Australia’s commitment to the Paris Agreement means cutting carbon emissions to near zero over the next 30 years. This must be done at the lowest cost, while ensuring energy supplies remain reliable.
This historic task is a challenge and an opportunity. The reforms and investments required will be unprecedented in their scale and complexity. But Australia has the energy and other resources to flourish in this low-carbon future.
Australia’s energy future should be a mix of renewables, batteries, electric vehicles, hydrogen, and possibly novel uses of fossil fuel with carbon storage. It should also be a future of lower prices. It will require collaboration, planning and flexibility by governments, energy agencies and the energy industry over several decades.
To date, the performance of all these parties has been poor. There has been growth in renewable power, but also carbon wars, piecemeal and stop-start policies, power station closures with little notice, needlessly high power and gas prices, compromised reliability, and only slow and partial decarbonisation.
Australia needs new foundations to underpin its energy policy reform agenda.
- First, energy policy must be integrated with carbon policy, which must encompass transport, industrial, and export energy. Emissions reduction targets must be accompanied by mechanisms to meet them and to increase them if necessary.
- Second, the Council of Australian Governments (COAG) should negotiate a new Australian Energy Agreement (AEA) to drive decarbonisation in stationary, transport, industrial, and export energy. The Agreement should embody a truly national commitment in which jurisdictional proposals for unilateral intervention are subject to a formal impact assessment by the lead independent agency, before any decision to proceed.
- Third, the institutional agencies need to be strengthened, so that they can implement the policies determined by governments.
The agencies supervising the electricity and gas systems were not designed to facilitate a rapid, disruptive transformation. They should be reformed so they can focus on this task and better cooperate with each other.