National Energy Strategy
 
Future energy supply 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 is pivotal to the climate challenge. Australia’s capacity to meet its greenhouse and economic challenges is vital to its international competitiveness.

At Alcoa, we believe energy 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 energy 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 future generations.  We have not been as disciplined as we should have been in framing an energy strategy.  Competition and diversity in the domestic gas market 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 Western Australia are three times higher than historical prices and wholesale gas prices are three times eastern states prices on a delivered basis. However, with new liquid natural gas facilities due to be built in the eastern states in 2015, these prices are now also on the rise.  Australia has an immediate need to guarantee domestic and local industry gas supplies 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 essential 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.