Competitive, Low Emissions Energy
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Globally competitively priced gas and electricity are essential for Australia to recover from the economic cost of COVID-19, support those Australians whose livelihoods have been impacted, and get people back to work.
Affordable and globally competitive gas and electricity are also vital elements in strengthening Australia’s sovereign capability and for the continued viability of Australian manufacturing and many other industries.
Yet, the high cost and unreliable supply of gas and electricity have damaged Australian industry, commerce, and households. Australia’s energy market and the supply of globally competitive long-term gas feedstock contracts were once the envy of the world and formed the basis of vast investment in Australia.
Much more needs to be done to protect consumers from escalating energy prices and attract capital investment for gas-based and other manufacturing. Chemistry Australia reiterates the principles of the National Energy Objectives, where investment is focused on benefits for consumers.
The opportunity to transform our energy supply from hydrocarbons to renewable sources, including hydrogen and bio-based fuels, is real. However, this transition will be neither speedy nor straightforward. The transition requires planning and investment, including establishing standards and appropriate regulation. While policy needs to support this transition, it must also recognise that no single technology will provide an economy-wide solution. Therefore, policy frameworks must support and incentivise the adoption of a variety of fit-for-purpose technologies and solutions.
Immediate
- Technology-neutral incentives to support emission- reducing technologies (eg. hydrogen);
- A re-set of domestic gas policy focused on economic recovery, the transition to a climate-neutral economy, Australian sovereign manufacturing capability and supply chain security, including:
– A sharper focus on long-term contracts needed to underpin plant turnaround capital investment decisions;
– Domestic gas price methodology based on long-run LNG Netback that does not cross-subsidise LNG capital and financing costs, and linked to suitable international gas on gas indices (Henry Hub).
Medium-term
- Implementation of a transition plan for gas users to bridge the forecast supply gaps and escalating prices that enable a long-term domestic investment environment;
- Implementing policies that prioritise gas availability and supply for domestic use at globally competitive prices;
- Continuing reforms to address the concentration of market power;
- Implementing policies that reserve valuable natural gas liquids for domestic industries;
- Introduction of a ‘use it or lose it’ mandatory development regime;
- Investment in pipelines and other infrastructure to bring new gas supply to the market;
- Continued gas market reform to increase transparency for consumers.
