Degree of reliance on imported energy:
Australia is a net importer of crude oil and petroleum products, but a net exporter of LPG. More than 60% of crude oil production is exported, while around 70% of Australia’s refinery feedstock is imported. This is because a large proportion of Australia’s oil production is based off the north-west coast, which is closer to refineries in Asia than to domestic refineries on the east coast.
In fiscal year 2009-2010, Australia had net total oil imports of about 440,000 bbl/d. Australia's crude oil and condensate imports mainly come from South East Asia; Malaysia, Indonesia, and Vietnam are currently the largest sources, while Australia's refined product imports come largely from Singapore. In the same period, Australia exported 311,000 bbl/d of crude oil and condensates and 47,841 bbl/d of LPG, amounting to about 70% of its total oil production of 511,304 bbl/d. These volumes were exported to Asian markets, mainly Singapore, South Korea, China, and Japan. Australia's 2009-2010 gross exports of refined petroleum products were 14,786 bbl/d, about 3% of its total oil production; its largest markets were New Zealand and Singapore.
Total coal production in 2007 was 218,406 ktoe, around 73% of which was exported. Australian coal production increased at an average annual rate of 4.1% between 2000 and 2007, underpinned by strong growth in demand and the addition of new capacity. Australia exported about 70% of its coal production in 2009-2010, or about 322 MMst. Japan was the destination for 43% of Australia’s coal exports during the same period, followed by South Korea (15%), China (14%), and India (11%). About 8% of Australia's coal exports went to Europe.
Main sources of Energy:
Total installed electricity capacity (2009): 56,000 MW
Natural Gas/ Multi-fuel: 26%
Other Renewables: 4.5%
Total primary energy supply (2009): 126,941 ktoe
Oil and products: 32%
Natural gas: 22%
Total primary energy consumption (2008-2009)
Petroleum products: 34%
Natural gas: 21%
In 2008, total primary energy supply was 5,417.8 PJ, of which renewable sources accounted for 303.3 PJ (5.6%), and energy self-sufficiency was 232.6%.
Australia has abundant and diverse energy resources. It is the world’s ninth largest energy producer, accounting for around 2.4% of world energy production. In 2008-2009, Australia’s energy production was 17,769 petajoules and net energy exports accounted for 68% of domestic energy production. It is one of only three net energy exporting nations in the OECD.
The main fuels produced in Australia are coal, uranium and natural gas. Australian resources of uranium account for 47% of total world resources while Australian coal resources make up 10% of the world total.
In 2008-2009, Australia’s energy production was dominated by coal, which accounted for 54% of the total energy production in energy content terms, followed by uranium with a share of 27% and natural gas with a share of 11%. Crude oil and liquefied petroleum gas (LPG) represented 6% of total energy production, and renewable represented 2%.
Australia was the world’s largest coal exporter and, according to Cedigaz, the fourth largest exporter of liquefied natural gas (LNG) in 2010, after Qatar, Indonesia, and Malaysia. It is a
net importer of crude oil and refined petroleum products, but a net exporter of liquefied petroleum
gas (LPG). Hydrocarbon exports accounted for 34% of total commodity export revenues in
its fiscal year 2009-2010. Natural gas production in Australia reached 1.6 Tcf in 2010 and could triple by 2020. About half of natural gas production is converted into LNG for export and the other half is consumed domestically.
Australia accounts for around 6% of world black coal production and is the fourth largest producer after China, the United States and India. Australian coking and steaming coals are high in energy content, and are low in sulphur, ash and other contaminants. Around 87% of Australia’s black coal production is destined for export. Coal is Australia’s largest commodity export, earning AUD 44 billion in 2010–11. It is also an important component of domestic energy supplies, accounting for around 75% of fuel used in electricity generation. Australian coal production has been increasing in the last decade, underpinned by strong growth in demand and the addition of new capacity.
In 2008-2009, around 261 terawatt hours of electricity (including off-grid electricity) was generated, mostly from thermal sources. Coal accounted for 77% of total electricity generation, followed by natural gas (15%), hydro (4.7%), wind (1.5%), biomass, biogas and solar (1.2%) and oil (1.0%). Coal is the major source and expected to remain so, reflecting its wide availability and relatively low cost. However, given the number of gas-fired, Coal-Seam Methane-(CSM)-fired and wind projects under development, those sources are expected to account for an increasing proportion of total electricity generation.
In 2008, Australia generated 257.1 TWh of electricity, of which renewable sources accounted for 8 TWh (7%).
Extent of the network:
The vast majority of the population of Australia has access to electricity, despite the very low population density of the country. The national transmission grid comprises of 27,640 km of transmission lines and cables, with 10,300 km of these operating at above 330 kV. There are two separate grids in the country, the eastern grid operating under the National Electricity Market (NEM), and the South-West Interconnected Supply Area, serving Western Australia. The vast majority of the transmission infrastructure is located around the major load centres, with no connection between Western and Southern Australia. In addition, Tasmania is connected to the Victorian grid through an unregulated interconnection under the NEM.
