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National Energy Security Strategy
Energy security is possibly the most vital issue confronting our entire country. Energy is the lifeblood of Australia’s mining and manufacturing economy which together accounts for 80 per cent of Australia’s exports. And of course energy security is pivotal to the climate challenge. Australia’s capacity to meet the greenhouse and current economic challenges is vital to its international competitiveness.
At Alcoa, we believe energy security is much more than simply evaluating sources and reserves. It must include an analysis of the needs of domestic users, detailed work on critical infrastructure, and the security and maintenance of that infrastructure. It also must look at contingency planning and supply vulnerabilities in the various energy sectors.
Alcoa’s position is that Australia must develop a national security strategy to guarantee the country’s energy requirements for the next 50 to 100 years. For too long we have been focused on expanding and maximising energy exports without proper protection for our own and future generations. We have not been as disciplined as we should have been in framing an energy security strategy. Competition and diversity of gas supply needs to be a priority.
The facts are that gas contracts are written for the long term, often 20 or 30 years into the future. This means that the gas going to overseas competitors is not available for the current and future needs of the local economy. As a result, foreign contract prices have been regularly spiralling upward with telling consequences for local users.
Some contracts for gas in WA are three times higher than historical prices and wholesale gas prices are three times eastern states prices on a delivered basis. Australia has an immediate need to guarantee domestic and local industry security of gas supply at a competitive price.
The use of gas bridges the time required to develop significant alternative renewable energy sources, as part of the greenhouse/ climate change solution. Research undertaken by the Business Council of Australia reveals that many low-emission technologies, with the exception of natural gas, will not be substantial contributors until after 2020. Alcoa is of the view that gas, as the cleanest transitional fuel, is an essential part of the jigsaw to Australia’s part in the solution to climate change.
Alcoa’s position is clear – we need to facilitate domestic gas growth to reduce greenhouse gas emissions, while maintaining the sustainability of Australian industry and its competitiveness.
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