**Check against delivery
I thank VENCorp for the invitation today to officially launch the gas market Bulletin Board and speak to you in more detail about progress on energy market initiatives.
I will come back to these topics later in my speech.
However, I know all of you are much attuned to issues related to the Carbon Pollution Reduction Scheme and the release of the Government's Green Paper. I therefore want to start my remarks on this topic today.
The CPRS will have a major impact on the National Energy Market and I appreciate the industry will have many questions.
The aim of the Carbon Pollution Reduction Scheme is to reduce Australia's greenhouse gas emissions in accordance with the Government's election commitment.
It will do this by placing a limit on the amount of emissions and allowing the market to allocate emission rights to those who value them most.
The Carbon Pollution Reduction Scheme is just one part of the Government's reform agenda in the energy arena to ensure that Australia's evolution from a high-carbon economy to a world-leading low-carbon economy is economically responsible and achievable.
I must emphasise that we are at the Green Paper stage - the discussion stage.
The Government knows it is vital to get the Scheme right for Australian industry, exports, investment and jobs.
As the experts in energy, your input is very important to us.
That said; there are some elements that cannot be changed.
The Scheme will be comprehensive.
It will cover all six Kyoto greenhouse gases and will initially cover emissions from stationary energy, domestic transport, industrial processes, fugitive emissions and waste.
Entities under covered sectors with operational control of facilities that directly emit 25,000 tonnes CO2 equivalent or more will be covered by the scheme.
This will capture around 70-80 per cent of national emissions.
As the Green Paper points out, the Carbon Pollution Reduction Scheme will increase the cost of producing emissions-intensive goods and services, such as electricity and mean additional costs for business and consumers.
The Government recognises that where costs cannot be passed on, such as in trade-exposed industries, the Scheme could impact on their international competitiveness.
The Government also recognises that coal-fired power generation will be particularly impacted.
The Green Paper puts forward the Government's preferred approach to addressing this impact.
We have proposed a new mechanism, the Electricity Sector Adjustment Scheme, which will deliver assistance through:
- Support for the development and deployment of carbon capture and storage technologies;
- Commitments to address particular impacts of the scheme on workers, communities and regions; and
- Direct assistance to coal-fired generators.
The direct assistance aims to underpin investor confidence in the electricity generation sector, with the quantum of support to be determined once overall emissions trajectories and likely costs are known.
Gas-fired generators have not been included in this particular element.
This is because our understanding is that they will not be materially affected, or may even gain from the introduction of the new scheme.
The Green Paper is a comprehensive examination of the many issues associated with the introduction of an emissions trading scheme and emissions abatement - not all of which can be covered here this morning.
As I said earlier, greenhouse gas abatement and energy market reform is more than the Carbon Pollution Reduction Scheme.
It is just one of a suite of measures to modernise the Australian energy industry and prepare for a low-carbon future.
The National Low Emissions Coal Initiative, the National Low Emissions Coal Fund, Renewable Energy Fund, and Energy Innovation Fund are all important commitments to drive research, development and deployment of low emission technologies.
Many other initiatives are being progressed through the Ministerial Council on Energy which I am proud to chair.
One initiative, being driven by the MCE, and which may help to reduce emissions, is the national smart meters rollout.
COAG and the MCE have committed to a staged approach for the national mandated roll out of electricity smart meters to areas where benefits outweigh costs - an important consideration as benefits vary between jurisdictions.
On this basis, smart meters will be rolled out initially in Victoria and New South Wales, with over 5 million new meters expected to be installed prior to 2017.
Other jurisdictions will undertake further pilots to confirm benefits and consider further roll-out commitments prior to 2012.
Smart meters provide new technology to create a step change in the electricity market by:
- Creating new, more efficient ways to operate the market and networks and save costs;
- Creating opportunities for new services; and
- Providing consumers more information, control and choice in managing their energy bills and so demonstrating that there are tangible financial benefits to be had from energy efficiency.
In the future, we will need to do more on the demand management front to reap the full benefits of initiatives such as smart meters and energy market reform.
The MCE also requested the Gas Market Leaders Group to start working towards the implementation of a Short Term Trading Market.
I expect this strategic reform of the energy market to be functioning by mid-2010 but it is also important that we take the time to properly address technical issues and get the design of the market right.
I must take this opportunity to thank VENCorp for its leadership and resources which have proved essential to the work undertaken by the Gas Market Leaders Group towards the Short Term Trading Market.
I am aware of the important role of VENCorp in designing, implementing and funding the Short Term Trading Project.
Without VENCorp's contribution, this policy initiative may not be so well-advanced.
I also greatly appreciate industry's efforts in ensuring that this project is progressing well.
Indeed, the industry has undertaken many initiatives that will secure supply.
Through the Gas Market Leaders Group and with major support from VENCorp, another industry-led initiative has been developed, one which I am proud to launch today: the Bulletin Board.
The Bulletin Board is an important step in achieving greater transparency and competition in the gas market, and in improving the market signals for further efficient investment in gas infrastructure.
Importantly, the Bulletin Board also includes an Emergency Information page which will assist government and industry to monitor the progress of recovery, and make informed market decisions during a time of gas supply shortage.
VENCorp will be the initial BB Operator, until the Australian Energy Market Operator is established.
I congratulate the Gas Market Leaders Group and the market players it represents on seeing the completion of this project, and I again thank the VENCorp team for their work here.
Both these MCE initiatives are to form a part of the Australian Energy Market Operator upon its anticipated commencement on 1 July 2009.
At the MCE meeting next week, I will discuss with my colleagues, including Minister Batchelor, the transitional AEMO arrangements and the appointments of the Chair and directors for the AEMO Board.
I can assure you, our discussions are informed by the contributions of VENCorp and the other market operators NEMMCo, GMC and REMCO to ensure the robust development of the AEMO.
The MCE will also consider the AEMC's report on establishing a national transmission planning function to be carried out by the AEMO.
National transmission planning is long overdue and vital in the context of both the Carbon Pollution Reduction Scheme and the Renewable Energy Target.
The MCE will consider how all the institutions which make up the National Energy Market need to respond to these measures and ensure appropriate outcomes regarding reserve levels, network availability and network investment.
Ladies and gentlemen, your input, expertise and experience are essential to building an enduring framework that sustains Australian industry during the significant reform challenges being faced by the energy industry.
It is vital that we address the challenges of climate change and energy security in partnership and I look forward to working with you in achieving a prosperous and sustainable national energy market for Australia's future.
Thank you.