The NEM is connected by seven major transmission interconnectors. These interconnectors link the electricity networks in Queensland, New South Wales, Victoria, South Australia and Tasmania. The NEM electricity transmission and distribution networks consist of around 790 700 km of overhead transmission and distribution lines and around 113 700 km of underground cables.
In 2009, the Australian government released the National Energy Security Assessment (NESA), which assessed the challenges that could affect current and future energy security. Energy security was defined to be the adequate, reliable and affordable provision of energy to support the functioning of the economy and social development, where adequate is the provision of enough energy to support economic and social activity, reliable is the provision of energy with minimal supply disruptions, and affordable is the provision of energy at a price that does not affect the competitiveness of the economy and encourages investment in the sector.
The NESA determined that Australia’s energy security has declined compared with the assessment conducted as part of the 2004 Energy White Paper process, because of the need to address new challenges (mainly, reducing carbon emissions). The challenges that governments need to address to maintain or improve Australia’s energy security include the need for further market reforms and greater infrastructure resilience, the rising cost of investment capital globally, and the transition to a lower-carbon economy. The NESA is a key input into the development of the new Energy White Paper.
Between 2000 and 2007, gas supply grew fastest, at an average annual rate of 4.1%, followed by coal (1.9%), others (1.5%) and oil (1.3%).
The rate of electricity T&D losses stood at 7% in 2009, below the world average.
Potential for Renewable Energy:
As of 2007, Australia generated 5.6 billion kWh of electricity from renewable sources. Under the previous Mandatory Renewable Energy Target (MRET), which targeted 9.5 billion kWh of the total electricity generation from renewable sources, solar hot water, wind energy and solar electricity experienced the greatest growth. Currently, the target is set at 45,000 GWh of new renewable electricity generation by 2020 under the Renewable Energy Target (RET), which began on 1 January 2010.
Australia’s renewable energy currently accounts for less than 5% or 244 PJ of total energy consumption. A recent decline is mainly due to low biomass production, which was affected by its low energy content and high handling and processing costs.
The majority of Australian territory receives a high level of direct solar radiation, sufficient to make it one of the world's best prospects for concentrating solar power (CSP) plants. Average insolations across the Australian land mass are 5.0-7.5 kWh/m2/day, rising to as much as 8.5 kWh/m2/day in some Northern areas. Current utilisation of the technology is low, with 40 MW of linear solar reflectors installed in New South Wales. However, many new solar projects are planned for the country, particular concentrating on CSP projects.
Assessments made in 2008 state that the potential capacity for on-shore wind-generated power in Australia is 91,760 MW, capable of producing 241 TWh/year of electricity, at a capacity factor of 30%. The majority of this potential is concentrated in Western and Southern Australia, as the coastline lies in the “roaring forties” region of high coastal wind strengths, with hundreds of sites having average wind speeds of 8-9 m/s at 50m. Current installed capacity, as of December 2009, is 1,877 MW, with South Australia possessing the majority of capacity. Wind power is expected to grow from 1 TWh to 4 TWh over the same period.
The potential for biomass energy production from wood wastes and bagasse has been identified, although concerns are high amongst the population and government as to the “food vs. fuel” debate, due to the recent food price crisis. There are currently three commercial producers of fuel ethanol in the country, all on the eastern coast. Current legislation imposes a 10% cap on ethanol blend for fuels, and E10 (90% unleaded petrol, 10% ethanol) is commonly available around major sources of ethanol production, for example in Queensland.
Hydro-electric resources are largely used for electricity generation, and account for about 95% of the total share of renewable electricity generated, although hydropower generation has been below average for the past few years due to continuing drought. Despite the strong contribution made by the resource, it is projected to grow by roughly 0.6% per year, reaching about 18 TWh by 2019–2020.
Forays are being made into the establishment of wave power generation in the country, including a 50MW trial plant at Douglas Point in South Australia.
In Australia, geothermal resources are primarily found in South Australia and Tasmania and along the southern Victorian coastline. Despite vast resource potential, only 80 kW at one geothermal station is currently on line. This small plant built in the early 1990s produces one-third of the power for the town of Birdsville, Queensland. In 2009, it was reported that the government of Queensland will invest up to AU$ 4.3 million to upgrade the station.
Potential for Energy Efficiency:
Australia’s per capita energy consumption is relatively high, at about 6 toe, more than three times higher than the world average. Australia’s energy consumption increased at an average rate of 1.7% a year over the 10 years, compared with 2.8% over the previous 10 years. In 2008-2009, energy consumption increased by 0.2% to 5,773 petajoules. Australia’s final energy consumption in 2008 was 76,709 ktoe. The transport sector accounted for 36% of the total, industry 35% and the other sectors, which include residential and commercial, 24%. By energy source, petroleum products accounted for 49% of consumption, electricity for 24%, natural gas for 16%, and coal for 5%.
Per capita electricity consumption was 10,000 kWh in 2009, which is nearly four times as high as the world average. The share of electricity in final consumption has been increasing since 2000 and was around 23% in 2009. Electricity consumption has been increasing rapidly, in particular since 2003, and rose by 2.6%/year on average over the period 1990-2009 while it decreased by 2.1% in 2009 due to the economic crisis. Industry is the main user of electricity with a stable share of over 45% of electricity consumption.
