Energy policy

APPEA believes a national energy policy should deliver:

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

These objectives must be pursued a commitment to maintaining the Australian petroleum industry’s international competitiveness. Market forces should be the preferred basis for policy; government intervention should only occur if significant market failure is clearly demonstrated.

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
• fiscal and other issues reducing the competitiveness of Australia's current and potential gas exports.

A level playing field for gas

Any final decision on fuel inputs should be based on each fuel source’s intrinsic economic and technical merits – not on political considerations. Australia is rich in gas, and gas-fired electricity generation is much cleaner and less water-intensive than coal-fired power. And unlike renewable energy, gas is relatively cheap and is suitable for both baseload and peaking power. Yet the Australian tax and fiscal systems put gas at a disadvantage relative to coal, while the renewable energy target (RET) scheme advantages renewable energy over gas.

APPEA is striving to ensure gas can compete effectively as the fuel of choice for power generation and industrial energy in Australia as this would serve commercial and national interests by providing an energy mix that is cleaner, more affordable and more secure.

The International Energy Agency says global energy needs will expand by 1.6% per year on average between 2006 and 2030 – a total increase of 45% over that period.

Demand for oil is forecast to rise from 85 million barrels per day (MMbbl/d) now to 106MMbbl/d in 2030. China and India account for more than half of incremental energy demand to 2030 while the Middle East is emerging as a major new demand centre. Almost all of the increase in fossil-energy production will occur in non-OECD countries. These trends call for energy-supply investment of $US26.3 trillion to 2030, or more than $US1 trillion/year.

Australia has proven energy reserves, infrastructure, competitiveness and reliability. APPEA is aiming for Australia to become 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 in some cases 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 and secure access to low-cost energy while also addressing climate change. Australia's gas resources place us in a strong position to secure both domestic economic and global environmental benefits.