Once again, the Federal Government is commencing an Energy White Paper process, and if you’re feeling a bit of déjà-vu reading this article, don’t worry, I am writing it. When the Labor Government came to power, it commenced an Energy White Paper process but got caught up in the debate around the Carbon Pollution Reduction Scheme (CPRS), and then the uncertainty around the CPRS created further delays. Eventually, the Government rightly decided that energy policy is intimately linked to climate policy, and the absence of a decision on climate policy made it problematic to outline a vision for Australia’s energy future, so the Energy White Paper was shelved.

While we still don’t have resolution on the carbon price issue, the path the Government has headed down means it should be decided once and for all (in the short term anyway) in the next 12 months or so. The Federal Minister for Resources and Energy has signalled in several speeches that an Energy White Paper team has been reformed and that a policy will be developed by the end of 2012. Consultation hasn’t commenced yet, but that doesn’t mean that the gas transmission industry – and the pipeline industry more broadly – shouldn’t start thinking about the energy markets of the future and what we would like to see. In fact, now is the ideal time to start thinking – once the consultation commences, the clock will be ticking for industry to provide a response.

The establishment of the Energy Pipelines Co-operative Research Centre (EPCRC) last year was the culmination of a significant effort from the pipeline industry and APIA’s Research and Standards Committee. To successfully establish the case for the EPCRC, the industry was able to articulate the technical requirements of the future, both for existing gas and oil pipelines, and for pipelines transporting substances that aren’t transported via pipeline in this country yet, such as hydrogen and CO₂. The pipeline industry has an excellent record of anticipating the technical needs of the future and developing strategies to manage them. The success of the Australian industry in this regard is demonstrated through the esteem our practitioners are held in around the world, and our heavy involvement in the Joint Technical Meeting just completed in San Francisco.

I don’t think the industry, as an industry, has given the same regard to the future of energy policy in Australia and what we’d like to see happen. Sure, we want gas to play a greater role in the economy, and it probably will. The Federal Minister often mentions the coming ‘Golden Age’ of gas, and there is fairly unanimous agreement in energy predictions that gas usage in Australia will double by 2030, driven mainly by a surge in gas-fired power generation. But at the same time, there are no federal policies, and very few state policies, to encourage the use of natural gas in the economy.

This is a problem because just about any other energy source you can think of does have policies directed at it. Geothermal, solar, wind and even coal all have the explicit backing of Government through targeted policies, whether it’s the Solar Flagships program, the Renewable Energy Target or the Clean Coal Initiative. Government policy can signal a confidence in technology, and encourage investors, the public and the media to pay attention to an energy source. And gas is lacking. This is particularly a problem when gas is in direct competition with other energy sources, say for water heating (solar versus gas), power generation in the home (solar photovoltaic versus gas fuel cells) or in remote power generation (gas versus renewable).

So what is the gas transmission industry’s vision for the future of our industry in Australia and how can energy policy influence it? There needs to be two parts to the vision, a broader gas vision and a specific consideration of gas transmission.

Clearly, we want to see more gas used in Australia. It’s good for business. But can we argue it’s good for the economy too? As an example, consider distributed generation and trigeneration technology. Policy to encourage greater use of this energy would lead to more gas being used, which is something we want. What are the wider benefits? Two things immediately spring to mind:

1. An increase in distributed generation should lead to lower electricity transmission needs, lowering the overall cost of infrastructure that consumers have to ultimately pay for. 2. A flattening in the demand for gas. Gas infrastructure has to be built to meet the winter peaks, and distributed generation should increase the overall demand for gas, which would help mitigate the size of the peak. Additionally, demand for electricity from distributed generation should be greater in summer, when the air conditioners are turned on, creating a new demand in the traditionally low demand summer period. This can lead to more efficient use of infrastructure, and lower costs for consumers.

What about gas transmission-specific policy? If gas demand is going to double by 2030 then gas transmission infrastructure should too. Are there policies that could encourage better investment in gas transmission? The APIA Regulatory and Economic Affairs Committee is considering this issue right now. If Government encourages ‘overʼ investment in gas transmission, it should lead to lower costs for everyone.

With the increase in gas-fired power generation, gas transmission and electricity transmission will be in increasing competition. The market frameworks are very different, and the decision whether to transport gas to a generator or electricity from a generator may not always come down to which is the most efficient. We need to consider ways to ensure a level playing field exists between the two options.

There are lots of ways energy policy can influence our industry, and it is something we should all think about from time to time. The more ideas and input APIA receives the better case we can make for gas policy, and the more chance we have to influence the debate. I’m always happy to get phone calls or emails with ideas, and it doesn’t matter if you haven’t written an essay on it (that’s my job). If you have any thoughts on where energy policy in Australia should be heading, drop me a line and let’s talk.