The potential for more efficient practices in energy use has been identified in Australia. A 2002 study by Energy SA concluded that up to 20% of the then-current energy use could be economically saved through demand-side management measures over a 20-year period. This amounted to 11.16 PJ of electricity savings, and a further 5.26 PJ of gas savings, equating to AU$425 million per year.
The efficiency of the power sector decreased up to 2002 but has been increasing in recent years, owing to switches to natural gas in the power generation mix and the spread of gas combined cycle units. Since 2006, all additional thermal capacity has been gas turbines and, more recently, gas combined cycle power units. At approximately 34%, the average efficiency of thermal power generation is not very high, because coal plays a significant role in the country’s fuel mix
Between 1990 and 2008 the energy intensity of industry decreased by 0.7%/year. The steel and chemical industries achieved a 1%/year reduction in energy consumption per tonne produced over the period. The decrease in energy consumption per tonne of paper produced over the period was greater, at around 1.5%/year. With the exception of the paper and non-metallic minerals industries,
which saw their energy intensity levels increase, the sector’s energy intensity decreased more sharply over the period 2000-2008.
According to the Department of Climate Change and Energy Efficiency (DCCEE), estimated energy savings of 32,000 GWh per year by 2020, more than 14% of all electricity generated in Australia, can be delivered through measures such as increasing energy efficiency requirements in the building codes, ensuring the availability of environmental information on the property market, and regularly introducing, reviewing and increasing the standard of energy efficiency which a wide range of products must perform to.
- Rigorous EE opportunity assessments for energy-intensive businesses (recurrent).
- National Framework for EE (NFEE): A. EE Opportunity Programme (EEO) for large industry (200+ employees), including EE assessments and business response. B. Commercial - Industrial capacity building package: guidelines, audits and advice.
- Training the industry in EE: ensuring consistent standards.
- Best-practice guidelines for power plants.
- White certificate schemes in Victoria and New South Wales.
- Residential EE scheme in South Australia.
- Green Vehicle Guide with comparative environmental ratings and figures.
- Mandatory fuel consumption labels.
- Rail transport tax credit.
- NFEE: expanded minimum EPS (MEPS) and labelling programme for electrical and gas appliances as part of the E3 programme.
- EE standards in the national building code: Nationwide House Energy Rating Scheme (NatHERS 2007).
- Mandatory disclosure of buildings’ EE (commencing in 2010) and mandatory disclosure of energy, GHG and water performance at the time of sale or lease (starting May 2011).
- Maximum standby power levels for home entertainment equipment (from 2008).
- Import restriction on inefficient light bulbs (2009). Minimum EPS for lamps (Nov 2009). Minimum EPS to extra low voltage / decorative lamps (Oct 2010).
- National Hot Water Strategic Framework (NHWSF). Phase-out conventional electric heaters, incentivize EE water heaters.
- Green Loans Programme. Promote EE by providing free home sustainability assessment (600,000+ were conducted). Transition to the New Green Start Programme in February 2011.
- Green Leasing Project: EE policy for commonwealth, state and territorial government offices.
- Education and comprehensive guides.
- Solar Cities, Solar Schools, and other demonstration projects (e.g. Smart Grids).
- EE program for government operations.
- Australian Carbon Trust incl. EE scheme.
The current structure of Australia’s eastern electricity market was shaped by industry reforms that began in the early 1990s. A key element of these reforms was the National Electricity Market (NEM), which began operation in 1998. The NEM allows market determined power flows across the Australian Capital Territory, New South Wales, Queensland, South Australia, Victoria and Tasmania. Western Australia and the Northern Territory are not connected to the NEM, primarily because of their geographic distance from the east coast. The NEM operates as a wholesale spot market in which generators and retailers trade electricity through a gross pool managed by the Australian Energy Market Operator (AEMO), which aggregates and dispatches supply to meet demand. In addition to the physical wholesale market, retailers may also contract with generators through financial markets to better manage any price risk associated with trade on the spot market.
The Australian Energy Market Operator (AEMO, www.aemo.com.au) was established on 1 July 2009 by the Council of Australian Governments (COAG) and developed under the guidance of the Ministerial Council on Energy (MCE) as a key component of ongoing energy market reforms. It is incorporated as a company limited by guarantee under the Corporations Act. The ownership of AEMO is comprised of 60% government members and 40% industry members. AEMO operates under the governance of a Board comprised of nine skills-based non-Executive Directors and the Chief Executive Officer.
AEMO is the amalgamation of six electricity and gas market bodies: the National Electricity Market Management Company (NEMMCO), Victorian Energy Networks Corporation (VENCorp), the Electricity Supply Industry Planning Council, the Retail Energy Market Company (REMCO), the Gas Market Company and the Gas Retail Market Operator.
The AEMO’s functions include managing the NEM and the retail and wholesale gas markets in eastern and southern Australia; overseeing the system security of the NEM electricity grid and the Victorian gas transmission network; economy-wide transmission planning; and establishing a short-term trading market for gas from 2010.
