A fracking company active in the Northern Territory’s Beetaloo Basin may have unlawfully obtained almost $30 million through a publicly-funded Commonwealth “research and development” scheme that explicitly excludes fossil fuel exploration.

Empire Energy Ltd has reported a $28.8 million windfall in government research and development grants over the past three years.

Last week, questions were raised in Senate Estimates by Greens Senator Penny Allman-Payne over how Empire, and two gas companies active in Queensland, Blue Energy and Galilee Energy, had obtained refunds through the scheme. The department committed to investigating the research and development grants as “part of a compliance process” and reporting back to the committee.

Lock the Gate Alliance and the Tax Justice Network Australia question how the companies could be entitled to such huge handouts when the rules of the scheme clearly exclude gas and petroleum exploration.

The groups say that if the companies were not lawfully entitled to the sums they received, the companies should be required to return the cash, at the bare minimum.

Late last year, lawyers from Environmental Justice Australia wrote (see attached letter) to the Minister for Industry and Science, Ed Husic, and the Board of Industry Innovation and Science Australia, on behalf of the two groups, asking them to investigate if the handouts violate the scheme’s eligibility requirements.

The letter requests the board review the registration of Empire Energy Ltd and its purported R&D activities over the last three years to determine whether the company's application was valid.

In October, Empire told financial markets it received a $15.6 million handout under the Australian Government’s Research & Development Tax Incentive Scheme, on top of $7.8 million in 2022 and $5.3 million in 2021.

Empire Energy has claimed that the latest handout puts it in a financial position to move towards a final investment decision (FID) on its Beetaloo Basin pilot project. Recently, the company announced plans to drill 10 new horizontal wells, and build a new compressor station, roads, and pipelines for its Carpentaria Pilot Program.

The gas company also took $20 million in grants from the Morrison Government through the Beetaloo Cooperative Drilling Program.

“Australians’ hard earned money should not be used to bankroll fracking corporations like Empire Energy who want to wreck our water and climate.

Subsidies and handouts for coal and gas companies are costing Australian taxpayers billions every year. So too are the devastating climate disasters like fires, droughts, and floods that fossil fuel companies cause.

We’re pleased to hear the department says it will investigate this matter further as part of a compliance process."

— Lock the Gate Alliance National Coordinator Carmel Flint

”This is a system built on self-assessment, so it's essential that the regulator thoroughly investigates potential tax abuse and unlawful activity.

Gas and petroleum exploration is explicitly excluded from eligibility for this R&D scheme, so we’re asking the board to investigate how Empire Energy could have validly accessed this money.”

— Environmental Justice Australia Senior Specialist Lawyer Retta Berryman

"The Australian public has a right to trust that our public money is being spent wisely and with integrity. There is a history of research and development schemes being rorted, so we don't want to see genuine innovation missing out because of unscrupulous companies. If tax abuse is taking place, the responsible regulator needs to investigate and crack down.”

— Mark Zirnsak, of the Tax Justice Network Australia