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Resilience to Energy Supply Shocks an Australian National Priority

November 15, 2011

The Standing Council on Energy and Resources today confirmed that building Australia’s resilience to energy supply shocks is a national priority.

The Council works under the auspices of the Council of Australian Governments (COAG) and covers other issues including resource and petroleum exploration and extraction, clean technology coordination, and efficient electricity market governance.

The Council’s terms of reference specify a mandate to identify:

Changes required to ensure market resilience and energy security

One might imagine that this refers to two aspects:

First, to electricity market security, given the signficant changes in hand related to the introduction of carbon pricing.  The recently legislated carbon tax will lead to a shift in electricity production away from coal, and towards gas and renewables.  However, there is much uncertainty in the evolution of the sector as newly accessible gas markets due to LNG export terminal development mean that domestic gas prices are deemed to rise substantially, while the vaunted mandatory renewable energy target will be very hard to meet from renewable energy supply options.

Second, Australia’s liquid fuels (oil) deficit is widening.  Production and reserves are declining, while consumption is expanding inexorably.  There is very little envisageable substitutability for liquid fuels.  Vehicle fleet efficiency and electric vehicle facilitation may be the focus.

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