AEMO is also responsible for improving the operation of Australian energy markets. It will prepare and publish a 20-year National Transmission Network Development Plan (to provide more information to market participants and potential investors), as well as the Electricity Statement of Opportunities and the new Gas Market Statement of Opportunities (to forecast long-term supply and demand). It will also maintain the Gas Market Bulletin Board. AEMO now oversees Australian energy market governance in cooperation with the Australian Energy Market Commission, as the rule-making body, and the Australian Energy Regulator, as the regulating body.
AEMO also operates National gas market (which currently includes the gas Bulletin Board but is expanding to include Short Term Trading Markets in some states), the Victorian Wholesale Gas Market and Retail Gas Markets in Victoria, New South Wales and South Australia. Each of these energy markets operates under its own set of rules and involves different sets of participants. While wholesale electricity and gas markets operate as short term trading links between producers and consumers, retail gas markets operate to fulfill contractual arrangements based on metered flows at supply inputs and retail outlets. A national wholesale gas market platform was established when the Short Term Trading Market began operations in September 2010. This links hubs in New South Wales and South Australia and operates alongside Victoria’s established Wholesale Gas market, with the potential to link all state based hubs in the longer term.
The Australian government has no ownership stake in the domestic oil and natural gas industry. Australia’s management of oil exploration and production is divided between the states’ and the Federal (Commonwealth) governments. Australia’s states manage the applications for onshore exploration and production projects, while the Commonwealth shares jurisdiction over Australia’s offshore projects with the adjacent state or territory. In place of a national oil company, the Australian government supports privately held Australian companies, of which the largest are Woodside Petroleum and Santos. ExxonMobil is the largest foreign oil producer; other international oil companies include Shell, Chevron, ConocoPhillips, Japex, Total, BHP Billiton, and Apache. Australia has a well-developed domestic oil and gas pipeline network.
Australia has around 107 privately owned coal mines located throughout the country. International companies such as BHP Billiton, Anglo American (UK), Rio Tinto (Australia-UK), and Xstrata (Switzerland) play a significant role in Australia's coal industry.
Structure / extent of competition:
The NEM comprises both a wholesale sector and a competitive retail sector. All electricity dispatched must be traded through the central pool, where output from generators is aggregated and scheduled to meet demand. Retail competition is in place in the country.
AEMO is an independent, member-based organisation. The NEM is separated into generation, transmission, distribution and retail supply components. Some assets that comprise the NEM’s infrastructure are owned and operated by state governments, and some are owned and operated under private business arrangements. AEMO operates within a broader market governance structure alongside the Australian Energy Market Commission (AEMC) and the Australian Energy Regulator (AER). With AEMO’s establishment in 2009, Australia became one of the first countries in the world to establish highly competitive and transparent gas and electricity markets underpinned by strong governance structures. While individual energy markets remain separate with their own participants and jurisdictions, evolution in market operations can now build on the consistent framework of operational rules and underlying systems to ensure maximum efficiency, combined with maximum integrity or energy resource development.
The Australian domestic gas market consists of three distinct regional markets: the eastern market; the western market; and the northern market. The geographical isolation of these markets makes interconnection costly and currently uneconomic. Until recently, and with the exception of Victoria, wholesale gas was sold under confidential long-term contracts between producers, pipeline operators, major users and retailers. The Victorian Wholesale Gas Market was established in 1999 to increase the flexibility of market participants in buying and selling gas.
In September 2010, the Sydney and Adelaide hubs of the Short Term Trading Market (STTM) commenced operation. The STTM is a day-ahead wholesale spot market for gas that aims to increase price transparency and improve efficiency and competition within the gas sector. Additional STTM hubs are intended, with a Brisbane hub expected to be operational by late 2011. Domestic gas market reform over the past decade has increased transparency and competition in the sector, as well as brought industry regulation under the national energy framework, in line with electricity. Ministerial Council on Energy initiatives such as the National Gas Law and National Gas Rules, National Gas Market Bulletin Board (BB) and the STTM for gas have provided a framework for greater transparency. The BB (www.gasbb.com.au), which commenced operation in July 2008, is a website publishing daily supply and demand information on major gas production plants, storage facilities, demand centres and transmission pipelines in southern and eastern Australia.
Existence of an energy framework and programmes to promote sustainable energy:
Australia’s energy policy framework changed significantly in 2009, through amendments to existing policy and legislation. Developments included the Review of the Australian taxation system; updating the Energy White Paper 2004; the release of the National Energy Security Assessment; the establishment of the Australian Energy Market Operator; the release of the National Strategy for Energy Efficiency; the passing of the Renewable Energy (Electricity) Amendment Bill 2009 and the Renewable Energy (Electricity) (Charge) Amendment Bill 2009 to expand the renewable energy target; and the proposal for an emissions trading scheme.
The Australian government is committed to a long-term goal of reducing Australia’s greenhouse gas emissions to 60% below the 2000 level by 2050. The climate change policy is built on three pillars:
- reducing Australia’s emissions of greenhouse gases,
- adapting to unavoidable climate change,
- helping to shape a global solution.
