Remaining state-owned electricity assets should be privatised to increase competition and lower power bills, a federal government report recommends.
And the Abbott government says it will not support a domestic gas reserve despite its own report acknowledging that demand for Australian gas exports is pushing up prices for households and industry.
Industry Minister Ian Macfarlane released the report, known as the energy white paper, on Wednesday morning.
The report carries over two key recommendations from a green paper published in September: privatisation of electricity assets and harnessing the “enormous opportunity for the economy” of liquefied natural gas exports.
The paper argues that competition between electricity suppliers has been stifled by state government ownership of assets and privatisation would encourage greater competition and innovation and deliver energy at the lower cost.
“The evidence is that privately owned assets are more productive,” the paper notes, calling for a reduced regulatory role for governments in the energy market.
The paper charts electricity price rises in recent decades, with the government’s figures showing household prices rose sharply from 2005 and by 50 % in 2013/14.
It acknowledges that the increases were largely due to investment in poles and wires by electricity companies.
The government’s modelling shows electricity prices flat-lining nationally over the next few years.
Gas prices, however, have skyrocketed, with the retail price for gas increasing by eight % a year for the past 10 years.
Fuel prices have been increasing steadily as well since 2010.
The paper also says consumers are increasingly taking greater control of their energy costs, but “more flexible tariffs and giving consumers better access to information on energy use” would assist them in better managing those costs.
The document is likely to anger environment and climate groups for the minimal attention it gives to the problem of climate change and the need to reduce reliance on fossil fuels.
The paper will draw the same criticism as an issues paper the government published last month ahead of public consultation on Australia’s post-2020 emissions reduction targets.
That paper was criticised for using a global energy scenario that would put the world on track for nearly four degrees of warming instead of the internationally agreed level of two degrees or less to avoid catastrophic climate change.
The energy white paper argues that no single energy source should be prioritised over another but says electricity from fossil fuels, particularly coal, will continue to play a “vital role” in “providing low-cost energy around the world until the cost of renewable power becomes more competitive”
It says that investment support for low emissions technologies, such as carbon capture and storage, is important for Australia “as a major user of coal-fired power and can aid international development efforts that help economic growth in developing countries by using coal and gas while limiting emissions”.
The report says government policy of encouraging investment in renewable energy has contributed to the surplus supply of electricity in Australia.
Mr Macfarlane has used this as an argument to support the government’s efforts to reduce Australia’s renewable energy target, despite energy companies arguing that assistance to retire old mothballing coal-fired power stations would help to address the over supply problem.
“The Australian government remains committed to a RET that allows sustainable growth in both small- and large-scale renewables so that 20 % of Australia’s electricity demand in 2020 comes from renewable sources,” the paper says.
The paper calls for a “technology neutral” approach to energy supply, which would be determined by the market.
Climate and environment groups want government energy policy that will lead to decarbonisation to halt global warming. – Sydney Morning Herald