Australia will need $240 billion of investment in its gas and electricity industries over the next two decades to ensure a reliable supply, a draft federal government white paper says.
The paper, which flags further privatisation of energy assets and the removal of retail price regulation, sets out a plan for the government to follow in maintaining energy security and economic growth.
Releasing the draft in Melbourne today, Energy Minister Martin Ferguson said it highlighted the need for sound regulation and investor confidence in Australia's energy industries.
Central among these were the generation, transmission and distribution of gas and electricity.
The draft paper also says the government should include the acceleration of clean energy measures among its four priorities for the energy industry.
The others are the strengthening of a policy framework, reinvigorating market reform and developing critical resources, especially gas.
Mr Ferguson said Australia would need about $240 billion of investment in the generation, transmission and distribution of gas and electricity over the next 20 years.
"We need sound regulatory frameworks and confidence from investors to ensure that the necessary investment is delivered," he said.
He said the government had abandoned a plan to introduce emissions standards or carbon capture and storage requirements for new coal-fired power stations.
Along with the release of the draft energy white paper for public consultation, Mr Ferguson unveiled the 2011 National Energy Security Assessment (NESA) and the strategic framework for alternative transport fuels.
The NESA shows Australia has a positive energy security assessment but must remain vigilant and responsive to emerging challenges.
"In a period of significant change, improving the resilience of energy policy is critical," Mr Ferguson said.
The government has proposed a review of national energy policy every four years and bi-annual reviews of national energy security.
"This will allow us to assess and respond as required to emerging strategic market or policy developments in a timely and predictable way," Mr Ferguson said.
The white paper also focuses on the next round of energy market reform, which aims to increase efficiencies and remove distortions in markets that deter private-sector investment.
Mr Ferguson said the paper recognised the need for the government to act in consumer interests after a period of rising energy prices.
Business Council of Australia (BCA) chief executive Jennifer Westacott said the paper provided a solid foundation for ensuring secure, affordable and sustainable energy in the long-term.
"Having a clear pathway for future energy policy is an important signal in continuing to attract investment," Ms Westacott said.
“The draft white paper recognises that Australia cannot afford to limit its options if we are to deliver energy at the lowest possible cost while ensuring that our energy supply is reliable, and supports our transition to a low-carbon economy.
“The BCA strongly supports this view and believes technologies such as nuclear are an important consideration in determining the optimal mix of demand and supply-side technologies."
Ms Westacott said the paper suggested taking steps to wind up the numerous state and federal climate change initiatives which were inconsistent with the objectives of a national approach.
"The BCA has consistently advocated the removal of the plethora of federal and state-based programs related to emissions reduction, which have the potential to reduce the effectiveness of a national emissions trading scheme, increase the cost to business and prevent the attainment of least cost emissions reduction," she said.
Sustainable Energy Associaton of Australia chief executive Professor Ray WIllis said the white paper will be an important element to lead market reforms across Australia, however called on the final energy white paper to be more ambitious.
"Electricity price reform is needed – reform that eliminates subsidies for the use of fossil fuel in the generation of energy, and delivers cost reflective pricing that has perversely inhibited the improvement of energy efficiency, and take up of renewable energy in Australia," Professor Willis said.
"Renewable energy will get cheaper over time and the report needs to consider rapid technological development of renewable energy generation in other parts of the world are significantly reducing the cost, and improving the efficiency, of renewable energy generation right now.
"As the nation with the world’s best renewable energy resources, all Australian Governments and their agencies need to be more ambitious in their support of renewable energy, and the final Energy White Paper must do more to embrace this.
"Even more importantly, the final Energy White Paper must also prepare Australia for the transformative arrival of renewable energy generation."