The Renewable Energy Target (RET) began on 1 January 2010, and aims for at least 20% (or around 60,000 GWh) of electricity supply to be provided by renewable energy sources by 2020. This includes the new target of 45,000 GWh of new renewable electricity generation, on top of 15,000 GWh of existing renewable electricity generation, compared with 95,000 GWh by 2010 under the previous Mandatory Renewable Energy Target (MRET). The RET also brings existing state-based targets, such as the Victorian Renewable Energy Target and the proposed New South Wales Renewable Energy Target, into a single Australia-wide scheme. The RET is scheduled to end in 2030, when the proposed Carbon Pollution Reduction Scheme (CPRS) is expected to be the primary driver of investment in renewable energy, replacing the RET.
In June 2010, legislation was passed to separate the RET scheme into two parts from 1 January 2011: the Small-scale Renewable Energy Scheme (SRES) and the Large-scale Renewable Energy Target (LRET).
In 2000, Australia introduced a voluntary measure for fossil fuel electricity generators to reduce the greenhouse intensity of energy supply. The Generator Efficiency Standards apply to new projects and existing electricity generators above a minimum threshold (30 MW), whether grid-connected, off-grid or self-generators. Since 2004 the best-practice efficiency guidelines have defined for new plants; and the measure is implemented through legally binding, five-year Deeds of Agreement between the Australian government and participating businesses.
The Energy Efficiency Opportunities program (EEO) came into force in 2006, under which all large energy-using businesses – more than 139 GWh / year (12 Mtoe / year) – are required to undertake an energy audit every five years and to report publicly on cost-effective energy savings opportunities. The EEO covers approximately 240 businesses across all sectors (mid-2010 figures) accounting for more than 60% of total business energy use.
The Australian Ministerial Council on Energy (MCE) endorsed the National Framework for Energy Efficiency (NFEE) in 2004, following on the 2002 Energy South Australia study, and approved the implementation of a number of energy efficiency packages. Stage 1, which came to a close in June 2008, included nine policy packages. Stage 2 started in July 2008, with five new energy efficiency measures: expanding and enhancing the Minimum Energy Performance Standards program for electrical appliances and gas appliances; developing a heating, ventilation and air conditioning (HVAC) high efficiency systems strategy; phasing-out of incandescent lighting in the households sector; providing government leadership to stimulate energy efficiency in buildings through green leases; and developing measures to improve the energy efficiency of water heaters.
The National Strategy for Energy Efficiency (NSEE), released in 2009, incorporates and builds on measures in the NFEE. It is a coordinated, comprehensive 10-year strategy for energy efficiency improvements for households and businesses. Through this collaborative approach, the NSEE delivers a range of policy measures, with a focus on increasing energy efficiency. The MCE is responsible for the delivery of several important measures in the NSEE that are delivered through the NFEE.
The National Energy efficiency Initiative – Smart Grid, Smart City was implemented by the Department of Resources, Energy and Tourism in 2009. It will demonstrate Australia's first fully integrated, commercial scale smart grid. Smart grids combine advanced communication, sensing and metering infrastructure with existing energy networks. This enables a combination of applications that can deliver a more efficient, robust and consumer-friendly electricity network.
In July 2009, the New South Wales government implemented an energy saving obligation for electricity retailers and other parties who buy or sell electricity (Energy Savings Scheme, ESS). Total energy savings requirements are fixed for each year of the scheme, as a given percentage of the electricity sales. The target for the first year was set at 0.4% of total electricity sales, and will gradually increase to 4% in 2014.
In 2009, Australia launched a Solar Flagships program aimed at supporting large-scale solar power generation of up to 1,000 MW.
In 2010, the Energy Efficiency Program was established within the framework of the Australian Carbon Trust to promote take-up of energy efficient technologies and practices in the business sector. It provides innovative finance solutions and expert advice to help businesses achieve energy efficiency improvements and cost-effective carbon emission reductions. Five initial projects were announced in November 2010, an investment totaling 23.7 million Australian dollars over the next three years.
The Minimum Energy Performance Standards program (MEPS) aims to increase the energy efficiency of products used in manufacturing sectors (three-phase electric motors, etc.).
The Department of Innovation, Industry, Science and Research provides Clean Business Australia and the Green Car Innovation Fund to support businesses.
Clean Energy Act 2011
In November 2011, the Australian parliament passed the Clean Energy Act 2011, which establishes the structure of and process for introducing an economy-wide carbon price on 1 July 2012, and the transition to an emissions trading mechanism on 1 July 2015.
The Act covers the following:
- liable entities’ obligations to surrender emissions units corresponding to their emissions
- limits on the number of emissions units that will be issued
- the nature of carbon units
- the allocation of carbon units, including by auction and the issue of free units
- mechanisms to contain costs, including the fixed charge period and price floors and ceilings
- links to other emissions trading schemes
- assistance for emissions-intensive trade-exposed activities and coal-fired electricity generators
- monitoring and enforcement.
The Clean Energy Future package incorporates the carbon pricing mechanism; along with a commitment to renewable energy, energy efficiency and action in the land sector.
