Australia’s plentiful energy resources, well-developed transmission and distribution infrastructure, open energy markets and improving energy productivity provide a solid basis for continued high living standards and a growing economy. Ongoing reforms are needed to address cost-of-living pressures and improve small, medium and large business competitiveness, ensure growth in energy exports and encourage investment.
The Australian Government will deliver an Energy White Paper in 2014 as part of a broader package of Government reforms. The Energy White Paper will set out an integrated and coherent Australian Government position on energy policy.
This Issues Paper is the beginning of consultation on the Energy White Paper that will be developed by the Department of Industry. It outlines the scope of the Energy White Paper, maps links to other related policy and regulatory developments, and seeks comment on issues to be considered in a Green Paper that will outline possible policy approaches.
Energy policy needs to underpin the day-to-day reliability, longer term security and the cost of energy in an efficient and competitive market. The Energy White Paper will consider the supply and use of Australia’s energy resources to deliver security of supply, increases in new energy sources to ease demand/supply constraints, regulatory reform to put downward pressure on prices, and improved energy productivity. Downward pressure on prices will help relieve cost-of-living pressures and improve business competitiveness.
Energy policy should remove unnecessary barriers to continued investment in exploration, production, distribution and end use systems to meet demand and support Australia’s economic growth. The Government is exploring measures to support investment and growth in the energy and resources sectors, including:
- regulatory reform;
- workforce productivity;
- the development of both traditional and new energy sources; and
- maximising export opportunities for energy commodities, products, technologies and services.
The energy sector faces some challenges; among them implementing reform and reducing costs in an environment that has seen a decline in electricity use, and a tightening gas supply balance on the east coast. Australia’s resources sector is in a period of significant growth and change as the investment boom of the previous decade peaks. However, as major projects are completed, the coal and LNG sectors will experience a large-scale ramp-up in production capacity. The economic impact of this transition is expected to be felt most over the next two to three years.
Australia’s energy and resources sectors have supported national economic prosperity through trade. There are significant further investment opportunities that can be captured under the right business conditions. The Government recognises the importance of improved workforce and energy productivity coupled with technology uptake to maintain international competitiveness. Further investment will create employment opportunities, particularly for Indigenous communities in remote and regional areas.
Reforms that could reduce the regulatory burden on business and maintain appropriate levels of disclosure and transparency in energy and related markets include:
- the reform of electricity and gas markets to improve efficiency and user choice;
- the development of a more flexible and informed trading environment for gas markets;
- encouraging productivity and market efficiency by continued privatisation of state and territory owned energy assets and businesses; and
- streamlined environmental approvals and creation of a one-stop-shop approach to help navigate other approval and licensing requirements.
The Government has committed to finalising the energy market reforms endorsed by the Council of Australian Governments (COAG) to ensure that consumers pay no more than is necessary for a reliable and secure supply of electricity. Reforms will put downward pressure on domestic energy prices by enabling the community’s demand for energy services to be met by the lowest cost combination of supply and demand-side action, including moves to increase energy efficiency.
Existing energy efficiency measures include labelling, minimum standards, development of energy management systems, capacity building and demonstration programs. There is scope to support further improvements in energy efficiency while reducing regulatory burden and reducing costs for consumers. The Government will consider the current suite of energy efficiency and demand-side measures, particularly those targeting peak usage and improving consumer information, and ways these could be enhanced with a low regulatory regime.
Australia remains committed to reducing carbon emissions by five per cent by 2020 (against 2000 levels). The Government will consider measures to encourage the deployment of renewable energy as well as low-emission technologies that allow Australia to continue to utilise our abundant coal and gas resources. In addition to improving fuel efficiency in the transport sector, there is also potential to increase the use of alternative fuels.
The Government is seeking submissions from stakeholders parties on the issues outlined in this paper.