Maintaining our competitive advantage of diverse and affordable energy resources is critical if Australia is to maintain its competitive advantage.
Australia’s East Coast gas market is undergoing a profound structural change, caused primarily by the rapid development of a liquefied natural gas (LNG) export industry, which will see a trebling in demand for gas from the east coast of Australia as it links to markets in Asia.
While there are significant benefits to Australia of a major new Liquefied Natural Gas export industry on the east coast, the impact on domestic downstream gas users – both industrial and residential – is substantial.
Recent modelling by Deloitte Access Economics1 shows that supply constraints, market dysfunction and higher gas prices will have impacts across the economy including mining, agriculture, electricity and water, construction and trade, transport and commercial & services.
The industrial impact is especially felt in the manufacturing sector. Natural gas is essential to a range of manufacturing industries, both as a feedstock in manufacturing plastics and chemicals (Australia’s second-largest manufacturing sector) and fertilisers and explosives (which support Australia’s two primary export industries agriculture and resources); and as a favoured energy input in other manufacturing, especially alumina, bricks, cement, float glass, steel, glass container manufacturing, paper and roof tile production.
Manufacturing Australia has developed a solutions paper titled "Reforming the East Coast gas market: Solutions to keep gas-intensive manufacturing in Australia."
The 13 point plan, released on 13th April 2015, urges joint action by Federal, State and Territory governments and industry, and says gas market reform should focus on four key goals: establishing transparent and functional gas markets; securing domestic and export supply, developing appropriate infrastructure and providing incentives for new production.
You can download the solutions paper here.