Current energy debates or legislation:
The Minister for Resources, Energy and Tourism launched a Draft Energy White Paper 2011 – Strengthening the Foundation for Australia’s Energy Future on 13 December 2011. The Draft Energy White Paper provides an overview of Australia’s future energy needs to 2030 (and in some cases beyond) and defines a comprehensive strategic policy framework to guide the further development of Australia’s energy sector. The draft Energy White Paper proposes four priority action areas to enhance Australia’s energy potential in response to the challenges facing Australia’s energy sector. These priority action areas are:
- Strengthening the resilience of Australia’s energy policy framework;
- Reinvigorating the energy market reform agenda;
- Developing Australia’s critical energy resources – particularly Australia’s gas resources; and
- Accelerating clean energy outcomes.
The Energy White Paper also incorporates elements of other reviews and initiatives, including the design of the Carbon Pollution Reduction Scheme (CPRS, a proposed emissions trading scheme), the Australia’s Future Tax System Review, the Garnaut Climate Change Review, the Review of Export Policies and Programs (the Mortimer Review) and the Strategic Review of Australian Government Climate Change Programs (the Wilkins Review).
It is anticipated that a final Energy White Paper will be released in 2012 following public consultation.
Australia is considering a scheme to curb carbon emissions, in line with its ratification of the Kyoto Protocol. The CPRS will use a cap and trade mechanism to impose a price on carbon, which is expected to make gas and renewable energy resources more competitive against coal. It is expected to directly affect around 1,000 entities.
The Government will establish a AUD $10 billion commercially oriented Clean Energy Finance Corporation (CEFC) to invest in businesses seeking funds to get innovating clean energy proposals and technologies off the ground. The CEFC will invest in energy efficiency and low emissions technologies as well as the manufacturing businesses that provide inputs for these sectors.
Major energy studies:
The Garnaut Climate Change Review was commissioned by Australia's Commonwealth, state and territory governments to examine the impacts, challenges and opportunities of climate change for Australia. The Final Report was published in September 2008.
The Wilkins review, completed in July 2008, developed a set of principles to assess whether existing programs are complementary to an emissions trading scheme. These principles are expected to include whether programs address market failures that are likely to continue after the introduction of emissions trading, or which may be necessary to prepare for emissions trading.
Economic modelling undertaken by the Australian Treasury assisted both of these reviews.
Role of government:
The Council of Australian Governments (COAG, www.coag.gov.au) comprises the Prime Minister of Australia, the State Premiers and the Territory Chief Ministers. It meets at least once a year to consider issues that affect all jurisdictions, including those related to energy.
The Ministerial Council on Energy (MCE, www.mce.gov.au) was established by the COAG in 2001 to deliver the economic and environmental benefits for Australia from implementation of the COAG national energy policy framework. The MCE was the national energy policy and governance body for the Australian energy market. The remits of the MCE has been withdrawn following the formal commencement of the COAG’s Standing Council on Energy and Resources (SCER). The SCER will carry on key reform elements of the Ministerial Council on Mineral and Petroleum Resources and the MCE. The standing council will:
- progress consistent upstream petroleum administration and regulation standards;
- address issues affecting investment in resources exploration and development;
- develop a nationally consistent approach to clean-energy technology;
- promote efficiency and investment in generation and networks; and
- build on Australia's resilience to energy-supply shocks.
Department of Resources, Energy and Tourism (RET, www.ret.gov.au) helps promote internationally competitive and sustainable businesses. It is the principal Commonwealth energy policy-making body. The department administers the Energy Efficiency Opportunities (EEO) program, and works with the Department of Climate Change and Energy Efficiency (DCCEE) to further investigate the merits of a national Energy Saving Initiative (ESI) amongst others. The divisions and agencies with a role in energy are:
- The Energy and Environment Division is responsible for domestic and international energy policy, including climate change, renewable energy, energy efficiency and energy security policies. It gives advice on sustainable development policies for industry and the economy. It also works on energy market reform.
- The Resources Division provides legislative advice and administrative support to the government on the resources sector, including the upstream and downstream petroleum sectors, and the minerals and coal industries. Its jurisdiction includes the release of offshore petroleum exploration areas, refining and fuels, resources taxation, offshore petroleum safety regulation, and liquefied natural gas (LNG).
The Department of the Environment, Water, Heritage and the Arts (DEWHA, www.environment.gov.au) develops and implements national policy, programmes and legislation to protect and conserve Australia's natural environment and cultural heritage. It administers the Environment Protection and Biodiversity Conservation Act 1999.
The Department of Climate Change and Energy Efficiency (DCCEE, www.climatechange.gov.au) has responsibility for energy efficiency as it applies to other sectors of the economy, such as the residential and transport sectors, small and medium businesses and commercial buildings. The DCCEE has produced the ‘Energy Use in the Australian Residential Sector 1986–2020’ report, the second study on residential energy use. The modelling incorporates Australian energy policy programs in place or finalised by mid-2007. The DCCEE is also responsible for the analysis of the projected effects of the Equipment Energy Efficiency Program over the period 2000–2020. Results have been published in: ‘Prevention is Cheaper than Cure — Avoiding Carbon Emissions through Energy Efficiency, Projected Impacts of the Equipment Energy Efficiency Program to 2020’. Finally, the DCCEE administers the National Greenhouse and Energy Reporting Scheme (NGERS). NGERS commenced in 2009–10. It will be mandatory for all companies that use more than 0.1 petajoules of energy per year to report on their energy consumption and greenhouse gas emissions.
