Energy

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

The Energy White Paper defines a comprehensive strategic policy framework to guide the further development of Australia's energy sector over the next four years. This framework is set against a review of Australia's energy needs and goals over the period to 2035.

At its core, the policy framework is based on a clear vision of building a secure, resilient and efficient energy system that:

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

The Australian Government has identified four identified priority areas that will strengthen Australia's ability to fully realise this objective:

• 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 better energy market outcomes for consumers

Past reforms have provided a strong foundation for competitive national energy markets. However, several major areas of reform remain outstanding.

In the face of rising cost and transitional pressures and the challenge of transforming energy markets, we need to ensure that our market settings and regulatory frameworks are delivering better benefits to consumers. We also need to continue to improve our energy productivity and provide for a better demand responsiveness.

For Australia's electricity markets, the government will pursue an ambitious package of reform with the states and territories to improve market efficiency, regulation and competition and to deliver a wider range of services and products for consumers. Key areas of action include:

• strengthening market institutions and governance by:

  • ensuring that our energy market bodies have the necessary capacities, capabilities and accountabilities to perform their assigned functions

  • levelling the playing field by removing conflicts of interest where they arise from the ongoing public ownership and governance of energy businesses

  • ensuring that the interests of consumers, including vulnerable consumers, are better represented in market development and decision-making processes.

• improving network efficiency and performance by:

  • actioning recommendations from current reviews to ensure that the regulatory framework, including appeals or review processes, provides for efficient investment outcomes

  • ensuring greater transparency in network investment, balancing the need to deliver a consistent standard of reliability at minimal cost, and improving performance, connections and network services for the benefit of consumers.

• empowering consumers by:

  • ensuring that markets are enabled and incentivised to provide consumers with better information and choice about their energy-use decisions, as well as a greater ability to participate in the energy market through demand-side opportunities and the deployment of smart meters, other advanced energy management applications and smart appliances

  • ensuring that consumer protections are maintained through the full implementation of the National Energy Customer Framework.

• ensuring competitive and efficient wholesale and retail markets by:

  • seeking a clear commitment and timeframe for deregulating retail price controls where effective competition exists, or developing a pathway to effective competition and deregulation where it does not

  • developing national guidelines that provide a benchmark approach to a 'fair and reasonable' feed-in tariff for micro-generation to encourage competition, and clear rights and obligations for connections

  • rationalising policies and programs that are not complementary to a carbon price, or are ineffective, inefficient or impose duplicative reporting requirements on business.

See Chapter 10: Energy markets: electricity and Chapter 11: Energy productivity for a full list of actions to benefit electricity consumers and businesses.

To further develop our gas markets and to ensure the overall adequacy of supply and forward investment, the Australian Government will work closely with the states and territories to implement an ambitious gas market development program. Key areas of action include:

• developing options for a national gas supply hub trading model to enhance transparency and the reliability of supply

• exploring the merits of reviewing pipeline capacity trading, including potential mechanisms for utilising unused (but contracted) capacity

• identifying additional market information and potential reporting mechanisms to promote the development of more robust gas market arrangements

• engaging with key stakeholders to promote a long-term vision for the development of Australia's gas markets as a framework for guiding near-term market reform directions.

The government will also closely monitor developments in Australian gas markets, including the emergence of potential impediments to adequate domestic supply, and will actively engage with gas suppliers to identify options to improve liquidity in key markets.

See Chapter 9: Energy markets: gas for a full list of actions to develop our gas markets.

Because of ongoing changes in our liquid fuel markets, governments must maintain the right balance in our policy settings to ensure that we attract investment in new supply infrastructure, maintain access to diverse and reliable supply chains, and address regulatory or policy barriers that impede the efficient market-based development of alternative fuels or technologies. Key areas of action include:

• assessing Australia's liquid fuel supply vulnerabilities associated with the decline in domestic refining capacity, and continuing to monitor developments in the liquid fuel market

• continuing to work with industry and, guided by the Alternative Transport Fuels Implementation Advisory Group, pursuing a market-led approach to the development and deployment of alternative transport fuels

• undertaking biennial Australian transport fuel technology assessments and improving the quality of our liquid fuel statistics (possibly through mandatory reporting).

See Chapter 8: Energy markets: liquid fuels for a full list of actions to improve our liquid fuel markets.

Accelerating our clean energy transformation

The pace of Australia's clean energy transformation will be determined through the interaction of carbon, renewable energy certificate and energy prices in the market and support for innovative technologies. The ability of emerging technologies to establish their commercial reliability and competitive cost will determine market outcomes.

Accelerating the pace of commercialisation for new clean energy technologies is critical if the market is to have early deployment options that could reduce the longer-term cost of meeting national greenhouse gas abatement goals.

Through the Clean Energy Future Plan and earlier commitments, the Australian Government has already put in place the key mechanisms to drive a transformation to cleaner energy. They include:

• pricing carbon emissions
• the 20% by 2020 Renewable Energy Target
• legislating the $10 billion Clean Energy Finance Corporation
• establishing the $3.2 billion Australian Renewable Energy Agency
• the $1.68 billion Carbon Capture and Storage Program
• the $370 million National Low Emissions Coal Initiative
• the $300 million Low Carbon Communities Program
• the $200 million Clean Technology Innovation Program.

