Major new actions announced in the policy include:
- Fuel excise changes to remove $1.5 billion in excise liabilities from businesses and households over the period until 2013;
- Establishment of a $500 million fund to leverage an additional $1 billion investment in low carbon intensity technologies, including geosequestration (underground storage of carbon dioxide);
- Provision of $75 million for Solar Cities trials in urban areas;
- Provision of $134 million to remove barriers to renewable technologies;
- Incentives for petroleum exploration in frontier areas; and,
- New energy efficiency requirements, including mandatory energy efficiency reporting by major energy users.
The new Energy Policy has some attractive features for the pipeline industry, particularly for those who wish to become involved in carbon dioxide transport and storage. Pipelines will have an important role to play in this respect. It also recognises the role that natural gas can play in reducing the greenhouse intensity of energy use in Australia.
In other areas the new Energy Policy is very disappointing and does nothing to improve the key investment policy parameters faced by pipeline developers.
The report states that the Australian Government aims to stimulate the long term infrastructure investments required to meet future energy demand, but is silent on the very real barriers that exist today. There is a very heavy reliance on the on-going work of the Ministerial Council on Energy (MCE), including consideration of the Productivity Commission’s Review of the National Gas Access Regime. This agenda has, to date, been very slow and tedious and appears to be focussing far too much on the process of regulation (for example establishment of new regulatory bodies) with insufficient attention being given to developing clear principles to guide these regulatory bodies to ensure “pro-investment” outcomes are delivered to existing players and new investors.
Already, the MCE agenda appears to be raising issues which will be of major concern to existing owners and potential investors in the pipeline sector. There is strong evidence that senior officials reporting to the MCE are seriously contemplating the removal of important merit review rights from the Gas Access Code. Merit review has played an essential role in the gas transmission industry by ensuring that inappropriate decisions to regulate pipelines have been overturned (as in the case of the Eastern Gas Pipeline) and that unreasonable decisions by the ACCC have been changed (as in recent successful appeals by GasNet Australia and Epic Energy). APIA argues that it is untenable that the MCE process, which has improved investor confidence and certainty as one of its underlying goals, could even contemplate actions which have the opposite effect.
In conclusion, the new National Energy Policy places considerable faith on a reform agenda which faces a very uncertain path. The current high level of uncertainty was highlighted in a recent response to APIA from the Parliamentary Secretary to the Treasurer, the Hon Ross Cameron, who in rejecting our proposal that a final decision on the “effectiveness” of the Queensland Gas Access Regime should be deferred pending finalisation of the Productivity Commission’s review of the National Gas Access Regime and subsequent consideration by the MCE stated: “The timing for completion of these processes is uncertain.” This statement totally contradicts the timing outlined by the MCE to finalise this consideration by the end of the year and stands in stark contrast to the confidence in current processes outlined in the National Energy Policy.