The Australia Federal Government released its 2012 Energy White Paper on 8 November 2012 (the Energy White Paper). The Energy White Paper, the first since 2004, sets out a non-binding strategic policy framework to guide the development of the energy sector in Australia.

Since 2004, Australia has seen a dramatic change in energy exports, with natural gas and thermal coal increasing by at least threefold. In the same period solar and wind generating capacity has increased tenfold. By 2035 global energy demand is projected to grow by around 40%, with 90% of that growth occurring in developing economies such as China and India.

Key observations in the Energy White Paper

  • The importance of Australia securing it’s share of the ongoing energy investment, noting increasing competition from Asia for that investment.
  • The need to improve inefficiencies in the electricity network, particularly through broadening of the electricity consumption peak.
  • Recognising the criticality of natural gas production to Australia’s strategic economic objectives.
  • The Federal Government’s continued support for renewable and low emission energy projects.
  • An emphasis on efficient markets and competition.

Key recommendations of the Energy White Paper

  • Continued emphasis on the growth of supply chains to Asia, and improvements in production efficiency, as a way to maintain investment levels.
  • Increased use of the co-location of energy generation and consumption in order to reduce transmission infrastructure.
  • Improvement of electricity market signals through time-of-use pricing and smart metering.
  • Deregulation of electricity pricing in markets where adequate competition exists.
  • Development of gas supply hub trading and the introduction of pipeline capacity trading in order to enhance competition and efficiency in the gas market.
  • Review of offshore retention lease arrangements for the natural gas market.
  • Harmonisation of coal seam gas regulations.
  • Maintenance of the 2020 renewable energy target of a 20% emissions reduction against 2000 levels.
  • Maintenance of specific funding for the innovation and commercialisation of clean energy technology.
  • Continued non-reliance on uranium resources for domestic consumption.
  • Continued investment in Carbon Capture and Storage research.
  • Ongoing consideration of the increasing future challenge of managing the electricity grid with variable utility scale renewable energy generators.
  • A general rejection of gas reservation policies, except in cases of clear market failure.

A more detailed summary of the Energy White Paper is available on the Herbert Smith Freehills website.