These policies are intended to work together to drive the shift to cleaner energy sources and to be mutually supporting. For example, the Australian Renewable Energy Agency will enhance research and development into renewable energy, the Clean Energy Finance Corporation will help overcome financial barriers to commercialisation, and the Renewable Energy Target will work alongside the carbon price to drive deployment in the market.

We must continue to identify and overcome potential market gaps or barriers to the efficient take-up of clean energy technologies and processes. This might include identifying and addressing problems in network connection and integration and ensuring that there are appropriate regulatory standards to support take-up. Key areas of action include:

• expediting the implementation of clean energy programs to ensure continued support for innovation and commercialisation

• responding to any recommendations by the Climate Change Authority's current review for improving the efficiency and effectiveness of the Renewable Energy Target scheme in achieving its 2020 target

• monitoring the impacts of increased levels of intermittent renewable generation on network stability, particularly the need for any new requirements for the structure and operation of networks

• identifying the need for nationally consistent and supportive regulatory arrangements for new clean energy technologies and working with states and territories to promote the efficient development and take-up of clean energy.

See Chapter 6: Clean energy for a full list of actions to accelerate the clean energy transformation.

Developing Australia's critical energy resources, particularly gas resources

Competition among nations for investment and market share in key energy export markets is growing as many new suppliers seek to take advantage of strong demand. While Australia has been enormously successful in capturing investment in our energy resources to date, we will need to work hard to attract further projects. To remain competitive, we must maintain and improve our standing as a reliable and competitively priced energy supplier.

In some markets, there are ongoing tensions between export and domestic demand for important energy resources. We need to manage this while maintaining sound market arrangements, as both factors have critical roles in our future economic development.

The Australian Government is working on reforms to ensure the timely and sustainable development of our energy resources. Key areas of action include:

• streamlining environmental regulations that apply across Australian and state government jurisdictions, including by working with states and territories through the Council of Australian Governments and the Business Advisory Forum to improve business regulation

• pursuing an active approach to the development of its offshore gas resources, including by:

  • updating offshore retention lease arrangements to continue to promote transparency and the timely development of resources

  • paying close attention to the potential for offshore LNG projects to supply the domestic gas market when assessing retention leases or granting production licences

  • examining the possible introduction of cash bidding for offshore petroleum acreage release.

• promoting the safe and sustainable development of our energy resources, particularly our gas resources, by:

  • working through the SCER to develop a nationally harmonised regulatory framework for the CSG industry, and undertaking additional actions to develop a better understanding of the direct and cumulative impacts of proposed coal mining and CSG developments on groundwater and the environment

  • working through the SCER to develop a world-class multiple land-use framework to promote coexistence, rather than exclusion, as a key principle in land-use policy.

• enhancing Australia's energy resource prospectivity by:

  • supporting the continued provision of high-quality pre-competitive information through Geoscience Australia

  • updating the Australian Energy Resource Assessment every three years from 2013

  • working with states and territories through the SCER on options to improve mineral resource and ore reserve disclosure by companies not listed on the ASX, and developing the National Exploration Strategy to address Australia's greenfield mineral exploration challenge.

• capturing opportunities for local industry and communities by:

  • implementing changes to Australian Industry Participation plans and working with industry to enhance firms' competitiveness and ability to win work and integrate with global supply chains

  • continuing to work with the energy resources sector and Indigenous communities and groups to promote economic and social opportunities.

See Chapter 5: Energy resources for a full list of actions to develop our energy resources.

Strengthening the resilience of Australia's energy policy framework

The Australian Government recognises that there are substantial changes underway in Australian and global energy markets. Strengthening the resilience of our energy policy frameworks through regular and predictable strategic assessments of key policy settings will provide policymakers and businesses with a better ability to anticipate and respond to emerging risks or changing circumstances. This is recognised in the IEA's recent review of Australia's energy policies (IEA 2012a).

The government will strengthen the resilience of Australia's energy policy framework by:

• institutionalising a regular four-yearly national strategic review of energy policy from 2016, providing an opportunity to assess overall progress in meeting our national energy goals and to identify emerging risks or changing circumstances and consider appropriate responses

• undertaking the National Energy Security Assessment on a two-yearly basis, starting from 2014, and reviewing the assessment framework with the aim of providing a more systematic assessment of energy security risks

• undertaking the National Energy Risk Preparedness Audit, in collaboration with states and territories, industry and market bodies, across the energy sector as part of the National Energy Security Assessment, to test the appropriateness and effectiveness of response mechanisms to manage critical risks to the energy sector

• improving Australia's energy information base through more regular assessments of resources, technologies and market conditions, including work to streamline and better coordinate existing data collection and assessment activities to reduce the burden on business. See Chapter 4: Energy security and Chapter 14: Energy information for full list of actions to make the energy policy framework more resilient.