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Ladies and gentlemen, this conference is focussed on one of Australia's great challenges - developing our energy infrastructure for the 21st century.
As the Minister for Energy, it's a pleasure to make a contribution to the conference this morning.
The 21st century may be only nine years old, but it's not too early to suggest it may come to be defined by the twin challenges of delivering both clean and secure energy supplies - not only in Australia, but globally.
Energy security is also at the heart of solving the world's water and food crisis.
The solution to that crisis lies in mechanised irrigation, water-harvesting and modern agricultural technologies - all dependent on access to reliable, affordable and secure energy supplies.
Energy security is the defining issue of our times.
Last week, I attended the Carbon Sequestration Leadership Forum in London and the International Energy Agency Ministers' meeting in Paris.
It is very clear that - around the world - Australia is seen as being very much at the centre of the energy security debate.
We are known as a responsible global player and that has been recognised with Australia invited to the G8 Energy Ministers' meeting for the first time this year.
There is also no doubt in my mind that our membership of the G20, combined with our constructive contributions in the area of energy and climate change, played an important part in securing the G20's new global leadership role.
In some ways, this is unsurprising.
We are an energy superpower - the world's biggest supplier of coal, second biggest supplier of uranium, and fifth biggest supplier of LNG.
It is more than within the bounds of possibility for us to be number one in the world in all three major energy commodities.
At the IEA meeting, the US State Department's representative told me Australia's $50 billion Gorgon LNG project is considered of vital importance to global energy security and that the State Department had in fact provided a briefing to Secretary Hilary Clinton on its significance.
But our superpower status comes not only from our resources wealth, but just as importantly from our technology leadership role.
IEA members are going to Copenhagen with an absolute acceptance that technology is central to the climate change problem.
And Australia is seen to be at the leading edge.
We introduced the world's first regulatory framework for carbon storage in Australia's offshore waters and we have released the first acreage specifically to explore for greenhouse gas storage sites.
The States and Territories are following closely to introduce similar arrangements in their jurisdictions.
It is recognised internationally that Australia will soon have the world's biggest commercial CCS project in Gorgon.
Our $2.4 billion CCS Flagships Program provides an opportunity for us to get such industrial-scale projects into our coal sector as well and the world is watching intently.
Great hopes are also held for the Global Carbon Capture and Storage Institute which we established and are funding at up to $100 million a year.
Over the last year, this initiative has attracted 20 government members and 120 industry partners, and the results of its first major project - a strategic analysis of the global status of CCS - will be launched next week.
The $1.5 billion Solar Flagships Program is also capturing the world's imagination and will mean that Australia has some of the biggest solar power stations on the planet by about 2015.
But despite our abundance of energy resources, including renewables, our ambitious programs to transform the nature of energy production and consumption in Australia pose many challenges.
Cheap, reliable energy dominated by coal has been one of Australia's competitive advantages for much of the post-World War II era.
Together with our extraordinary resources base, that competitive advantage has underpinned the development of internationally competitive iron and steel, alumina, aluminium, cement, chemicals, pulp and paper, non-ferrous metals and a host of other manufacturing industries in Australia.
It has also meant that Australian households have enjoyed among the lowest electricity prices in the developed world.
In fact, in 2007 we had the fourth lowest electricity prices in the OECD for both industry and households.
Today, however, the industry faces many challenges, none more so than its role in responding to climate change.
The introduction of a carbon price and a revised renewable energy target will inevitably mean more gas and renewables, a race to clean up coal-fired power generation, and greater focus on energy efficiency gains.
Estimates of our power industry infrastructure investment needs between now and 2020 are in the order of $100 billion in generation and network costs including for renewables.
That is an investment comparable to Australia's current asset base of $120 billion in power generation, transmission and distribution - so it is a huge challenge.
Most importantly, the role of Government is to provide an investment environment that makes the Australian energy sector attractive for footloose global capital.
And in the Energy Green Paper process, we will be seeking the views of industry on the best policy measures to deliver that investment environment and continue the national energy market reform agenda that was started under the Hawke and Keating Governments.
