Discours du Consul-Général d'Australie Heidi Bootle, Conference du Pacific Economic Cooperation Council, Nouméa 2014
Australia's Energy Transition: Current Policy and Future Prospects
Good afternoon ladies and gentlemen.
Thank you to the organisers of this conference, the French Pacific Territories National Committee for Pacific Economic Cooperation, as well as the Secretariat of the Pacific Community, for the opportunity to speak to you today about Australia’s energy policies and programs.
Energy is the driver of Australian industry and economy, and a critical contributor to our high standard of living.
Like many developed nations, Australia faces challenges in retaining the competitive advantage of our industries.
Many of the challenges in this area relate directly or indirectly to energy supply, usage and markets, as we can see on this graphic.
Good energy policy is about promoting environmental and economic advantage – making prices lower for consumers, helping businesses become more productive, and minimising the impact of our energy needs on the environment.
The goal of Australia’s energy policy is threefold:
-to improve energy productivity
-to increase domestic security
-and reduce greenhouse gas emissions intensity.
Energy security is about Australia’s ability to meet the energy needs of the Australian community and industry—both in the short and in the long term.
This means having an adequate, reliable and competitive supply of energy.
Securing our long term domestic energy needs, maintaining international competitiveness, and growing our export base are fundamental to a strong economy and high standard of living.
We are fortunate that different sectors of the Australian economy rely on different sources of energy, as indicated in the graph displayed.
Most notably, it can be seen that our manufacturing and construction industry uses a mix of sources including gas, electricity and renewables.
What this shows is that competition drives productivity improvements across the energy industry, restraining energy prices, which in turn, helps to keep our industries competitive.
Australia’s energy infrastructure also supports the economy, with well-established infrastructure supporting the delivery of these diverse energy sources to homes and businesses.
This diversity of sources and technologies increases the flexibility and sustainability of our energy system, as well as helping to lower emissions.
Energy diversity is one of Australia’s natural strengths and one of our most potent competitive advantages.
Australia has plentiful and diverse energy resources, including large amounts of gas, uranium and renewable energy.
Our renewable energy resources include wind, solar, geothermal, hydro, wave, tidal and biomass.
Since 2010, wind and rooftop solar energy have grown strongly, together accounting for 35 per cent of renewable electricity generation, following hydro at 56 per cent.
Solar has been particularly popular in remote and regional parts of Australia that are off the main electricity grid.
On the other hand, geothermal and ocean energy resources remain largely undeveloped in Australia.
Technology costs have decreased in solar and wind as global production levels increase.
The same investment support and lowering of costs does not currently apply to other renewable technologies.
Our abundance of energy resources has meant that the energy industry contributed 7 per cent to Australia’s Gross Domestic Product in 2013-14 and 71.5 billion Australian dollars in export earnings.
Coal exports continue to account for the majority of Australia’s energy exports, and we are the world’s second-largest exporter of coal, holding 25 per cent of world recoverable brown coal.
In 2013-14 exports of thermal and metallurgical coal accounted for 40 billion Australian dollars in exports.
Australia exported 56 million Australian dollars’ worth of coal to New Caledonia in 2013, making it our largest export to this market.
LNG accounted for 16.4 billion dollars in exports and uranium around half a billion dollars, making us, respectively, the third and fourth exporters in the world of these resources.
The International Energy Agency predicts that global energy demand is set to rise by a third by 2035, with demand for coal growing by a fifth, meaning Australia’s exports of energy sources will remain vital.
Meeting this demand will not only require increased supply of a broader range of energy sources, but improved energy efficiency will be essential in order to achieve emission reduction targets.
Australia is firmly committed to meeting our 2020 target of 5 per cent below 2000 levels.
This is the equivalent to a reduction of 19 per cent below business as usual levels.
Australia is working towards this target not only by making better use of energy, but by making its production more efficient.
To achieve our goal of improving energy productivity to increase domestic security and reduce greenhouse gas emissions, the key challenge we face today in Australia is encouraging new technologies without increasing costs.
To achieve this, strong partnerships between government and industry on technology research and development are an important means of ensuring that research investment is well-targeted.
This includes governments investing in pre-commercial research and development, as well as the adaptation of international developments to Australian conditions.
Regulatory barriers to the adoption of new energy technologies also need to be removed.
The Australian Government has been consulting on the Energy Green Paper, which is a precursor to a new Energy White Paper, to be released in coming months.
The Energy White Paper will set out an integrated approach to energy policy to reduce cost pressures on households and businesses.
The basis of the Green Paper are submissions from the general public, companies and organisations on key energy issues and policy approaches – it is not endorsed government policy.
An expert reference panel are assisting the Department of Industry in the development of the White Paper, offering expertise and advice, as well as helping to identify and prioritise issues.
Its precursor, the Energy Green Paper, outlines four priority areas for the Government:
• attracting energy resources investment;
• managing electricity price rises;
• building gas supply and improving market operation; and
• improving security, innovation and energy productivity.
The Energy Green Paper strikes the balance between energy as an enabler of economic growth, and energy sustainability to help manage Australia’s transition to a lower carbon economy.
Looking beyond Australia’s policy of energy diversity, I would like to discuss with you some key drivers that are enhancing Australia’s energy productivity.
Firstly, it is clear that changes in energy technologies can emerge quickly, with the most recent example in Australia being the rapid uptake of solar photovoltaic panels.
15 per cent of Australian households now use solar photovoltaic panels.
Australia needs to take advantage of new technologies which can contribute to the reliable and affordable supply of energy.
The development of large-scale energy storage, for example, is a potential game-changer for renewable energy in smoothing the intermittent supply of energy.
