Calls mount for gas windfall profits tax

The government is under pressure to consider a temporary windfall tax on super profits made by coal and gas companies as the energy crisis intensifies.

Teal independent Kate Chaney said there was a good case for a short-term super profits tax on gas exports given the war in Ukraine was largely responsible for pushing up commodity prices and inflating company profits.

She said a short-term tax would be better than less-flexible options under consideration, such as price caps, which would be harder to unwind.

"That would be potentially a better solution than the export controls or price controls that end up being quite hard to reverse, but obviously the second tier of options would be those export controls or price controls."

Ms Chaney recognised there would be some resistance to a windfall tax on coal and gas companies.

"We have to look at the options available and pick the least-bad option," she said.

Modelling for the Greens carried out by the Parliamentary Budget Office last week showed a windfall tax on coal and gas companies would allow electricity bills to be frozen for two years at pre-Ukraine invasion costs.

Under the proposal, retail electricity bills would be frozen at the same rates as those before February 2022, with the windfall tax making up the difference.

But Deputy Prime Minster Richard Marles expressed his reservations about the effectiveness of such a proposal and said the government was focused on getting more cheap renewables into the energy system.

The government has been under pressure to produce a solution to the impending energy crisis after the federal budget revealed Treasury forecasts of Australian energy prices rising by 56 per cent and gas lifting by 44 per cent over two years.

On Sunday, Workplace Relations Minister Tony Burke said the government was pursuing serious regulation to keep energy prices down.

"It's not just about household energy bills but also what this means for manufacturing and jobs," he said. 

There have been calls for some kind of Australia-wide domestic gas reservation policy, which has been effective at driving down gas prices in Ms Chaney's home state of Western Australia.

"One of the problems with it, though that it is not a long-term solution for decarbonisation, and that can really embed gas in the energy mix for a long time," she said.

Ms Chaney also said there was no need to embark on new gas projects to boost supply. 

"There are enough gas projects that are already approved to meet the gas needs that we need in the energy mix for a long period," she said. 

Nationals leader David Littleproud said the government had set the clean energy transition back by cutting funding for carbon capture and storage technologies.

"Renewables can't do it all, they need firming, something that can switch on and off, such as gas," he told Sky News.

"And why not reduce the emissions of that?"