Loose with the truth

COVID19 has spurred public debate on energy stimulus packages, posing the question of how government should best allocate funding to ensure a clear path to economic recovery. Environmental activist groups across Australia have pitted fossil fuels against renewables, claiming government subsidies that support fossil fuel production and consumption outweigh those supporting clean energy. Specifically, activist groups like Market Forces and the Energy Policy Tracker have presented some “compelling data” – but should we question it? Absolutely.

We’ve done analysis on the numbers they have used and found blatant distortion of the facts by these activist groups. With truth comes trust, yet mistruth breeds mistrust. We’ve laid out some of the mistruths, followed by the facts.

Stimulus spending smack down

Recent data published by Energy Policy Tracker, an activist organisation that claims to “track real-time data on public finance for energy around the world,” provides a misleading representation of Australian government stimulus spending on the oil and gas industry.

The data claims at least USD$479 million has been allocated for unconditional fossil fuels under seven policies since the beginning of the COVID19 pandemic in early 2020. USD$477 million is claimed to have been committed to oil and gas, with USD$2.3 million to other unconditional fossil fuels.

Upon closer analysis it is clear that the policies included in the analysis are a misrepresentation of actual funds allocated to the industry.

Around 97% of the amount categorised as stimulus spending for fossil fuels is actually a dedicated Aviation Industry Relief Package – a rescue package for the airline industry. The Aviation Industry Rescue Package is about protecting thousands of aviation jobs and safeguarding an important sector in our economy and reflects a decision by governments to support airlines, not oil and gas exploration and production.  It does not subsidise or provide any direct benefit to the oil and gas industry.

Once removed from the analysis, the actual amount of stimulus spending for oil and gas is USD$10 million, compared to USD$212 million for renewables.

Misleading data and questionable accounting by Market Forces

Environmental activist group Market Forces, an affiliate of Friends of the Earth Australia, claim to “work with the community to prevent investment in projects that would harm the environment and drive global warming.”

In a campaign on fossil fuel subsidies, Market Forces estimates that tax-based fossil fuel subsidies cost AUD$12.9 billion annually, including subsidies that support both the production and use of fossil fuels.

Analysis reveals that this figure is massively inflated. Once you take out the spurious inclusions that have nothing to do with assisting the oil and gas industry, such as the fuel tax credit scheme, Fringe Benefits Tax (FBT) on car benefits and FBT on taxi travel, the fictitious AUD$12.9 billion reduces to AUD$165 million. Market Forces have inflated the real figure by nearly 80 times.

The facts

Australia’s oil and gas industry makes a valuable contribution towards local, regional, state and national economies through such outputs as employment opportunities, royalties and third-party contracting. Just take a look at some recent data from Western Australia or Queensland.

It is disappointing, but not surprising, to see data conveniently misrepresented to suit activist agenda – the facts tell a very different story.