Government maps out energy future

Power Lines

By Courtney Pearson

April 8, 2015

THE Federal Government could have to spend billions of dollars to bring Australian oil reserves up to International Energy Agency (IEA) standards, its energy white paper has revealed.

Australia is the only one of 29 IEA countries to have below-standard oil stockholdings; members are required to have at least three months’ worth of oil imports in reserves, yet Australia only holds 52 days’ worth.

The paper warned the shortfall could potentially impact the national economy if oil supplies were disrupted, stating “a decision on how to address this compliance issue will be made by the government in 2015”.

Industry minister Ian Macfarlane released the blueprint today, which focused on increasing productivity and market competition and securing investment in Australia’s energy future.

Much of the paper reaffirmed previously announced policy such as asset recycling and the recommended privatisation of state-owned electricity assets. It also confirmed a commitment to cutting the renewable energy target and plans to abolish the Clean Energy Finance Corporation and Australian Renewable Energy Agency.

Mr Macfarlane said the plan included an “integrated approach” that would provide industry and consumer certainty in energy policy.

“The measures in the Energy White Paper will deliver stable energy policy and efficient transparent markets that give consumers information to make choices about their energy use and industry the confidence to invest,” Mr Macfarlane said.

“We will be taking an integrated approach to address challenges arising in the gas market as a result of our domestic markets linking in with international markets.

“This includes removing unnecessary barriers to increasing supply, ensuring adequate competition and transparency in the upstream gas market and encouraging more flexible trading arrangements through trading hubs.”

Australian Petroleum Production and Exploration Association (APPEA) acting chief executive Paul Fennelly welcomed the paper’s commitment to market-based energy policies rather than intervention such as gas reservation.

“At a time when some interest groups are seeking a return to protectionism and a leg-up from gas producers, a long-term policy position rejecting gas reservation is an important signal to investors,” he said.

“Policies that enhance Australia’s attractiveness as a place to do business and encourage industry to increase domestic gas supplies can deliver another wave of prosperity in addition to the current $180 billion pipeline of investment in LNG export projects.”