Features, Federal policy, Opinion, People and policy

Political certainty in 2015 is a must for Australian gas industry

It is true that the patience of many has been tested over the past two years with two white paper exercises, the east coast gas review ordered by Gary Gray and the numerous gas-related state inquiries.

No one can seriously argue that the extraordinary number of energy reviews undertaken in Australia since the middle of the past decade is good for investor confidence or even public understanding of the issues (because of selective coverage of what is said, often shorn of context, and not least because social media are prone to be partisan).

What comes through loud and clear from the current crop of submissions is that there is an urgent need to put an end to the cycle of political reaction to energy issues. The case for a multi-jurisdictional, bipartisan approach for the long-term is being stressed by a large number of those making white paper input.

“Certainty around future policies is crucial to guiding investment decisions,”? said Origin Energy, for example, in its submission to the white paper taskforce.

To which ERM Power added: “The petroleum business needs a stable regulatory framework and confidence that policies will be based on scientific evidence, professional/expert risk assessment and/or industry standards.”?

Input from numerous sources talks about “getting the settings right”?, but the energy industry is universally aware that this is not enough – the chosen settings have to be armoured against political mood swings after federal and state elections.

The inability of the Coalition and Labor to reach consensus on key directions is well illustrated by the ongoing wrangling over renewable energy, but this is far from the only area where political point-scoring
eems to take precedence over a meeting of minds on energy directions – a coherence that has to extend beyond the federal realm.

As ERM Power said, with respect to gas exploration and development: “In order for any policy response or strategy arising from the white paper to have any practical effect, commitment is required from the states and territories to implement it.”?

This issue is also taken up by Alinta Energy, who said in its submission, from the vantage point of a company operating across Australia, that inconsistent regulatory developments and overlapping policy at all levels of government are significant problems.

“The absence of a holistic policy approach to common energy issues often acts to duplicate existing functions and to provide conflicting signals to investors and industry.”?

The situation, it added, is compounded by the tendency among all governments to develop policies without regard to their long-term consequences in the energy markets.

“Nowhere is this more apparent than in environmental policy [which is] ad hoc with no references to impacts on energy markets.”?

The vehicle to mend our currently fragmented energy policy landscape is the Council of Australian Governments (COAG).

However, its ministerial Energy Council is not seen as satisfactorily addressing the problem. Alinta and others think the ministerial committee focuses too much on issues of the day and not enough on long-term energy policy.

All of this leads to the view that a central theme for policymakers in 2015 should be to address the issue of risk in the development of national energy markets, if issues continue to be pursued without adequate regard to the long term.

What follows is that publication of a white paper will not solve the problem because the Federal Government only has partial responsibility for delivery of the energy package.

A key requirement is for first ministers – the Prime Minister, the state premiers and the territory chief ministers – to devote serious attention to both the coordination of governments’ approach and to aligning energy and carbon policy.

It is (or should be) a worrying thought that, at a federal level, we embarked on producing a new energy strategy through a white paper process in 2008. Seven years later, it is still unfinished business.

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