Key challenges: energy security and climate change

Federal Energy Minister Martin Ferguson says there is no doubt the two major themes of energy policy for the next few years are energy security and climate change.

“Responding meaningfully and effectively to climate change while maintaining adequate, reliable and affordable energy remains a key challenge for the Government and the energy sector,” says Ferguson.

“We know from experience that competitive markets and effective regulatory frameworks help deliver the right level of investment and in turn deliver ongoing access to adequate, reliable and affordable energy services,” he says.

Ferguson says it is the Federal Government’s job to provide the leadership necessary to get the policy settings right to deliver open, competitive markets and investment certainty for the energy sector.

“As the Minister for Energy, this is my top priority,” Ferguson says. Competitive markets and effective regulatory frameworks are the cornerstones of Australia’s domestic stationary energy markets for electricity and gas.

Ongoing energy market reform is therefore vital to provide the right investment signals and ensure long-term gas and electricity supply security for Australia.

Ferguson is looking to progress the Ministerial Council on Energy work program on time and to deliver real outcomes for the benefit of the Australian economy. “We cannot afford to slacken the pace of reform,” he says.

The MCE has agreed on several reforms in recent months, including a detailed implementation plan for the establishment of the Australian Energy Market Operator; a consistent national minimum functionality for smart meters and the Australian Energy Market Commission’s review of retail competition in South Australia’s retail market.

One of AEMO’s functions will be the National Transmission Planner for electricity. The AEMC is developing a detailed plan for the implementation of this function and Ferguson says he is closely monitoring its progress. Ferguson says that transmission planning is especially important in the new carbon-constrained environment.

“The successful integration of a potentially large increase in renewable energy supply, resulting from the 20 per cent Renewable Energy Target, will rely on effective transmission planning and congestion management strategies” he says.

The MCE is also working hard to achieve COAG’s commitment to mandate a roll-out of smart meters if they are deemed cost-effective, according to Ferguson. In addition to the electricity market, he says the MCE recognises the importance of investment in domestic gas infrastructure. The current reforms embodied in the National Gas Law and Rules are designed to improve the regulatory regime and encourage such investment.

Ferguson says the most significant policy challenge facing the energy sector today is climate change.

“The Government is also serious about being economically responsible and we are committed to reducing emissions at least economic cost, whilst maintaining adequate, reliable and affordable energy supplies and the international competitiveness of Australia’s industries” Ferguson adds.

Ferguson says the introduction of a domestic emissions trading scheme is a core element in the Australian Government’s plan to reduce emissions.

The development of measures that will complement an emissions trading scheme include development and deployment of renewable and low emissions technologies; energy efficiency and conservation; and successful international engagement on energy efficiency and technologies, according to the Energy Minister.