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Energy concerns a major Budget focus

26th October 2022

By: Esmarie Iannucci

Creamer Media Senior Deputy Editor: Australasia

     

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PERTH (miningweekly.com) – As part of its first Budget, the newly elected federal government has announced a range of measures to assist in addressing increasing energy costs.

The measures include a A$67-million package of reforms to modernise energy market regulation with the states and territories, increase the monitoring and oversight of gas markets and improve the functioning of the Australian Domestic Gas Security Mechanism (ADGSM), including moving to quarterly-based consideration.

Minister for Climate Change and Energy Chris Bowen said the new National Energy Transformation Partnership, agreed in August by energy Ministers from each state and territory, would create policy certainty for the first time, to attract the necessary investment in transmission and renewable energy projects.

This included delivering critical market reforms, supporting investments in the grid such as large-scale storage and transmission, and helping to make homes and appliances more energy efficient.

The budget also included a new heads of agreement (HoA) signed in September with East Coast liquefied natural gas (LNG) exporters to prevent a gas supply shortfall, delivering an additional 157 petajoules of gas, or nearly three times the projected shortfall, to the east coast market in 2023.

The Budget also reiterated last week’s announcements of over A$6-billion of new investments in energy infrastructure on the east coast, as part of the federal government’s A$20-billion Rewiring the Nation fund.

The Budget also included the Powering Australia plan, focusing on bringing cheaper renewable energy to Australian homes and businesses, with A$224.3-million going towards the Community Batteries for Household Solar grants program, to deploy 400 community-scale batteries for up to 100 000 Australian households, A$102.2-million for Community Solar Banks for 25 000 Australians living in apartments, rentals and low-income households across Australia, and A$63.9-million to invest in dispatchable storage technologies, such as large-scale battery projects.

A further A$62.6-million will go towards an energy efficiency grants program for small and medium-sized businesses to reduce energy use and lower energy bills, and A$83.8-million towards the development and deployment of First Nations Community Microgrid projects.

“In addition, the government has asked the Australian Competition and Consumer Commission (ACCC) to examine the voluntary Code of Conduct governing Gas Supply Agreements between Gas Suppliers and Gas Customers (Code of Conduct) and inform options to improve its operation and effectiveness with the view of making it mandatory,” Bowen said.

“The ACCC has also been asked to consider options that will improve price transparency and ensure reasonable pricing.”

The Minister pointed out that Russia’s willingness to weaponise energy has sent coal, oil and gas prices through the roof, causing the most significant shock to global energy markets since the 1970s.

“In Australia, the energy market shock has been compounded by the Coalition’s lost decade of denial, delay and dysfunction on energy policy. This resulted in a 3 GW decline in dispatchable power.

“It’s a challenging time in energy markets but the government is determined to provide a stable policy framework that incentivises investments in cheaper and more reliable energy to improve the situation over the short, medium and long term.”

The Australian Petroleum Production & Exploration Association (Appea) on Wednesday said that the Budget had confirmed the financial contributions made by the oil and gas industry, but warned that future investment in the sector could be put at risk from energy policy changes.

“Growing revenues are helping to fund essential infrastructure and services – from hospitals and schools to Medicare and paid parental leave. But that contribution is at risk when there is uncertainty and changing policy settings that act as a brake on new investment,” Appea CEO Samantha McCulloch said.

“The best way to put sustained, downward pressure on gas prices is to bring on new supply. This will boost energy security, support manufacturing, reduce emissions, and ensure the industry can continue to deliver the substantial economic benefits to Australians we see in the Budget figures.

“The industry has announced more than A$20-billion in investment in recent years but moratoriums and regulatory uncertainty are impacting future investment opportunities.

“From reviewing a voluntary industry Code of Conduct that was announced just 27 days ago as part of the renewed HoA, to a revised and more frequently considered ADGSM, significantly expanded powers to intervene by the Australian Energy Market Operator and another extension to the ongoing ACCC inquiry, this everchanging policy playing field risks new investment and supply as well as the associated economic, emissions reduction and energy security benefits.”

McCulloch said if the government was to go down the path of making the new Code mandatory, then it should be broadened to include the whole supply chain, to ensure full transparency around the commercial conduct of all participants in the gas market.

“That includes all parts of the gas supply chain as well as commercial and industrial customers; we are fully committed to realising the objectives of the Code.

“Appea members have engaged for more than two years on the development of the Code – with representatives of major commercial and industrial customers, as well as with the government and with regulators – to provide greater supply certainty and transparency to the market.

“With the Code covering customers and all parts of the gas supply chain, government will have full awareness of the true state of the gas market,” she said.

Edited by Creamer Media Reporter

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