The Federal Greens will try to use their influence in the Senate to persuade the Albanese Government to scrap its plans to fund the $1.5 billion prosed petrochemicals precinct at Middle Arm that environmental groups have called “greenwashing at its worst”.

Labor announced this week it would be funding the manufacturing and minerals precinct at Middle Arm as part of its soon-to-be-released federal budget, which the NT Government welcomed, however, the Greens said $1.5 billion for the petrochemical industry in an already tight fiscal climate for the government was not prudent.

“The Middle Arm commitment is the biggest and most unacceptable budget commitment so far,” Greens resources spokeswoman Senator Dorinda Cox said, adding that it does not align with federal Labor’s climate commitments.

“The government needs to align their current commitments in the budget with their policy commitments and legislation about triggering the climate issues in our communities.

“We are talking about giving public money to new coal and gas projects, this is about export of gas out of Australia by Middle Arm, and we cannot continue to do that.

“We hold the balance of power, plus one, across the crossbench and there would need to be a serious conversation with us about the validity of this.”

Environmental groups have also been lobbying hard for the budget commitment to be dropped.

“This Middle Arm project is about making petrochemicals from gas fracked from the Beetaloo Basin – it will be a climate and health disaster for the Northern Territory and it’s a public subsidy to the fossil fuel industry, pure and simple,” NT Environment Centre director Kirsty Howey said. “It should not be paid for by the taxpayer.”

In an email encouraging Territorians to voice their concerns about the new project by contacting their federal Labor members, the Arid Lands Environment Centre said the Middle Arm precinct was “greenwashing at its worst”.

“The Labor Government are trying to spin this as investment in ‘green hydrogen, critical minerals and sustainable low emissions manufacturing’,” the email said.

“However the majority of the precinct is earmarked for gasfired industry, as demonstrated by the NT Government’s concept map for the project.”

The funding commitment to the Middle Arm industrial area – which the NT Government has now dubbed the “Middle Arm Sustainable Development Precinct” – was previously committed to by the Coalition and Labor clarified this week it would be funding it not as a potential Defence project but rather with the potential to get hydrogen and other goods in and out.

The Albanese Government said this week that it would be seeking a ‘cut’ of profits generated by the Middle Arm industrial precinct if it becomes successful to pay back the money.

The Territory Labor Government has spruiked the Middle Arm Sustainable Development Precinct as a globally competitive, sustainable development zone for “low-emission” petrochemicals, renewable hydrogen, carbon capture storage, and minerals processing.

A preliminary report, however, found that plans to further industrialise Middle Arm could cause “significant” negative impacts on threatened species and health effects for Palmerston residents, which environmental advocates labelled as “incredibly concerning”.

Independent Senator David Pocock also called for Labor to ditch the funding, telling the ABC that “we’ve heard so much from the government about how tight the budget is and how the priority needs to be addressing the cost of living crisis and the housing pressure that people are feeling”.

“It makes no sense for a huge investment of taxpayer money that’s essentially a subsidy for the fossil fuel industry,” he said.

Opposition backs precinct, APPEA says it will create jobs

Opposition Leader Peter Dutton, who was in Darwin this week, said he remained committed to the project.

The Australian Petroleum Production and Exploration Association said creating the Middle Arm precinct, that would use gas from the Beetaloo Basin and would include a carbon capture and storage hub, would expand the industry and ultimately provide more taxes to the government.

“The industry has already been collaborating with authorities by progressing the Darwin Carbon Capture and Storage Hub planned for the Middle Arm area and set to service a range of industries using emissions reduction technology to lower their footprints,” APPEA said in a statement.

“This infrastructure can also underpin the development of an extraordinary economic and energy security opportunity like the Beetaloo Basin, where … many jobs could be created alongside substantial government revenues for the next two decades.”