Minister for Resources and Energy, Minister for Tourism

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1. Introduction

·        It’s a pleasure to be here today at this important event which brings together the peak bodies of the energy industry.

·        The energy sector is fundamental to meeting Australia’s most basic social and economic needs.

·        It underpins every form of our economic activity, powering our industries, our vehicles, our workplaces and our homes.

·        The secure supply of energy is clearly essential to the nation’s future economic growth and prosperity.

·        Over the past few years much has changed in the energy industry.

·        The global supply-demand balance for energy has tightened, sending energy prices up across the board.

·        Concerns about energy security have risen along with prices, but so has awareness of the impact of climate change and the need to take action to reduce emissions.

·        Responding meaningfully and effectively to climate change while maintaining adequate, reliable and affordable energy remains a key challenge for the Government and the energy sector generally.

·        There is no doubt the two major themes of energy policy for the next few years are energy security and climate change.

  

2. Dimensions of Energy Security

·         Energy security is about our ability to meet the growing energy needs of the Australian community and industry – both in the short and in the long term.

·         Australia is also a strategic energy supplier to the Asia Pacific, holding the key to energy security in our region as well as here at home.

·         Continuing investment in energy resources and supply infrastructure is vital.

·         We know from experience that competitive markets and effective regulatory frameworks help deliver the right level of investment and in turn deliver ongoing access to adequate, reliable and affordable energy services.

·         It is the job of the national government to provide the leadership necessary to get the policy settings right to deliver those open, competitive markets and investment certainty.

·         As the Minister for Energy, this is my top priority.

  

3. Exploration  

·        Let me start with exploration.

·        Australia is gas and coal rich, but oil poor with one to two decades of known oil and condensate resources. 

·        By contrast, we have hundreds of years'worth of remaining gas and coal resources.

·        Therefore, the need for policy settings that promote exploration is most apparent in the oil sector where our future depends on finding Australia’s next Bass Strait. 

·        My Department is currently developing policy options to intensify mineral and petroleum exploration.

·        In the latter part of 2008, I will be bringing forward for Government consideration a package of proposals to significantly enhance Australia's exploration efforts.

·        Without new oil discoveries Australia could face a trade deficit in petroleum products of more than $25 billion by 2015 and domestic oil production could be as little as 20 per cent of our needs compared with 80 per cent in the 1990s.

·        The vast majority of Australia’s more than 50 sedimentary basins are largely unexplored.

·        Australia's easy oil has already been won and the simple fact is our frontier basins are higher risk and higher cost locations for exploration than other options around the globe.

·        One of the important jobs a national government can do is the preliminary scientific work to try to reduce risk and increase the relative prospectivity of new frontiers by providing a better information base for the industry.

·        I am pleased that Geoscience Australia is doing a very good job on this front.

  

4. Developing Resources

·        Not only do we have to find the next Bass Strait, we have to do more with our vast reserves of natural gas and coal seam methane.

·        Despite the many projects under consideration on both the west and east coasts, Australia still has only two LNG export projects two decades after the birth of the industry.

·        The outlook for LNG exports is rosy with exports already totalling $5 billion a year, but we must not underestimate the challenges of getting major gas projects off the ground.

·        And if we are to take full advantage of our coal resources, nothing is more important than the race to develop clean coal technologies to lower the emission intensity of coal-fired power generation.

·        We also have to be more innovative in the ways we use our natural gas and coal. My Department is actively engaged with industry to investigate what policy settings might be required to encourage the conversion of some of our gas and coal to liquid transport fuels like ultra clean diesel, using GTL and CTL technology.

·        Further, we will need to continue the safe development of our uranium resources which are so important to those countries less fortunate than Australia when it comes to energy options and who rely on nuclear power for clean development.

·        All of these issues bring their own policy challenges and require creative thinking on the part of governments and industry to solve them.

  

5. Stationary Energy Markets

·         Competitive markets and effective regulatory frameworks are the cornerstones of Australia's domestic stationary energy markets for electricity and gas.

·         Ongoing energy market reform is therefore vital to provide the right investment signals and ensure long-term gas and electricity supply security for Australia. 

·          I am looking to progress the Ministerial Council on Energy (MCE_ work program on time and to deliver real outcomes for the benefit of the Australian economy.

·         We cannot afford to slacken the pace of reform.

·         The MCE has agreed on several important reforms in recent months, including a detailed implementation plan for the establishment of the Australian Energy Market Operator; a consistent national minimum functionality for smart meters and the Australian Energy Market Commission's review of retail competition in South Australia's retail market.

·         One of AEMO's functions will be that of National Transmission Planner for electricity.

·         The Australian Energy Market Commission is developing a detailed plan for the implementation of this function and I am closely monitoring progress on this important work.

·         Transmission planning is especially important in the new carbon-constrained environment.

·         The successful integration of a potentially large increase in renewable energy supply, resulting from the 20 per cent Renewable Energy Target, will rely on effective transmission planning and congestion management strategies.

·         The MCE is also working hard to achieve COAG's commitment to mandate a roll-out of smart meters if they are deemed cost-effective.

·         In addition to the electricity market, the MCE recognises the importance of investment in domestic gas infrastructure.

·         The current reforms embodied in the National Gas Law and Rules are designed to improve the regulatory regime and encourage such investment.

  

6. The National Energy Security Assessment

·        To improve information in the energy sector, the Government made an election commitment to develop a National Energy Security Assessment (NESA).

·        The NESA will provide an integrated picture of the outlook for electricity, gas and liquid fuels supply and demand in five, ten and fifteen years.

·        My Department has commenced development of the NESA, and expects consultation with industry over the next three months.

·        I look forward to your constructive input to this process.

·        The NESA will be an important tool to identify weaknesses in the energy supply chain and barriers to future investment.

