Mr Macfarlane’s strong agricultural background in farming and running cattle in Queensland as well as his past experience as Shadow Minister for Energy and Resources lends him insight into gas’s role in rural communities, landholder engagement issues and the pivotal relationship between both farmers and cattle producers with the natural gas sector.
Gas Today asked Mr Macfarlane about his views on recent political developments and how they may affect Australia’s natural gas industry.
How will the reduction of the Renewable Energy Target impact the Australian domestic energy supply?
The Coalition Government is committed to a Renewable Energy Target that represents a real 20 per cent of electricity production in Australia, as was the original intent supported by Labor.
It was the Coalition that introduced the Renewable Energy Target in 2001 and there is a longstanding history and record of bipartisanship on this issue.
The Coalition is seeking to achieve that agreement again to provide long-term stability for the renewables sector.
The Coalition continues to have constructive discussions with the Labor Party with a view to providing certainty for the renewable energy sector while better reflecting the market need for new generation, restoring competitiveness to industry, and providing electricity price relief to households.
What did you set out to achieve with the Energy Green Paper?
The Energy Green Paper sets a framework for the development of a coherent and comprehensive blueprint that will allow Australia to take full advantage of its natural strengths and consolidate its position as an energy superpower.
The Paper is built around four key themes – attracting energy resources investment; electricity prices; building gas supply; and improving market operation and security, innovation and energy productivity.
Submissions to the Green Paper closed on 4 November and will inform the development of the Energy White Paper outlining the Australian Government’s long-term energy policy.
What future steps should be put into place to build domestic gas supply?
Increased gas supply for the domestic market is best achieved by governments removing regulatory barriers to new production, providing investment certainty for industry, and enabling the market to respond to price rises by exploring new opportunities for gas supply.
The Australian Government’s Industry, Innovation and Competitiveness Agenda, the repeal of industry red and green tape, the streamlining of environmental approvals through a one-stop shop approach, and the removal of taxes like the carbon tax and mining tax all contribute to providing an environment where the industry can invest in developing gas supply for both the domestic and export markets.
What are key challenges associated with building a reliable supply of CSG?
The Australian Government takes a pragmatic approach to resource development – carefully balancing economic, social and environmental factors supported by sound scientific evidence.
CSG has an important role to play in Australia’s energy future.
Its use as an energy source is longstanding and already accounts for around 35 per cent of domestic gas production in the eastern states.
State and territory governments have primary responsibility for regulating onshore minerals and petroleum exploration and production – including CSG.
State and territory responsibilities include setting conditions to ensure resources development is undertaken in a responsible and sustainable manner.
The Government supports the responsible development of the CSG industry under three co-existing conditions – that access to prime agricultural land should only be allowed with the farmer’s agreement, that there is no long-term damage to the underground water supply, and that agricultural production is not permanently impaired.
The Government will continue to work with state and territory governments to ensure CSG development remains subject to strong evidence-based environmental regulation at both a state and federal level.
What is the importance of community engagement in this consultative process?
When it comes to CSG, what is being done in Queensland communities works.
Farmers and gas companies are working together, within the framework set out by the Queensland Government, to sign access agreements that are allowing the CSG industry to develop, while delivering a return to farmers.
Just as importantly, this progress has meant there are new job opportunities in regional towns and, younger generations are returning to their home districts to live – reversing the exodus of skilled people to the bigger cities.
Can you provide more detail on the government’s plan to link NT’s gas supplies to the eastern gas market. What are the advantages of this National Gas Grid?
Part of an efficient gas market is infrastructure that links markets, builds resilience and enables new gas resources to be developed.
The proposal to link the Northern Territory (NT) with gas markets in eastern Australia provides significant opportunities to encourage investment in the NT while assisting supply challenges facing the eastern market.
The Australian Government will work with the NT Government to progress this project as quickly as possible with the next steps including analysing any proposals and then putting together a plan for a proposed pipeline corridor.
What is the importance of ramping up LNG exports to Australia’s energy mix?
Energy drives the Australian economy and underpins our future prosperity.
The abundance and diversity of energy supplies, including planned LNG export growth, will give Australia the opportunity to firmly establish itself as an energy superpower. It is an opportunity the energy sector has grasped and is running with.
Australia’s significant energy resource endowment positions the country well to help meet growing demand in Asia and, at the same time, meet domestic needs.
What is the long-term impact of domestic gas reservation policies?
The focus of the Australian Government is on ensuring long-term sustainable supplies of gas both for export and the domestic market.
A mandatory gas reservation policy would reduce the incentive to explore and develop new gas fields and may create gas shortages followed by rising prices.
The government is working to make the market more transparent and more competitive so people can get access to the gas they need and have information about the prices available.
How important do you think the existing gas industry is to the future energy mix?
In Australia, gas will play an important and growing part of the country’s energy mix for domestic consumption and for export.
Growth is being driven by strong Asian demand, which is underpinning the commissioning of several new Australian export facilities over the next few years.
Towards the end of the decade, Australia could be exporting around 80 million tonnes of LNG, worth around $60 billion, compared with current exports of 24 million tonnes worth just under $14 billion.
Global energy demand is forecast to grow strongly, including for natural gas (forecast to increase by 48 per cent by 2035) which ensures strong demand to underpin continued development of Australian gas resources.
How has the Australian energy market changed in the past decade? What do you foresee for the future energy mix in Australia?
Australia needs to ensure that it is competitive on the global stage and to reinvigorate energy market reform.
The government’s Industry, Innovation and Competitiveness Agenda will play an important role in this regard.
The government wants Australia to have access to the broadest possible range of energy options into the future.