Chemistry Australia has welcomed agreement by the COAG Energy Council to further develop the National Energy Guarantee (NEG).

“We support a policy that allows the market to invest in the most effective mix of technologies, and delivers benefits for both industrial and residential customers. There is still a lot of detail to come, but it is promising to see in-principle agreement by all states and territories,” said Chemistry Australia CEO Samantha Read.

“Today’s outcome is a step towards greater certainty in energy policy for industrial energy users and Australia’s valuable manufacturing supply chains. It’s a step towards improving the environment for investment, employment and growth to support a competitive Australian economy.

“We are now looking forward to working with the Energy Security Board, Governments and other stakeholders to ensure the detailed design delivers on the objectives of lower energy costs, reliable supply and emissions reduction.

“There has already been a lot of damage to the viability of manufacturing operations and supply chains through rapid energy price increases and supply uncertainty, particularly in the gas market.

“We already have major chemical manufacturing facilities shuttered due to the lack of affordable gas and energy. We know of other companies assessing whether to keep operations in Australia, and we know of companies that are struggling to keep operations viable.  While today’s agreement is cause for optimism, the next phase remains urgent,” said Ms Read.

Ms Read emphasised that as the details of the National Energy Guarantee are developed, it will be important to remain focussed on the big picture.

“It’s the combination of cost, reliability and emissions all working together, that is critical. Any of these elements on their own cannot address the current energy crisis,” said Ms Read.

“This has been the crucial shift in thinking that makes sense to major Australian manufacturers. It’s this new thinking that has brought together diverse groups to jointly back the National Energy Guarantee,” said Ms Read.

Ms Read said that Australia’s $40 billion Australian chemistry industry, including major Australian manufacturers, is highly trade-exposed in a competitive global economy. For many companies, the energy crisis has been the tipping point, removing one of Australia’s significant competitive advantages.

“The principle of a technology agnostic approach, where all forms of energy are ruled in, promotes a balanced approach to energy investment,” said Ms Read.

“Australia has a wealth of all forms of energy. We should be in a position where they are being utilised for the benefit of Australians to build a strong and globally competitive economy,” said Ms Read.

Ms Read stressed that the evolving role of gas in the energy market will be an important factor in the design of the mechanism.

“Energy policy needs to address the impact that the diversion of gas for power generation would have on the total system, including manufacturers whose operations rely on gas,” said Ms Read.

“Electricity and gas policy can’t be considered separately because the markets are interconnected.

“It was very encouraging to see the decision by the Northern Territory to be guided by science and allow the responsible development of unconventional gas.

“We urge governments in the southern states to make use of the engagement, research and balanced outcomes from the NT to enable responsible growth, rather than further restricting supply and endangering jobs,” said Ms Read.

Gas is particularly essential to the business of chemistry. It’s important for process energy, and it is also a non-substitutable ingredient for advanced manufacturing. The Australian chemistry industry uses 10% of Australia’s domestic gas for its molecular properties to create a huge range of products essential to our everyday lives. These include fertilisers for our crops, cleaning products for health and hygiene in our homes and hospitals, and smart packaging to keep our food fresher for longer.