A broader range of energy sources are continually sought as technology makes alternative sources more cost-effective.
Australian homes and businesses are increasingly energy savvy and well-informed with regard to energy issues.
The Energy Green Paper is being prepared in an environment in which consumers and customers are better informed and more engaged than ever before.
In Australia, we have found that consumers can also help support energy security with better energy efficiency, aided by improved information that helps them to use energy cost-effectively.
In recent years, this trend has contributed to reducing overall electricity use and increasing energy productivity through increased end-use efficiency.
This has meant that while there are still rapid increases in the volume and quality of energy services – for example in lighting, heating and cooling - the amount of energy needed per service has declined.
When it comes to larger businesses, over the past five years for every one dollar that has been invested in energy efficiency upgrades and practices, almost four dollars in savings have been delivered.
Finding new efficiencies has been good for the bottom line for both households and businesses, whether this is through lower maintenance and training costs or improved quality control.
For example, improvements in home design and size mean today’s homes can use 29 per cent less electricity than homes built just ten years ago.
Another key driver of increased efficiency can be seen in the changes to the global energy market.
Other countries are also looking to vary their energy sources, with the increasing linkages between global markets seeing a move to more consistent pricing.
Australia’s domestic energy market must respond to this global trend, in order to become more flexible and competitive, allowing customers choice and better energy prices.
Reforms programs are already underway in Australia to find energy market efficiencies.
The harmonisation of regulations, ensuring transparency in the market, and increasing competition between energy providers are key outcomes sought by these programs.
An example of an area for potential reform, raised in the Green Paper, is Australia’s electricity market.
Australian electricity prices are mid-range among OECD countries on a purchasing power parity basis, but the last four years have seen electricity prices rise by 33 per cent, with retail prices rising faster than the rate of inflation.
Recent increases in network costs associated with investment in transmission and distribution infrastructure have contributed to the recent rise in retail electricity prices.
The Australian electricity market comprises three distinct electricity systems: the National Electricity Market (NEM), the Western Australian market, and the Northern Territory market.
Australian state and territory electricity utilities are divided into separate generation, distribution and retail markets, with price disconnects existing between – and within - these various stages.
For example, depending on the state or territory regulator, retail electricity prices are either regulated or determined in a competitive market, while the sole retailer in Tasmania has no competition at all.
The Energy Green Paper has identified a need to examine the electricity pricing system, including regulatory systems, to minimise the distortive effects on the market in order to make it more consumer-friendly.
Looking beyond the domestic context to our region, Australia is supporting Pacific island countries to meet their long-term energy needs.
Australia recognises that the impacts of climate change are priority issues for Pacific Island countries and that climate change is inextricably linked with energy.
That is why Australia has given 32 million dollars of support to the Pacific-Australia Climate Change Science and Adaptation Planning Program.
This program has helped to improve the region’s climate science base and to develop effective adaption responses.
In the energy sector, we support the development of renewable energy options that are appropriate and affordable to Pacific Island Countries which, as you know, are among the most dependent on imported petroleum products.
It has become clear that investments in renewable energy, alongside energy efficiency, can help to mitigate vulnerability to oil price volatility.
Australia sees value in expanding access across the Pacific to reliable and cost-effective energy sources, which are vital for businesses and for communities.
Australia has committed to a variety of energy programs in the Pacific, including contributions to:
• the ‘Clean and Affordable Energy’ regional initiative in the Pacific with the World Bank and Asian Development Bank;
• the World Bank’s Energy Sector Management Assistance Program to help developing countries find environmentally sustainable energy solutions for poverty reduction and economic growth;
• the ‘Promoting Energy Efficiency in the Pacific’ program, managed by the Asian Development Bank which aims to reduce fossil fuels in five Pacific countries;
• And in August, Foreign Minister Bishop announced that Australia will contribute an additional $20 million to the World Bank’s Pacific Facility Trust Fund, bringing our total contribution to this program alone to more than $70 million Australian dollars.
As highlighted at the Small Island Developing States conference in Samoa in September, renewable energy technologies and energy efficiency measures play an important role in increasing the energy independence of Pacific island countries.
We recognise, however, that renewable energy alone will not enable all Pacific island countries to meet their long term energy challenges.
Furthermore, our assistance must continue to be aligned with coordinated with infrastructure investments and in cooperation with other donor nations also seeking to expand access to renewable energy in the region, including New Zealand.
Australia is also engaged on the world stage, recognising that energy is an interconnected and truly global issue.
In Brisbane earlier this month, G20 countries affirmed support for strong and effective action to address climate change.
Leaders agreed to deliver climate change actions that will support sustainable development, economic growth, and certainty for business and investment.
As part of this action on climate change, for the first time at the G20, leaders discussed major energy challenges.
They agreed that affordable and reliable energy is crucial for all countries.
Leaders agreed to work together to end energy poverty and enhance energy security, and to refresh the institutions that will help us meet these goals – by making them more inclusive of the emerging and developing economies.
These ideas are stated in the G20 Principles of Energy Collaboration, which will guide future G20 work on energy, and the G20 Energy Efficiency Action Plan.
This work will, in turn, inform the United Nations Framework Convention on Climate Change process ahead of the meetings in Lima next month and in Paris in 2015.
In conclusion, it is clear that our region is progressing towards a more beneficial and cost-effective energy future through a variety of fora and actions taking place at the national, regional and global level.
This is a long road, and one which Australia is committed to travelling, including through engaging with our Pacific neighbours to find solutions to the pressing problems in our region.
Thank you for your attention.