Uncertain future in the face of Government delays

Climate Change

Federal Government policy in the area of climate change remains to be determined following the abolition of the carbon pricing mechanism.

Opposition in the Senate continues to the Government’s Direct Action scheme for reducing greenhouse gas emissions.

The future of the other key aspect of Government climate change policy, the Renewable Energy Target (RET), also remains uncertain.

Last month the Government-appointed expert panel delivered its recommendations on the future of the RET, providing two options for the Large-Scale Renewable Energy Target (LRET). Both envisaged the Scheme closing down in 2030.

The first option is closing the Scheme to new entrants – equating to a renewables target of 15 per cent by 2020.

The second option is a paring back of the LRET, which would reserve 50 per cent of any growth in the electricity market for renewables, assessed annually, which could potentially achieve a renewables target of 20 per cent in a rising market.

At the time of writing the Government was considering the Report.

The Senate is likely to block any change, with the ALP and the Greens opposed to any change, and the Palmer United Party ruling out changes to the RET prior to the 2016 election.

The eventual resolution of these issues may also be linked to broader horse trading in the Senate on the passage of the Federal Budget.

Energy White Paper

Another key strategic issue for APIA is the development of the Federal Government’s Energy White Paper, which aims to establish an integrated approach to energy policy.

The release of the so-called Green Paper, the final formal consultation document, is imminent, with the White Paper currently scheduled for publication at the end of the year.

Originally the Government intended to produce a 2020 Gas Supply Strategy, separate from the White Paper, but gas policy reform options will now be included in the broader document.

Gas Supply & Gas Markets

Ahead of these important developments, APIA has been active in its advocacy of the pressing need to put in place the policies to mitigate, if not address, the increasing price in the eastern gas market.

A possible option might be to improve competition in upstream gas markets, which could assist in getting more gas out of the ground.

We have suggested that, perhaps, discussion could cover: improving access by small producers to production facilities; strengthening administration of the title system; and removing the prevalence of joint marketing arrangements.

Meanwhile, Government policy initiatives have remained focused on the gas transmission sector.

While these changes will improve the operation of the market, they do not address the issue of supply. APIA has been engaging closely with the Federal Government on issues of transparency, highlighting costs to industry while encouraging focus on changes that provide genuine improvement to the market.

The industry has already made progress on the development of a capacity trading facility.

The process continues, with the Australian Energy Market Commission (AEMC) scheduled to consider a draft rule change proposal in October.

Further work on market transparency is expected in the coming year.

NT-east Australia link

Industry Minister Ian Macfarlane announced in August his support for APA Group’s proposal for a possible gas pipeline linking eastern Australia with the Northern Territory and Western Australia’s Browse Basin.

This pipeline would enable producers there to supply gas to east coast consumers. APA Group is undertaking a detailed feasibility study that is considering three possible siting options.

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