Chemical industry economic contribution analysis

Guy Jakeman, John Söderbaum, Jyothi Gali 

Chemistry Australia

Published 2019-08-02

ACIL Allen Consulting was engaged by Chemistry Australia to report on the comparative value of gas used by major gas using industries in Australia.  The total contribution of the chemical industry for every petajoule of gas use in 2017-18 was around $286 million, compared to $8.7 million and $4.2 million from the LNG and gas-fired electricity generation industries, respectively. This illustrates that the chemistry sector has more value-added per petajoule of gas used than LNG (33x) and electricity (68x) in the Australian economy. Importantly, however, this does not mean that the LNG and gas-fired electricity industries are less important to Australian income, nor does it imply that the intertemporal return on capital and other scarce factors is smaller. It does, however, provide an indication of the relative value add of gas that is currently being jeopardised by the difficulties facing the Australian chemical industry in obtaining reliable supplies — particularly supplies under long term contract arrangements, as such contracts are highly important in underpinning the investment decisions for building and maintaining the chemical industry’s manufacturing facilities.

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