**Check against delivery
Speech to the CEDA 2009 Energy Overview Forum in Adelaide
Good afternoon ladies and gentlemen,
It's a pleasure to make this address to the 2009 Energy Overview.
'Fuel sources for power' is indeed a very appropriate title for today's forum.
Determining how we maintain our energy security, economic prosperity, and consequent social cohesion, is a challenge occupying a great deal of the Government's thinking at present.
Our region's insatiable thirst for energy means energy security is one of the big issues confronting Australia and the world today.
Access to energy resources is the key to continuing economic growth and the challenge of meeting global energy demand - in a sustainable way - is daunting.
As the world's largest exporter of coal, the second-largest exporter of uranium, and the 5th largest exporter of LNG, Australia's place in the world in this debate is front and centre.
There are presently 1.6 billion people in the World who do not have access to electricity.
As the developing nations of the world - led by China and India - continue to modernise, demand for resources & energy supplies will continue to grow, providing Australia with great opportunity.
But today, I'd like to set out for you what our economic prosperity and our energy security depend upon in a carbon-constrained world.
Clean energy
The need for prosperity in a carbon-constrained world is heralding an industrial revolution, every bit as important as the one that built the factories of 19th Century Europe.
But whereas the first industrial revolution was about economic growth and empire-building, today's goal is sustainable growth with energy security for all.
Specifically, our goals are:
- To reduce Australia's greenhouse gas emissions
- To produce 20 per cent of Australia's electricity from renewable sources by 2020
- To ensure Australia has adequate, affordable, and reliable energy, and To be a reliable trading partner contributing to the energy security of our region
On the energy front - Australia is indeed the Lucky Country.
We have a wider range of energy options available to us than almost any other nation.
Ladies and gentlemen, the Australian Government's challenge and responsibility is to encourage the development of all energy options.
The $4.5 billion Clean Energy Initiative announced in May, seeks to maximise the potential of new, low-carbon technology, while recognising the need to lower the carbon footprint of existing fuels.
In conjunction with the Government's expanded Renewable Energy Target and the Commonwealth's determination to put a price on CO2 emissions, this $4.5 billion investment in clean energy is giving industry the confidence to drive investment and innovation.
For example:
- The $1.5 billion Solar Flagships program will see private-public partnerships build Australia's first large-scale solar power stations. The $100 million Australian Solar Institute is encouraging collaboration between Australian and international solar researchers and institutions. The $465 million Australian Centre for Renewable Energy will give the best ideas the best chance of commercial success
- $14 million of this money has already been provided to two geothermal energy projects here in South Australia - Petratherm, which I launched in August, and Panax Geothermal.
- Geoscience Australia estimates that if just one per cent of Australia's geothermal energy was extracted, it would provide us with 26,000 times Australia's total annual energy consumption. The potential is staggering.
- Biofuels are another part of the clean energy strategy - specifically 2nd generation biofuels to move us beyond the food versus fuel debate in the biofuels space. Our $15 million Biofuels R&D program will fund cutting edge research.
Australia has a broad suite of clean energy technology options and the Government is striving to give them each an opportunity to develop to commercialisation.
We are not in the business of picking winners. And nor should we be.
Uranium and LNG
As I said in my opening remarks - Australia is also very fortunate to possess an abundance of conventional energy sources.
These include uranium and liquefied natural gas - both of which are increasingly being incorporated into the energy strategies of our trading partners, as they seek to reduce CO2 emissions from their energy sectors.
Due to our existing energy options, nuclear power is not necessary in Australia. However it is important we recognise it as an increasingly important part of the energy mix in many economies beyond our shores.
It is the Australian Government's view that Australian uranium exports provide valuable export earnings and will increasingly help other countries reduce greenhouse gas emissions.
Australia has more than one-third of the world's uranium and is well-placed to capitalise on growing demand.
The environmental approval to allow mining at the Four Mile deposit in South Australia is a significant achievement for the Australian uranium industry.
And, as you know, BHP Billiton is examining options for the expansion of Olympic Dam.
The Australian Government strongly supports the expansion of this industry.
Likewise - we are strong supporters of our growing LNG sector.
Gas is going to be a very important transition fuel in the coming decades, not only in Australia, but also on our doorstep in Asia.
In the context of energy security and climate change, further development of Australia's LNG industry is one of my top priorities.
As you all know - the recently-announced Gorgon project is Australia's biggest ever resources project, which has already given rise to:
- Our first long-term supply contract to India - worth $25 billion
- Our biggest-ever single trade deal - a $50 billion contract with PetroChina, and
- $70 billion worth of supply contracts to Japan and South Korea
It is hard to over-state the importance of Gorgon.
Gorgon will provide jobs for about 6,000 Australians, buy about $33 billion worth of Australian goods and services and generate about $40 billion for public services and infrastructure.
We also have the Pluto, Browse, Wheatstone, and Ichthys projects on the horizon, as well as the developing coal seam methane sector in Queensland.
However - we cannot be complacent.This important sector's future growth depends on offshore exploration.
Earlier this morning - I had the pleasure of awarding 10 new offshore exploration permits off Western Australia and the Northern Territory, bringing new investment worth $158 million.
Importantly, this shows Australia remains a highly attractive and secure destination for offshore petroleum exploration.
Coal and CCS
Global use of gas, uranium, and a range of renewable technologies is forecast to grow strongly throughout the coming decades.
But so too, is the global use of coal.
Coal is Australia's largest export and the primary fuel for around 80 per cent of Australia's current power supply.
It underpins the security, reliability and low cost of Australia's electricity.
In turn, this supports the competitiveness of Australian industry.
But it is not just important to Australia.
In recent years, China has been adding nearly three times Australia's entire grid capacity in new coal-fired generation - every year.
In the coming decade alone, China will bring on line something in the order of 1,000 average-sized coal-fired power stations.
This ladies and gentlemen, equates to 34 times Australia's grid-connected coal fired electricity capacity.
In just one country.
In just the next decade.
Clearly - any credible response to climate change must acknowledge that the use of coal has to change.
Technologies capable of significantly reducing global CO2 emissions from coal have to be found.
The Australian Government recognises this.
Which is why this year's Budget includes a $2.4 billion investment in low emissions coal technologies and industrial-scale CCS projects.
On present projections - around one-quarter of global electricity in 2030 will be from coal-fired power stations in China and India alone.
The International Energy Agency is very clear on the importance of carbon capture and storage.
It says CCS will need to deliver almost 20 per cent of the emissions reductions we need to achieve in 2050 if we are to stabilise emissions in a cost-effective way.
We know CCS can work.
The global community's great challenge now is to make it commercially feasible.
Our economic security depends upon breakthroughs in the way in which we generate electricity.
The development of baseload renewable technologies and the deployment of commercial-scale CCS are complementary strategies - not competing alternatives - to meeting this critical objective.
Conclusion
Ladies and gentlemen, as I outlined in my earlier remarks - the Australian Government is not in the business of picking winners.
Our responsibility is to ensure the sustainable supply of energy.
It is a challenging responsibility.
The Australian Government is firmly committed to sustainable economic growth with energy security, and we have a plan to achieve that.
Thank you.