Government agencies in sustainable energy:
The Australian Centre for Renewable Energy (ACRE) is part of the AUD 5.1 billion Clean Energy Initiative. The Centre is a new body to promote the development, commercialisation, and deployment of renewable energy technologies and enabling technologies. ACRE is overseen by a specialist board with expertise in research, venture capital, intellectual property and commercialisation. The ACRE takes over management of grants awarded under the Renewable Energy Demonstration Program, the Geothermal Drilling Program, the Second Generation Biofuels R&D Program, the Wind Energy Forecasting Capability Program, the Advanced Electricity Storage Technologies progam and the Renewable Energy Equity Fund.
A new independent agency—the Australian Renewable Energy Agency (ARENA)—will be established incorporating measures currently managed by the Australian Solar Institute (ASI), the ACRE, and the RET. ARENA will consolidate a range of existing renewable energy measures and funding including:
- Solar Flagships Program;
- ACRE Solar Projects;
- Renewable Energy Venture Capital Fund;
- Australian Biofuels Research Institute;
- Low Emissions Technology Demonstration Fund (Solar);
- Connecting Renewables Initiative;
- Renewable Energy Demonstration Program;
- Emerging Renewables Program;
- Geothermal Drilling Program;
- Australian Solar Institute; and
- Second Generation Biofuels Research and Development Program.
ARENA will manage various funding to be invested in renewable energy and enabling technology projects between now and 2020. In 2012, ARENA will consolidate administration of AUD3.2 billion in Government support for renewable energy technology innovation, assuming management of funding previously administered by ACRE, the Australian Solar Institute and the Department of Resources, Energy and Tourism.
Energy planning procedures:
The Draft Energy White Paper 2011 – Strengthening the Foundation for Australia’s Energy Future, when finalised, will provide an overview of Australia’s future energy needs to 2030 and define a comprehensive strategic policy framework to guide the further development of Australia’s energy sector, with four priority action areas. The previous Energy White Paper was developed in 2004.
The Australian Government offers a number of programs to encourage the development, commercialisation and deployment of renewable energy technologies. The Australian Co-operative Research Centre for Renewable Energy (ACRE) at the University of New South Wales is consolidating the following programs:
- a Renewable Energy Demonstration Program (competitive grants program to support the development of large-scale renewable projects other than solar). AU$235 million in grants have been announced;
- a Second Generation Biofuels Research and Development Program (with funding of AU$15 million),
- a Geothermal Drilling Program (funded with AU$50 million),
- an Advanced Electricity Storage Technologies Program (AU$20 million),
- a Wind Energy Forecasting Capability Program (AU$14 million),
- a Renewable Energy Equity Fund (AU$18 million), and
- new initiatives, (AUD 150 million including funding from the formerly proposed Clean Energy Program).
Energy regulator Date of creation:
In July 2005, the Australian government formed the Australian Energy Regulator (AER, www.aer.gov.au). The AER is responsible for economic regulation in Australian energy markets and compliance with the National Electricity Law and Rules and the National Gas Law and Rules. In addition, the AER promotes investment to ensure supply security, while monitoring prices faced by end users. In 2006, Australia’s 13 government bodies transferred energy regulation responsibility to the AER. The AER is accountable to the Commonwealth Government as a constituent entity of the Australian Competition and Consumer Commission (ACCC).
Western Australia retains state-based regulation of its electricity sector and, while the National Gas Access Law came into effect in Western Australia on 1 January 2010, the WA legislation is limited to regulatory matters and adopts the local Economic Regulation Authority and Energy Disputes Arbitrator to regulate the market in Western Australia instead of the AER.
The National Electricity Market Management Company Limited (NEMMCO, www.nemmco.com.au/) was established in 1996 to administer and manage the NEM, and improve its efficiency. The responsibilities of NEMMCO were transferred to the AEMO on the 1st July 2009.
The Office of the Renewable Energy Regulator (ORER, www.orer.gov.au) is a statutory authority established to oversee the implementation of the LRET and the SRES. The Renewable Energy Regulator is appointed by the Minister for Climate Change and Energy Efficiency to administer the Renewable Energy (Electricity) Act 2000, Renewable Energy (Electricity) (Charge) Act 2000 and the Renewable Energy (Electricity) Regulations 2001.
Electrical Regulatory Authorities Council (ERAC, www.erac.gov.au) took over from the Electrical Regulatory Authorities Approvals Committee (RAAC) and Regulatory Authorities Licensing Committee (RALC) which were sponsored by the Electricity Supply Association of Australia (ESAA) as an independent body in 1995. ERAC is the council responsible for the liaison between the technical and safety electrical regulatory authorities of eight Australian States/Territories and New Zealand. As technical and safety electrical regulatory functions are largely responsibility of state and territory governments in Australia, a considerable amount of liaison is required to coordinate the activities in respect of regulatory strategies, polices and ongoing reforms. The council is made up of representatives of the regulatory authorities responsible for electrical safety, supply and energy efficiency in New Zealand and the Australian states, territories and commonwealth. ERAC also provides a practical single point of regulator contact for unions, industry and other areas of government, at the national level. Although ERAC exists entirely through cooperative action and has no executive powers, it is recognised throughout the electrical industry as an authoritative cvoice for electrical regulators.
