Australia has abundant energy resources. It is a leading exporter of coal, uranium and liquefied natural gas (LNG), much of which is destined for Asia’s growing markets.At home, Australia’s energy sector is undergoing a significant transformation. The power system is seeing higher shares of variable wind and solar power; South Australia leads the deployment.
Yet despite this wealth of resources, energy security concerns are on the rise. As domestic oil production is dwindling, dependency on oil product imports and the oil supply chain are growing steadily. Gas supply in the east coast market has become tight, leading to higher prices in that market. Australia’s power system finds itself exposed to concerns over reliability, particularly amid extreme weather events. While its carbon intensity is in decline, it is still the highest among IEA countries. For natural gas to play a role as a transition fuel to a low-carbon economy, resource development, additional pipeline capacity and market integration are critical.
The government is implementing reforms to foster reliability and security of supply, prompted by the South Australia system wide blackout of September 2016 and the Finkel Review. However, a consistent energy and climate framework up to 2030/50 is needed at the Commonwealth level to ensure continued and adequate investment in the energy sector.
With the intention of helping to guide the country towards a more secure and sustainable energy future, this 2018 in-depth review analyses these and other energy policy challenges facing Australia, and provides recommendations for further policy improvements.