that they would offer their gas to Australians first. This policy helped halve gas prices at the time and has kept Australian gas prices at reasonable levels.
Over the last few months gas prices in Asia have been above $30 per gigajoule, while in Australia they have remained around $10 per gigajoule. This large difference is thanks to the “Australia first” gas policy that the LNP government put in place.
If gas is cheaper here then why can’t we keep making urea? While our gas prices are lower than in Asia, they are higher than in the Middle East and the US. Gas prices are lower there because they produce both oil and gas. Our gas now comes largely from coal seam gas, which produces no oil.
The solution then is to develop new oilfields in Australia. We have plenty of potential, especially the shale deposits of the Northern Territory and Northern parts of Western Australia.
The world is facing a shortage of oil not seen since the 1970s. Petrol prices are approaching $2 per litre around Australia. The only way we can control petrol prices is if we produce more oil.
In the 1970s Australia was self sufficient in oil production thanks to the Bass Strait. But the oil deposits there have been emptied and we have gone from producing 96 per cent of our raw petroleum needs in 2001, to under half of our demand today.
There was a lot of hot air produced at the Glasgow climate conference. But the technologies do not yet exist to capture this heat and turn it to energy or fertiliser. Many of the young, naive protesters at the conference stood behind signs that say “you can’t eat coal or oil”.
It is quite the contrary. Without fossil fuels, we can’t feed the world. To keep feeding Australia we need to discover new energy rich oil basins, otherwise it will be back to the rations of the early settler days for us.