Taxpayer-funded research and development incentives topping $44 million for a single gas company have critics calling for the fossil fuel industry to be excluded like gambling and tobacco.
Designed to spur business innovation, the R&D tax offset scheme already explicitly bars "prospecting, exploring or drilling for minerals or petroleum".
Yet at least one gas producer, Beetaloo Energy Australia, has been attracting millions in tax incentives as it explores for gas to frack in the Northern Territory's Beetaloo Basin.
The company, formerly known as Empire Energy, announced $15.4 million in cash payments in April, marking the fourth time it had accessed the R&D scheme.
Lock the Gate and the Tax Justice Network Australia have been tracking money flowing to the gas producer through the R&D program for the past six years and say refunds now total $44.1 million.
Beetaloo Energy defends its use of R&D incentives as innovative activity rather than business-as-usual exploration and prospecting.
"The Beetaloo Basin is the world's oldest shale gas basin and commercial extraction processes are yet to be proven due to its complex geology," a spokesperson told AAP.
"The activity in question is not exploration to discover gas but rather undertaking R&D activities with the purpose to generate new knowledge to determine how that gas can be extracted."
In a statement to the ASX, managing director Alex Underwood said the $15.4 million would "materially strengthen" the company's balance sheet as it advanced the Carpentaria pilot project.
Greens Senator Penny Allman-Payne has pushed Department of Industry, Science and Resources officials on the validity and legality of Beetaloo Energy's R&D tax incentive activities during senate estimates hearings.
The department's interpretation of the legislation allows for the inclusion of R&D activities where prospecting, exploring or drilling might be required for purposes other than finding deposits and establishing their prospective character, it said in answers to questions on notice.
"Other such purposes could include, for instance, drilling for the purposes of developing extraction technologies and techniques."
Differentiating authentic experimentation from business-as-usual activity has long been a challenge for the incentive scheme, Tax Justice Network Australia secretariat Mark Zirnsak said, as was transparency due to taxpayer confidentiality.
"There are companies claiming R&D incentives but a lack of transparency stopping us from knowing if they are legitimately entitled to it," he told AAP.
"And on the surface of what they're disclosing, there are huge question marks as to whether they are entitled to it."
Even if gas companies are genuinely engaging in R&D, Mr Zirnsak says fossil fuels should be excluded as gambling and tobacco companies have already been, with the sector in structural decline due to global climate commitments.
"Why would you want to keep propping up R&D there when you could be actually spending those valuable dollars on industries that have a longer life and will set Australia up to be working in innovative or emerging markets?"
Lock the Gate Alliance acting national co-ordinator Georgina Woods says gas companies operating in the NT could be in line for more federal backing following recent remarks made by the resources minister
Madeline King flagged opportunities for federal support for common-user infrastructure for the industry, including roads, while visiting Darwin.
"It's unbelievable that the federal government is signalling more handouts to Beetaloo Energy when there has been so much public opposition to fracking because of its impacts on water and contribution to greenhouse gas pollution," Ms Woods said.
