Energy White Paper eyes productivity and cost factors

By: Rob McKay


Fuel security and strategic arguments discounted as Coalition lets market decide.

Energy White Paper eyes productivity and cost factors
Industry and science minister Ian Macfarlane gives no backing for gas as a freight transport fuel.

 

Despite concerted efforts, particularly from the gas industry, to press for a greater focus on freight fuels other than diesel, the Federal Government’s Energy White Paper (EWP) refuses to accept arguments for such a move.

Industry and science minister Ian Macfarlane's long awaited clarity on the Coalition’s energy policy posture and plans makes plain that alternatives to traditional diesel will fail to attract special treatment from it.

The position is consistent with a long-held position of rejecting initiatives that immediately burden business or government financially in themselves.

"While developments in alternative fuel technologies continue, alternative fuels are not yet cost competitive," the EWP states.

"This is mainly because of the cost of converting vehicles, consumer appetite, and for renewable fuels, the cost and alternative use of inputs to produce the fuel as well as barriers to using supply chain infrastructure.

"So long as these issues remain, alternative fuels will not be able to gain significant market share in the transport fuels market.  

"Consistent with approaches elsewhere in the energy sector, the Australian Government prefers to not intervene in a way that promotes one technology over another or forces technologies that are not cost competitive into the market at a cost to consumers or taxpayers."

Nor is the Government persuaded by strategic arguments held by elements in the freight transport and science community centred on plentiful gas reserves or the perceived vulnerability of international supply lines.

On fuel import security, the next National Energy Security Assessment (NESA) will guide its actions.

A strategic fuel stockpile, such as exists in the United States and New Zealand, is rejected on cost grounds.

"The Australian Government considers that supply reliability will be maintained because of the depth, liquidity and diversity of international crude and fuel markets, combined with the existing Australian stockholding and at-sea tanker arrangements of commercial companies," the white paper says.

"Security of supply will continue to be monitored through the periodic NESA review. Additionally, emergency response arrangements and capacity will continue to be tested regularly to ensure preparedness.

"The 2011 NESA concluded there was sufficient global oil production and refining capacity to supply the Australian market to 2035, even with declining domestic refining capacity.

"The Government will consider and release a new NESA by mid-2015."

But it is considering priorities, including for transport, for the annual $9.2 billion research budget, "focusing on solving local issues, competitive advantage, and industry capability to commercialise research".

"The Australian Government is providing over $1 billion toward research, development and demonstration of renewable energy projects and half a billion to low emissions fossil fuel projects," the EWP says.

It is also positive about efficiency and pledges to develop a National Energy Productivity Plan, with a policy framework developed through the Council of Australian Governments (COAG) Energy Council.

"A national energy productivity improvement target will be determined as part of the plan, in parallel with developing Australia’s post 2020 emissions reduction target," it says.

"A national improvement target of up to 40 per cent by 2030 is possible."

In transport, it backs industry initiatives, using a case study Linfox’s internal Eco Drive program to improve fuel efficiency through changing driver behaviour, using route modelling software, and improving vehicle aerodynamics.

"Trials have demonstrated energy savings of up to 14 per cent," it says.

The full EWP can be found here.

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