The Government's mechanisms for facilitating our transition to a lower carbon economy are largely market-based:
- CPRS
- RET
- The MCE's review of national market rules
But the Government also recognises the need to invest in pulling through technological developments at this early stage of transition to a low carbon economy.
We have to reduce risk for producers and suppliers of emerging technologies and find the competitive advantages of the future that will keep Australia at the front end of technology and the low end of energy costs.
That is why we have invested $4.5 billion in the Clean Energy Initiative, including:
- Solar Flagships
- CCS Flagships
- The $300 million Renewable Energy Demonstration Program
- The $15 million Second Generation Biofuels Program
- The $50 million Geothermal Drilling Program
- And the Australian Solar Institute
It is why our energy institutions are looking at what it will take to integrate new gas and renewable sources into the national grid and maintain system-wide reliability.
It is why we have also invested in programs to promote ceiling insulation, solar hot water and green loans for energy efficiency and water-saving improvements.
The Government is working hard to achieve a portfolio of affordable energy technologies.
We are not in the business of picking winners - and nor should we be.
Instead, we are giving technologies the best chance of success along the innovation chain, especially where start-up costs are high.
For the first time, renewable energy is receiving the recognition and support it deserves, given its critical role in helping to address climate change.
Our investment in renewable energy technologies is complementary to the Government's Renewable Energy Target, which means that 20 per cent of Australia's electricity will come from renewable sources by 2020 and which represents a $20 billion subsidy to the renewables sector.
But of course - climate change is a global problem.
Our clean energy developments will reduce emissions at home.
And our exports of uranium and LNG will help reduce emissions abroad.
But by themselves they will not be enough to lead to the emission reduction targets sought by the global community.
There are now 1.6 billion people in the world without access to electricity.
As the developed world grapples with our transition to a low carbon future, we cannot afford to lose
sight of the bigger picture or our greater obligations.
International Energy Agency forecasts show the proportion of global energy produced by coal increasing, not decreasing, throughout the coming three decades.
China's coal production now exceeds that of all IEA member countries combined.
In 2007, China produced more than 32 per cent of the world's coal-fired electricity.
Over recent years, it has added new coal-fired generation at a rate that replicates Australia's entire coal-fired power sector every four months.
In the coming decade China will bring on line something in the order of 1000 average-sized coal-fired power stations.
The cold, hard reality is that we will not make any impact on global CO2 emissions if we don't clean up coal.
On this front, Australia - like other developed nations - has a global role to play as the nations on our northern doorstep lift hundreds of millions of people out of poverty.
It is also important we remember coal is not solely used for electricity.
Australian coking coal fuels the steel mills of Japan, China, Korea and India and our exports are forecast to
grow by about 30 per cent in just the next five years.
Coal is fuelling the rapid industrialisation and building the infrastructure of the developing world, and no substitute for coal or steel is anywhere on the horizon.
At the IEA meeting last week it was clear that the focus of global leaders is not on the reduction of coal consumption, but the reduction of coal emissions.
The international community accepts that coal and gas are fundamental sources of energy, and as we prepare for Copenhagen, it is becoming increasingly clear that no serious response to climate change can ignore the need to accept fossil fuels as part of our shared future.
As the world's largest exporter of coal and a nation which derives around 80% of its electricity from coal, it is vital that we make technological progress on carbon capture and storage - and soon.
Conclusion
In Australia, we have an enormous investment challenge to deliver the reliable, affordable, and clean power generation, transmission and distribution needed to power our industries and households in the 21st century.
We have to continue to pull through the technologies that will deliver the low carbon energy future demanded by the community.
And we must deliver the regulatory and market frameworks necessary to handle the energy transformation that is occurring in Australia.
There is no doubt in my mind that human ingenuity will get us there - technology created the problems of today and technology will be the solution.
These are interesting times to be the Minister for Energy. However, can I leave you in the knowledge that I am extremely confident about the future and our capacity to meet the challenges of the 21st century.
Thank you.