Protection of Critical Infrastructure & Response to Emergency Events

·        Whilst appropriately focussed investment will improve energy system resilience, we also need to manage the implications of accidental, environmental or intentional disruptions.

·        The Australian Government has in place a number of arrangements to deliver timely responses to emergency events in the energy sector, including gas and electricity supply emergencies.

·        During 2008, the Australian Government will be undertaking a National Liquid Fuels Vulnerability Assessment and a National Liquid Fuels Emergency Simulation Exercise: 'Catalyst 2008' to test our emergency preparedness in this important area.

 

7. Climate Change

·         The most significant policy challenge facing the energy sector today is climate change.

·         The Australian Government is serious about acting responsibly on climate change and has committed to reducing Australia's greenhouse gas emissions by 60 per cent on 2000 levels by 2050.

·         The Government is also serious about being economically responsible and we are committed to reducing emissions at least economic cost, whilst maintaining adequate, reliable and affordable energy supplies and the international competitiveness of Australia's industries.  

 

8. National Emissions Trading Scheme

·         The introduction of a domestic emissions trading scheme is a core element in the Australian Government's plan to reduce emissions.

·         An emissions trading scheme will provide a market-based incentive for technological deployment and energy efficiency.

·         It will allow the market to choose the most efficient way to meet our emissions targets.

·         Design of the scheme is arguably the most important challenge of the Government’s first term and I intend to work closely with my colleague, Senator the Hon Penny Wong, who as Minister for Climate Change, will lead this process.

·         The development of measures that will complement an emissions trading scheme include development and deployment of renewable and low emissions technologies; energy efficiency and conservation; and successful international engagement on energy efficiency and technologies.

·         I recently led Australia's participation at the Fourth Ministerial meeting of the G8 Gleneagles Plan of Action on Climate Change, Clean Energy and Sustainable Development where the development of clean energy technologies was an area of unanimous agreement.

 

9. Innovation and Development of Renewable and Low Emission Technologies 

·        A range of promising renewable and clean fossil fuel technologies are under development and my Department has a leading role in helping bring them to fruition.

·        The Government has committed over $1 billion dollars for renewable and low emission energy technology initiatives.

Renewable Energy Technologies

·        The $500 million Renewable Energy Fund will enhance the development, commercialisation and deployment of renewable energy technologies in Australia.

·        Geothermal energy has the potential to contribute base-load electricity to Australia’s energy supply without generating greenhouse gas emissions and this fund includes $50 million dedicated to the development of the geothermal industry.

·        In addition, my Department is finalising the Geothermal Industry Development Framework and Technology Roadmap, following consultation with industry.

·        The $150 million Energy Innovation Fund will focus on developing Australian research and development capability in clean energy technologies.

·        It includes $50 million for solar thermal research; $50 million for photovoltaic research and development; and $50 million for general scientific research into clean energy technologies in areas such as energy efficiency and storage, and hydrogen.

Clean Coal Technologies

·        As I mentioned earlier, coal will continue to make a major contribution to Australia's energy needs well into the future and therefore we need to urgently reduce greenhouse gas emissions from coal fired electricity generation.

·        Clean coal technologies involving carbon capture and storage will play a vital role in meeting future greenhouse constraints.

·        A nationally coordinated effort is needed to bring forward the commercial availability of these technologies. 

·        Through the National Clean Coal Initiative (NCCI), I will be working with industry, state governments, researchers and stakeholders to develop a national framework that supports the accelerated development and demonstration of clean coal technologies.

·        This includes the $500 million National Clean Coal Fund.

·        Carbon dioxide capture and geological storage is one of a range of options that will help Australia achieve a significant reduction in greenhouse gas emissions.

·        Australia has significant geological storage potential, particularly in our offshore sedimentary basins.

·        The Government committed as part of the National Clean Coal Initiative to implement a regulatory regime to provide access and tenure to offshore Australia for geological storage.

·        I am hoping that amendments to the Offshore Petroleum Act 2006 will be passed in time for the Government to release acreage for exploration in 2008, making Australia one of the first countries in the world to establish a regulated Carbon Capture and Storage regime.

 

10. Energy Efficiency & Conservation

·                Energy efficiency and conservation has an immediate impact on energy wastage and greenhouse gas reductions and is thus a highly effective complementary measure to national emissions trading scheme.

·                ABARE predicts that energy efficiency measures could contribute up to 55 per cent of Australia's emission reduction targets by 2050.^[1]

Energy Efficiency Opportunities Program

·                The Energy Efficiency Opportunities program administered by my Department seeks to improve industrial energy efficiency by transforming the way businesses understand, use and manage energy.

·                The program targets Australia's top 200 energy intensive corporations which together represent 45 per cent of the nation's end energy use.

·                Initial trial assessments of just 12 sites have led to over 100 energy efficiency opportunities being identified for implementation.

·                These will generate 0.8 petajoules in energy savings.

·                To put it in context that’s the energy use of 16,000 households.

 

Concluding Remarks

We live in an historic era of global economic expansion, particularly on our doorstep in the Asia-Pacific – home of the world’s four largest economies (in purchasing power parity) – the United States, China, India and Japan.

Together with increasing concern about climate change, the insatiable thirst for energy means that energy security is one of the big issues confronting Australia and the world today.

For access to energy resources is the key to continuing economic growth and the challenges of meeting unprecedented global energy demand – in a sustainable way – are great.

Australia has to not only look to its own future when it comes to energy security and cleaner energy technology, it has to be part of the solution to the environmental impact of economic growth in the region.

As an energy exporting nation, we cannot protect our own economic future otherwise.

This is a very exciting and challenging time to be the Minister for Resources and Energy, and I look forward to working with all of you over the coming years towards a sustainable energy future for Australia and our region.

Thank you.