Degree of independence:
The AER was established as a separate legal entity, and a constituent part of the Australian Competition and Consumer Commission (ACCC), under Part IIIAA of the Trade Practices Act 1974. The AER has three members who are statutory appointments, including a full-time chair. States will be able to appoint two AER members with the third coming from the ACCC. Chairmanship must be agreed by both the Commonwealth and five out of the seven states and territories (Western Australia is excluded). Appointments are for five years.
The AER may make decisions in relation to its functions under the National Electricity Law and National Electricity Rules, and may also seek an order from the Federal Court that a person is in breach of a relevant energy law. Decisions of the AER are subject to judicial review by the Federal Court of Australia. Under the 1974 Act, funds for the AER come from fees imposed on regulated bodies, and must not be such an amount as to be equivalent to taxation.
Regulatory framework for sustainable energy:
The National Electricity Code (Code) sets out the market rules that apply to market operations, power system security, network connection and access, and pricing for network services in the NEM. When the NEM started, the National Electricity Code Administrator (NECA) was responsible for administration of Code provisions.
The Renewable Energy (Electricity) Amendment Bill 2009 and the Renewable Energy (Electricity) (Charge) Amendment Bill 2009 were passed in August 2009. The Renewable Energy (Electricity) Amendment Bill modified the Renewable Energy (Electricity) Act 2000 to allow the government to replace the Mandatory Renewable Energy Target (MRET) with the expanded Renewable Energy Target (RET) from the 1st January 2010.
In 2009, the Department of Environment, Climate Change, Energy and Water introduced the Australian Capital Territory’s (ACT) Electricity Feed-In Tariff Scheme, which is available to all ACT electricity customers with generation facilities of no greater capacity than 30 kW. All renewable energy technologies are eligible for the tariff. The scheme will run for 20 years from connection of the generator and will be paid for gross generation.
Similarly, the Residential Net Feed-in Tariff for Western Australia was introduced by the Government of Western Australia in 2010. The scheme is available to residential applicants only (home owners), who will receive payments for 10 years for electricity generated by solar PV, wind or microhydro units. It will be administered by two utilities, Synergy and Horizon Power. Installed system size is limited to 5 kW for Synergy customers and 30 kW in total for Horizon Power customers.
Under the national electricity law and national electricity rules, the AER’s key responsibilities at present include:
- regulating the revenues of transmission network service providers by establishing revenue caps.
- monitoring the electricity wholesale market.
- monitoring compliance with the national electricity law, national electricity rules and national electricity regulations,
- investigating breaches or possible breaches of provisions of the national electricity law, rules and regulations,
- instituting and conducting enforcement proceedings against relevant market participants,
- establishing service standards for electricity transmission network service providers,
- establishing ring-fencing guidelines for business operations with respect to regulated transmission services,
exempting network service providers from registration.
Role of government department in energy regulation:
The Department of Resources, Energy and Tourism (RET) and the Ministerial Council on Energy (MCE) function as regulatory bodies over Australia’s oil and gas sector. The Department of Climate Change and Energy Efficiency (DCCEE) regulates for more efficient industries.
Australian Energy Market Commission (AEMC, www.aemc.gov.au/) was established as a separate legal entity in July 2005. It is the rule maker and developer for the nation’s energy markets. As a national, independent body, it makes and amends the detailed rules for the NEM and elements of natural gas markets. It also provides strategic and operational advice to the MCN. The AEMC is a member of the International Confederation of Energy Regulators (ICER).
Currently, the status of Australian energy regulation is good. Significant capacity in renewable energy is also being built, although progress in the field is slow. With abundant renewable energy resources, and a dedicated regulatory authority for the purpose, Australia is well-placed to increase its utilisation of renewable energy considerably in the near future.
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Department of Resources Energy and Tourism (2011a) Energy in Australia 2011. Available at: http://www.ret.gov.au/energy/Documents/facts-stats-pubs/Energy-in-Australia-2011.pdf [Accessed 12th September 2013]
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Department of Industry, Innovation, Climate Change, Science, Research and Tertiary Education: http://www.climatechange.gov.au
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RET (2011) Energy White Paper, Department of Resources, Energy and Tourism (RET). Available at: http://www.ret.gov.au/energy/facts/white_paper/Pages/energy_white_paper.aspx [Accessed 12th September 2013]
MCE (n.d.) Standing Council on Energy and Resources, Ministerial Council on Energy (MCE). Available at: http://www.mce.gov.au/about/default.html [Accessed 12th September 2013]
AEMC (2009) website: Who we are. Available from: http://www.aemc.gov.au/About-Us/Who-we-are.html [Accessed 12th September 2013]