An advocacy group has filed a formal complaint with the ACCC against EY for publishing potentially “misleading or deceptive” modelling on the role of gas in Australia’s net-zero transition.
Editor’s note: This story first appeared in Lawyers Weekly’s sister brand, Accounting Times.
In 2023, EY was commissioned by Australian Energy Producers (AEP), Australia’s peak oil and gas industry body, to model how natural gas could fit into Australia’s energy transition amid global decarbonisation efforts.
EY’s report concluded that “all scenarios” it modelled saw a continued role for gas in 2050, while 30 per cent of modelled scenarios expected that global gas demand would expand or remain steady to 2050.
Not-for-profit climate advocacy group Climate Integrity claimed that EY’s modelling was flawed and its report had misrepresented the future role of gas in Australia’s energy transition.
On behalf of Climate Integrity, the Environmental Defenders Office (EDO) filed a complaint with the ACCC, which sought an investigation into AEP and EY for potentially misleading or deceptive conduct.
“AEP, with the support of EY, produced sophisticated disinformation that misled policymakers and influenced the national climate strategy to expand gas production, and delay the energy transition under the guise of credible analysis,” Claire Snyder, director of Climate Integrity, said.
“This kind of disinformation is called data washing and is particularly harmful because it’s so hard to spot. It positions itself as an independent technical assessment and uses the language of expertise and the aesthetics of research to embed fossil fuel-friendly narratives deep within the policy-making process.”
Climate Integrity claimed that the “flawed” modelling contained in EY’s report had been used by the AEP to lobby the government to include additional gas investment in its net-zero strategy, contradicting views held by authoritative scientific bodies, including the IPCC, IEA, IRENA, UNEP, and CSIRO.
Independent analysis by the Institute of Sustainable Futures at UTS, commissioned by Climate Integrity, found that EY’s scenarios were inconsistent with international climate goals to limit global warming to 1.5 degrees.
Under the Paris Agreement, the European Union and 25 countries, including Australia, issued a call to action to end investments in new coal-fired infrastructure. Under the legally binding commitment, the agreement intends to limit global warming to 1.5 degrees.
Climate Integrity warned that flawed EY modelling had been used to influence Australian policymakers in determining the role of gas in its net-zero strategy.
In a November 2023 submission to the government’s Future Gas Strategy, AEP said that “independent analysis from Ernst & Young (EY) found that new gas supply is needed for all plausible net zero pathways for Australia”.
Further, it claimed that Australia’s gas sector was “pivotal to managing risks to energy security, cost of living, and emissions reductions targets in Australia”.
On behalf of Climate Integrity, the EDO warned that this statement, based on flawed modelling, could mislead stakeholders and shape Australia’s energy future.
“Our client is concerned that AEP’s statement creates the impression that continued gas expansion is both inevitable and required to meet net zero targets, in circumstances where this is inconsistent with authoritative international modelling,” the EDO wrote in its letter to the ACCC.
“This may mislead policymakers, investors and the public, which may, in turn, undermine the integrity of Australia’s public debate on energy and climate policy.”
In its report, EY reviewed 350 “global net zero pathways” from international climate authorities, including the International Energy Agency (IEA) and the Intergovernmental Panel on Climate Change (IPCC). Its modelling found that 30 per cent of the 350 “net-zero-aligned” scenarios saw global gas demand remain steady, or even increase.
EY’s review included two scenario types outlined by the IPCC, known as C1 and C2. IPCC C1 scenarios were pathways with a greater than 50 per cent chance of limiting warming to 1.5 degrees with no overshoot, while C2 scenarios predicted a temporary overshoot of warming above 1.5 degrees throughout the 21st century, followed by a return to 1.5.
Climate Integrity said that EY’s modelling was “potentially misleading” as it had excluded 23 IPCC C1 scenarios, and appeared to include 134 “non-existent” IPCC C2 pathways in its modelling, which assumed a greater role for natural gas until 2050.
“A feature of the IPCC C2 scenarios is that they assume a greater demand for gas as a transitional energy source than IPCC C1 scenarios, which assume a steep decline in gas demand,” the EDO’s letter said.
“It appears that the modelling ... excludes 23 IPCC C1 scenarios but includes 134 IPCC C2 scenarios that are not accounted for in the source document (i.e. IPCC AR6) and appear not to exist.”
Had the 134 IPCC C2 scenarios not been included in EY’s modelling, the EDO said the models likely would have shown that a sharper decline in global gas demand was necessary to meet internationally agreed-upon climate targets.
The EY report also proposed that Australia could expand its gas production while other countries cut theirs, giving it a “greater share in a declining global gas market”.
The EDO warned that this scenario would not align with equity and fairness principles laid out in the Paris Agreement.
Since the federal government published its Future Gas Strategy in May 2024, it has approved 12 major coal and gas projects and issued nine offshore exploration permits for gas supply, Climate Integrity said. The advocacy group warned that these approvals directly contradicted the IEA’s net zero by 2050 pathway.
“This issue goes beyond poor modelling,” Snyder said.
“It speaks to how compromised Australia’s ‘big four’ consultancies really are. Fossil fuel companies have deep pockets, and when they pay consulting firms to produce modelling that aims to justify their existence and influence government policy and public opinion, how can we expect them to remain neutral?”
An EY spokesperson told Accounting Times that the firm couldn’t comment on how a client used the modelling they delivered and that the report had outlined relevant scenarios and assumptions in its appendices.
“Scenario modelling is an assessment of potential future pathways, not a prediction. It incorporates assumptions and judgements that are transparently disclosed for the purposes of debate and discussion,” the spokesperson said.
“EY’s modelling in the report referenced clearly discloses our assumptions, scenarios and parameters underpinning the modelling.”
