Ladies and gentlemen, it is a great pleasure to welcome my friend Mr Nobuo Tanaka, Executive Director of the International Energy Agency, to our national capital.
Today, we will hear a summary of the latest thinking in global energy policy from the International Energy Agency (IEA), as reflected in its flagship publication – the World Energy Outlook 2010.
I am also releasing a technical report, commissioned by the Australian Government as part of the Energy White Paper process, which complements the World Energy Outlook.
The Australian Electricity Generation Technology Costs – Reference Case 2010 report includes work done by the Electric Power Research Institute.
These two pieces of work reveal the scope of the energy transformation challenges we face in future years.
They enhance our knowledge of the changing way we produce, transport and use energy.
World Energy Outlook 2010
The annual World Energy Outlook has established itself as a key reference point for the world’s energy decision-makers.
I welcome the World Energy Outlook's continued focus on the dual challenges of energy security and climate change.
I congratulate the International Energy Agency for its thorough analysis of global energy trends.
There are clear implications for Australia, not least the prediction that global demand for natural gas is set to resume its long-term upward trend.
As a growing exporter of LNG, Australia stands ready to meet this demand.
But it is the Outlook’s focus on electricity generation that is of most interest to me.
The IEA points to the fact that more than one-fifth of the world’s population lacks access to electricity.
And more than one-third rely on biomass for cooking.
From this starting point, the IEA expects world electricity demand to grow more strongly than any other final form of energy.
Within 25 years, world electricity demand is projected to grow by more than two per cent per annum.
And more than 80 per cent of the increase will take place in poorer countries.
In China alone, electricity demand is expected to triple between now and 2035.
Over the next 15 years, China is projected to add generating capacity equivalent to the current total installed capacity of the United States.
At the same time, electricity generation is entering a period of transformation.
Investment is shifting to low-carbon technologies.
This shift can support global energy security by diversifying supply, and reducing dependency on fossil fuels for electricity generation.
Globally, the share of fossil fuels in the energy mix is likely to fall, from 68 per cent to 55 per cent within 25 years.
The shift to low-carbon technologies is particularly marked in OECD countries, and Australia is playing a key role in supporting investment to overcome initial hurdles.
Australia has a diverse array of both fossil and renewable fuels.
I would note Mr Tanaka’s recent comments at the recent APEC Leaders Summit in Japan stressing the need for action to increase the deployment of low carbon technologies.
Today I am releasing the Australian Electricity Generation Technology Costs – Reference Case 2010 report.
This is the next in a series of technical reports developed as part of the Government’s Energy White Paper process.
This report follows the March 2010 release of the Australian Energy Resource Assessment and the October 2010 release of the report from the Prime Minister’s Task Group on Energy Efficiency.
The report I am releasing today is an important contribution to the examination of the cost and performance of globally available electricity technologies that can support our energy security needs as we transition to a low carbon economy.
This report is designed to fill the gaps that until now existed in the consistency and availability of recent information on the costs and performance of energy technologies specific to Australia.
The evaluation was undertaken by the Electric Power Research Institute or EPRI.
EPRI is a well regarded US-based institute with a strong global reputation in the electricity technology sector.
We also worked with a reference group of Australian stakeholders to ensure the results were applied properly to the Australian environment.
In addition to the descriptive evaluation of each technology, the Report provides two important data sets.
First, technology cost and performance data provides a data set which can be used as an input to stationary energy sector modelling and analysis.
Secondly, the analysis of the levelised cost of electricity technologies enables a comparison of a basket of globally-available technologies in 2015 and 2030 using a common set of assumptions.
This is the first time we have had such detailed cost and performance data publicly available that has been broadly supported by a range of stakeholders across the Australian energy sector.
Not surprisingly, the results in this Report show more mature technologies associated with fossil fuel generation are currently at the lower end of the cost range.
But, over time, the band of levelised costs across all technologies narrows.
That is largely because emerging technologies have more significant cost-reduction opportunities than more mature technologies.
The Australian Government is already encouraging a broad range of technologies and energy efficiency initiatives to reduce the carbon intensity of Australia’s electricity system.
In particular, through the $5.1 billion Clean Energy Initiative we are accelerating the development of renewable energy technologies such as solar and geothermal technologies, as well as other clean energy technologies, including carbon capture and storage.
The success and timing of these technologies will be a key factor in managing the transition to a low carbon economy while maintaining energy security.
Understanding the parameters of generation technologies will help clarify options for responding to the challenges of energy security, climate change and economic prosperity.
The Report is already being used as a key input to the work of the Australian Energy Market Operator (AEMO), including:
- The National Transmission Network Development Plan - which will be released on 15 December;
- Electricity Statement of Opportunity; and
- Gas Statement of Opportunity.
It is the Government’s intention that this reference set of Australian electricity generation technology cost curves will be accessed by industry stakeholders and Australian modellers.
I also hope that by making this Report publicly available on my Department’s website that it will improve transparency and understanding surrounding technology costs.
However, the Government also recognises that energy technology costs change over time.
It is the Government’s intention that technology cost estimates will be regularly updated and released to ensure the public remains well informed. It is intended that the next update will be in 2011.
The Australian Government is pleased to have added to the knowledge base of the Australian energy sector through the release of this Report.
We are continuing work as part of the Energy White Paper process, which is of course linked to the Government’s broader reform agenda going to putting a price on carbon.
Conclusion
Ladies and gentlemen, the speed of change in the global energy sector is unprecedented.
These reports are designed to add the community’s knowledge base in light of the changes facing the energy sector.
I now look forward to hearing Mr Tanaka’s detailed briefing on the World Energy Outlook 2010.
Thank you.