Leading Australian climate policy experts say a new oil refinery in Western Australia would be an investment in “dinosaur technology” that would require public subsidy and do little to solve the country’s fuel security.
The Albanese government announced a $4m early-stage feasibility study with the WA government for a new oil refinery in the Pilbara region on Tuesday, but experts said the money would be better spent on green technology to reduce Australia’s reliance on fossil fuels.
Experts told Guardian Australia doing the feasibility study was not a bad idea, but would ultimately show the project would be uneconomic and would require government subsidies.
Greg Bourne, a councillor at the Climate Council and former regional president of BP in Australia, said any potential refinery was unlikely to be economically viable.
“From a commercial point of view, you’ve got to be able to make sure you’re going to get a profitable return over the next 20, 30 years,” Bourne said.
“Australia is beginning to get more into renewables and if you look forward 10 years, you start saying less oil and gas are going to be needed, and if you look forward 20 years, you say it’s just not worth [it].”
Prof Frank Jotzo, director of the Centre for Climate and Energy policy at Australian National University, aired his criticisms at this week’s Clean Energy Summit in Sydney, and said investing in an oil refinery would send “a big signal against the clean energy transition”.
Jotzo is a leading voice on climate policy and most recently led a review for the government on policies to avoid large emitting industries shifting production to countries with low climate ambition – an issue known as carbon leakage.
He told Guardian Australia a new refinery would probably need government subsidies to compete with the more efficient mega refineries in Singapore and south Asia. Jotzo said the future for liquid fuels in Australia should be in renewable electricity, rather than looking to local crude oil which is in short supply.
“If you want to subsidise anything, then subsidise the next generation of technologies that is there to produce zero emissions liquid fuels,” he said.
“If there are state and federal subsidies, that should be on new technology rather than some dinosaur tech that could still be there in 50 years’ time.”
In its 2025 commodity resource report, Geoscience Australia wrote Australia’s domestic crude oil production “continues to decline rapidly, and without new commercial discoveries, production is projected to cease within the next 7 years”.
Baethan Mullen, chief executive of thinktank the Superpower Institute, said that meant a new refinery would probably exclusively refine imported crude oil, which would do little to improve Australia’s sovereign capability.
According to the Superpower Institute’s analysis, Australia is now 95% reliant on foreign imports of fuel, with 4% refined locally from Australian crude oil.
He said some petrol in Australia is refined from condensate, a type of oil which is a byproduct of gas extraction. But condensate is generally not used to make diesel products.
“Diesel products are the main product we need, particularly in WA in the mining sector and in agriculture,” Mullen said.
“So a refinery built on the west coast, close to the North West Shelf [where condensate is extracted] is still likely to need to import crude oil to make diesel, and that doesn’t make us any more fuel secure than we are now.”
Since 2003, six of Australia’s eight oil refineries have closed. Like Jotzo, Mullen said this was because the economics no longer stacked up given Australia’s smaller scale production was competing with refineries in Asia.
“Our analysis would suggest it’s not going to be a viable prospect … it’s fairly well understood by people who analyse these markets that the answer is not in rebuilding refining capacity here.”
