Australasian Science Magazine

By Bruce Godfrey

No single policy will achieve sustainable and affordable energy.

National energy policy cannot be formulated in isolation from the rest of the world or in isolation from other policies. An integrated, whole-of-government approach is essential, for which there are both horizontal and vertical dimensions.

National energy policy should be coordinated to the optimal extent with environmental policy, technological innovation policy and economic policy. This is the horizontal dimension of energy policy integration.

National energy policy should also be calibrated to the optimal extent with foreign policy and trade policy and with all levels of government. Domestically, this should include Commonwealth, state, territory and local governments. This is the vertical dimension of energy policy integration.

Creating a market and regulatory environment that encourages domestic and foreign investment in new, low emissions energy supply and use infrastructure and in innovation is crucial for Australia – and a clear role for Australian governments in conjunction with energy suppliers and users.

Why is this so important? Because energy is essential to Australia’s economy.

Its availability, affordability and efficient use is a key driver of business productivity and social well-being. Importantly, Australia is a net energy-exporting nation, with considerable national wealth derived from our exports of energy resources, including coal, uranium and liquefied natural gas.

Australia is heavily dependent on fossil fuels to meet our own energy consumption needs. Our electricity supplies are 85% derived from coal, natural gas and diesel; our passenger and freight transport tasks are almost completely dependent on fossil fuels; and much of the space heating in residential and commercial buildings is provided by natural gas.

Individual regions, countries and states are taking action to reduce their emissions, often to gain a first-mover advantage for their industrial sectors as well as seeking to reduce the local and regional pollution effects of energy supply and use. There is a global need to develop and deploy low-emissions energy technologies to meet emissions reduction targets, and sound environmental, industrial and economic arguments for Australia to play a role in that process.

Australia’s energy policies must help to ensure the reliable supply of the energy required by our economy and people at an affordable price. Failure to do so will put at risk the investment needed to retain and build international competitiveness. The clear need for strong and consistent links between energy and industry policy is evident.

In recent years, Australia’s energy and climate policies have been highly variable, which has hampered timely investment. The need for strong and consistent links between energy and climate policies is incontrovertible. Developing and implementing policies that will deliver a transition to a low-

emissions energy future while maintaining adequate, reliable and competitive supply now is Australia’s – and the world’s – key challenge.

Historically, energy and energy technology transitions have always required a long, difficult and complex journey before successful achievement. The private sector has brought, and will continue to bring, new energy technologies and products to market for a low emissions future.

This provides governments with options that can utilise local energy resources, and energy users with choices for the management of their energy supply, use and cost. However, the investment horizon of energy production, generation and transmission projects is very long – typically several decades.

No single policy aspect will achieve sustainable and affordable energy. Energy efficiency and consumer behaviour will deliver approximately one-third of the target; a transition to new technology delivered from consistent investment in innovation will also bring about one-third; and market reform, intelligent grids and smart meters will bring the remainder.

Australian governments must provide strategic support for RD&D of new energy technologies – energy policy must have close links with innovation policy. Energy policy must also encourage improved education and training to maintain a domestic competitive advantage and to enable Australia to have the skills needed to adopt and adapt energy technology solutions from around the globe.

This should include developing home-grown RD&D talent, attracting international talent to Australia and fostering a culture of globally connected researchers and industry to encourage inward streams of investment, information and skills.

The long timeframes for RD&D make it especially critical that policies to drive energy innovation are stable and predictable over the long term.

Dr Bruce Godfrey FTSE is chair of the ATSE Energy Forum and is involved through the Wyld Group in the commercialisation of technologies, particularly new energy technologies. He was Managing Director of Ceramic Fuel Cells Limited and of the Energy Research and Development Corporation.