MELBOURNE Nov 8 Australia's government will
lead a new push to deregulate state-based electricity markets
and prices and cut red tape to make the energy sector more
attractive to much-needed investment, Energy Minister Martin
Ferguson said on Thursday.
Releasing an energy white paper, Ferguson said the
government would also encourage states to transform to cleaner
energy and to do more to develop gas, including coal seam gas,
for both export and domestic consumption.
He said Australia had sufficient gas to meet both export and
domestic demand until 2035, but with a tightening of market
along the more populous east coast. But Ferguson rejected any
push to quarantine gas production for domestic use.
"Intervention such as reservation policies to force price or
supply outcomes are more likely to impede rather than promote
supply," Ferguson said in a business speech to launch the white
Australia's $50 billion coal seam gas to liquefied natural
gas (LNG) export industry has sparked calls for gas to be
reserved for domestic use due to fears that demand from
energy-hungry Asian buyers will push up Australian gas prices.
The much less populous state of Western Australia does have
such a policy, but Ferguson said he did not support a similar
policy being implemented in the eastern states.
While state and federal governments needed to work harder to
remove impediments to gas developments, companies themselves
needed to ensure enough gas is kept for domestic use, he said.
"It is also incumbent on the gas industry itself to maintain
a balanced supply for both the domestic and export markets," he
Australia's main oil and gas body said the white paper sent
an important message to investors, that the government
recognised the need for a market-based approach to developing
"It is important that gas is seen no differently to other
major export commodities such as iron ore, coal and wheat in
that the benefits associated with development are maximised
through links to international markets," Australian Petroleum
Production and Exploration Association chief executive David
He said Australia had reserves of about 819 trillion cubic
feet of natural gas, with 1 trillion cubic feet enough to power
a city of 1 million people for 20 years.
The white paper sets out the government's long-term
strategic policy for the energy sector as Australia moves to
cleaner energy and away from a reliance on coal for domestic
Ferguson has said Australia was chasing about A$500 billion
of investment to modernise its energy, electricity and gas
generation, transmission and distribution sectors by 2030,
although high production costs and lower commodity prices are
making more difficult for investors.
He said Australia had A$270 billion worth of committed
projects on its books, with a further A$230 billion worth of
projects not yet committed.
The government wanted to work with state administrations to
free up electricity pricing, allowing generators to charge
higher prices at times of peak demand and sending a price signal
to consumers, Ferguson added.
Australia's government has long pushed for fresh investment
to upgrade electricity networks and replace the country's ageing
coal-fired power stations - many of which date back to the
Ferguson said the white paper would also push for greater
use of clean energy, which would need investment of about A$200
billion by 2050, to help end Australia's reliance on coal and
reduce carbon emissions. Coal fired power accounts for about 80
percent of electricity generation.
But the white paper makes no change to Australia's target to
produce 20 percent of national electricity from renewable energy
"While fossil fuels will underpin our energy security for
many years to come, clean energy generation could growth to
provide over 40 percent of electricity needs by 2035, and
potentially up to 85 percent by 2050," Ferguson said.
"If this clean energy transformation were to be realised, it
would require more than A$200 billion in new generation
investment between now and 2050, including around A$50 to A$60
billion in gas, and A$100 billion in renewables."
Australia, which has the world's largest reserves of
uranium, has no domestic nuclear power and no plans to develop
nuclear power. Ferguson said it was not cost competitive.
(Additional reporting by James Grubel in Canberra; Editing by