Energy

This Energy White Paper sets out a strategic policy framework to guide the development of Australia's energy systems—our means of producing, supplying and using energy and energy-related services—into the next decade and beyond.

In doing so, it provides a set of clear policy positions and priorities set against an assessment of Australia's long-term energy needs and the challenges that may emerge. It also identifies measures by which we can judge progress towards our goals.

1.3.1 A long-term national vision for energy

At its core, the Australian Government's energy policy framework is based on a clear vision of building a secure, resilient and efficient national energy system¹ that:

• provides accessible, reliable and competitively priced energy and energy services for all Australians
• enhances Australia's domestic and export growth potential
• delivers clean and sustainable energy².

This vision and the supporting policy framework are based on the imperative of striking a balance between energy supply and demand while also meeting energy security, economic development and clean energy transformation goals.

Providing competitively priced energy that minimises costs for households and businesses while also providing a commercially attractive environment for investors is at the heart of that equation.

The Australian Government believes that market-based approaches are the best means to efficiently deliver policy outcomes, promote competitive efficiencies and provide the flexibility needed to respond to future developments. This position has been reaffirmed by evidence from over 30 years of continuous reform to our energy markets, as well as the comprehensive analysis undertaken during the design of Australia's carbon pricing framework.

The government also recognises that markets have natural limitations and require effective and efficient policy and regulation to guide them and ensure that they function well, and to address areas where markets cannot deliver as required. Such interventions should always be fit for their context, justifiable and transparent.

1.3.2 Policy principles

This approach is encapsulated in the following overarching policy principles to guide the development of energy policy:

1. Australians have the right to clean, secure, reliable and competitively priced energy.
2. Energy policy and associated actions should promote long-term efficiency and productivity and enhance national wellbeing.
3. Energy is most efficiently delivered through well-functioning markets supported by effective and efficient policy and regulation.
4. Energy frameworks and markets should operate in the long-term interests of consumers and provide appropriate consumer protections and a commercially attractive, stable and predictable investment environment.
5. Government energy policy interventions should be transparent, cost-effective, justifiable against objectives and targeted to address identified market gaps or failures.
6. Energy policy development and application should take into account the full range of economic, social and environmental considerations.
7. The Australian Government will work cooperatively with other Australian jurisdictions to develop and implement national energy policy and will engage internationally with governments and organisations to promote Australia's energy interests.
8. Australia will meet its international commitments.

1.3.3 Key elements of energy policy

Australia has a mature and complex energy system reaching all sectors of the economy and society. The system comprises producers, networks, retailers, customers, regulatory bodies and governments, as well as providers of capital and technology.

The Energy White Paper therefore covers energy security, the development of our energy resources, clean energy development and deployment, the operation of Australia's energy markets, and demand-side and consumer participation mechanisms.

This system does not operate in isolation: an intersecting set of social, economic and environmental frameworks must be properly understood and considered. The energy policy framework therefore also includes aspects such as the need for international engagement, sustainable development, improving our energy information base and promoting social and workforce opportunities. There are many other aspects, but these are considered the most important for this White Paper.

The key elements of Australia's energy policy framework, and thus the Energy White Paper, are shown in Figure 1.1.

Figure 1.1: Key elements of national energy policy

1.3.4 Priorities for energy policy

The objectives, principles and the policy challenges identified in subsequent chapters of the Energy White Paper lead to four core policy priorities:

• delivering better energy market outcomes for consumers
• accelerating our clean energy transformation
• developing Australia's critical energy resources, particularly gas resources
• strengthening the resilience of Australia's energy policy framework.

Delivering timely action under these broad priorities will promote better outcomes for Australian households and businesses though enhanced energy security, more efficient and competitive markets and service delivery, improved productivity, timely and safe development of our energy resources and a cleaner energy base. More specific actions under each priority are discussed in subsequent chapters.

1.3.5 The need for ongoing review

Regular review and assessment of Australia's energy policy and energy security settings is needed to ensure that our energy security is maintained, particularly during this period of significant transformation and investment (IEA 2012a). Periodic reviews should be regular, but not so frequent as to cause market uncertainty or instability.

In the past, the Australian Government has reviewed and updated national energy policy through ad hoc White Paper or other processes. Those reviews have been relatively infrequent, leading to a build-up of policy pressures over time and resulting in a need for greater clarity in overall policy objectives and direction.

The government will therefore conduct a regular four-year cycle of strategic policy review, starting in 2016. The reviews will take into account changes in markets, progress in the commercialisation of important energy technologies, and trends or projected developments in key aspects of energy delivery, including investment in generation capacity and progress in energy market reforms and in the development of critical domestic energy resources such as gas.

The reviews will formally align with the National Energy Security Assessments (see Chapter 4: Energy security). They will also take into account and inform other relevant policy processes and reviews across government, in particular where other policy areas (for example, climate policy) intersect closely with energy policy.

The reviews will also assess progress against key energy and related policy goals (as outlined in this White Paper), evaluate the resilience and preparedness of our energy security framework, and re-examine national energy policy settings in the light of current and expected global and national energy developments. Future reviews will be undertaken in consultation with the states and territories, industry and the public.

¹ In this White Paper, the term 'energy system' is defined inclusively to encompass the production, supply and use of energy as well as associated services.

²'Clean and sustainable energy' refers to sources of energy, technologies or processes that produce lower or zero greenhouse gas emissions relative to conventional counterparts and that meet appropriate social, environmental, health and safety standards.