APPEA - Energy Policy | APPEA

Energy Policy in Australia

The development of a White Paper on energy issues was agreed to by the Government in September 2008.

In developing the White Paper, the Government intends to ensure the provision of clean, adequate, reliable and affordable energy supplies to meet Australia's growing energy needs. This will be integral to Australia's economic prosperity and to ensure Australia reduces its fossil fuel related greenhouse gas emissions. Ultimately, the aim of the Energy White Paper is to set durable policy directions to ensure Australia's long-term economic prosperity and energy security.

A series of Discussion Papers to inform the development of the White Paper were released in April 2009. APPEA lodged a submission on these papers in July 2009, noting The Australian upstream oil and gas industry can contribute to meeting the White Paper's terms of reference in two key ways - directly contributing to meeting the ongoing energy needs of Australians and contributing to Australia's economic security by supplying energy resources to meet the Asia-Pacific's escalating demand for cleaner burning fuels. The submission also noted a successful Energy White Paper can be characterised as one that results in a policy framework most conducive to:

• exploring for and discovering in Australia substantially more oil and condensate; and
• producing, exporting to the Asia-Pacific and consuming in Australia substantially more natural gas.

The Energy Green Paper will be informed by the submissions received on the discussion papers, the outcomes of related reviews (for example, the Carbon Pollution Reduction Scheme), and commissioned research studies. The Green Paper will generate discussion on energy policy options for Australia to 2030.

The culmination of this process is the release of the Energy White Paper, which will establish Australia's long-term policy settings.

Demand for energy is increasing in conjunction with economic growth. The development of new low emission energy technologies is widely recognised as critical for addressing climate change. Energy security has become a major concern for countries without Australia's energy resources endowment. Australia's energy policy framework continues to meet these challenges.

The International Energy Agency projects that the world's energy needs will expand by 1.6% per year on average between 2006 and 2030 - an increase of 45%. Demand for oil rises from 85 million barrels per day now to 106 mb/d in 2030. China and India account for over half of incremental energy demand to 2030 while the Middle East emerges as a major new demand centre. The share of the world's energy consumed in cities grows from two-thirds to almost three-quarters in 2030. Almost all of the increase in fossil-energy production occurs in non-OECD countries. These trends call for energy-supply investment of $US26.3 trillion to 2030, or over $US1 trillion/year.

Australia has proven energy reserves, infrastructure, competitiveness and reliability. One of the targets of APPEA's Strategic Leaders Report is that Australia be the second largest LNG export by 2017, up from fifth currently.

The positive global outlook for Australian LNG is linked to heightened energy security concerns, particularly during this period of high oil prices and geopolitical uncertainty. The global market is responding to the high oil prices, through investment in new exploration, production and refining infrastructure. Australia must also seek new domestic oil reserves (recognising that their highest value may be as an export product), and consolidate efforts to develop low emission transport fuels and technologies.

Energy-importing counties are seeking to spread their import risks, secure access to low-cost energy, and at the same time address climate change. Australia's low-cost energy resources and our vigorous pursuit of low emission technologies - in both renewables and cleaner fossil fuel technologies, such as natural gas - place us in a unique position to secure both domestic economic and global environmental benefits.

The global emergence of clean fossil energy technologies, including carbon dioxide capture and geological storage, also contribute to the positive energy export outlook.

Energy Policy and the Upstream Oil and Gas Industry

APPEA believes that the objective of a national energy policy should be to ensure:

• a commercially viable, domestic energy sector based as far as is practicable on the effective utilisation of Australia's energy resources and expertise in a socially responsible manner; and
• the service of community needs through the provision of a reliable supply of energy, produced at internationally competitive prices and under world's best practice safety and environmental management regimes.

These objectives need to be pursued in a context where:

• there is a commitment to maintaining the international competitiveness of Australian industry;
• market forces are the preferred basis for policy; and
• intervention by government only occurs if significant market failure is clearly demonstrated.
• Principally, energy policy must address:
• the projected decline in Australia's self-sufficiency of crude oil and condensate supply;
• the need to ensure that gas plays a greater role in the energy mix; and
• the fiscal and other issues impacting on the competitiveness of Australia's current and potential gas exports.

APPEA is striving to ensure that gas is selected as the fuel of choice for power generation and process energy in Australia. Any final decision on fuel inputs should be based on the intrinsic merits of the fuel source, not political considerations.