10 April 2015
Act now or face energy shortage
Those campaign banners are now packed away and the re-elected Baird Coalition government can begin settling in for a four-year term. Not that it should get too comfortable, because there’s some more persuading to be done.
Convincing the electorate to embrace change is never easy, especially when “reform” appears a negative and arguments are manipulated for political advantage. This has long been the case in NSW, in Queensland and at the federal level. Bipartisanship on energy issues is as rare to find as an electric car refuelling station.
While the NSW electorate at least seems now to recognise the benefits of a lease on poles and wires, it has not yet turned the corner on the impending gas crisis.
The Australian Energy Market Operator and AGL have warned that NSW will suffer between 20 and 50 days of gas shortages, commencing in the winter of 2016. A 50-day shortage for a manufacturing business could mean at least 100 days of non-production time. For the domestic user, it means an increased use of electric heating, driving up the use of fossil fuel-generated energy.
The costs of gas shortages will be a massive hit. A recent Deloitte Access Economics study commissioned by the Energy Users Association and other industry groups states that there will be a loss of manufacturing output of $30 billion annually by 2021. Four other studies have made similar conclusions. We have all witnessed far too many reviews and far too little action to prevent this.
The problem is not a lack of gas. Australia has enough to supply our demands for centuries. A stronger, expanded market, streamlined approvals, price transparency, well-functioning gas trading hubs, and access to pipeline infrastructure are some of the measures that will promote continuity of domestic supply.
Failure to act now will result in the very thing that governments usually shun — to become market interventionists when the crisis hits. Given the decline in manufacturing has already cost thousands of jobs, no-one really wants to risk further damage. Failure to act has ramifications for all states, where their gas may need to be diverted to NSW.
Four years ago, around 45 per cent of NSW was open to coal seam gas exploration. Today it’s less than a quarter of that, due to corporate cowboys, nimbyism and the catastrophic wailing of too-sensitive political representatives.
The federal government has a leading role to play in gas reform. However, there must also be some urgent resolve from the NSW and Victorian governments to remove excessive regulatory barriers to new production, while still protecting aquifers and arable farm land from those with dodgy production plans.
No premier, least of all one with the integrity and reforming zeal of Mike Baird, wants to front a press conference to proclaim, “We’re out of gas!”.
Read...