The coronavirus (COVID-19) has had a profound impact on the health and economic wellbeing of Australians and the broader Australian economy. Australia is now in its first economic recession since the early 1990s. The recovery from this recession will most likely be long and complicated, requiring significant reform and investment by state and federal governments.
Energy-related reforms and investment will be a key pillar of the recovery strategies and budgets developed by governments. These reforms are likely to be aimed at not only addressing the challenge of a strong economic recovery but also will assist in transitioning Australia to a low carbon economy.
Some recent examples of government strategies and investments are outlined below.
Low emissions technology statement
In September 2020 the federal government released its first Low Emissions Technology Statement. The Statement outlines key actions, focus areas and economic stretch goals for the government all designed to make new technologies as cost-effective as existing technologies.
Other key items in the Statement include continued investment in hydrogen production and research and a focus on the ability to produce low carbon or green steel.
In parallel with the release of the Statement the government provided additional and guaranteed baseline funding of $1.43 billion for the Australian Renewable Energy Agency (ARENA) to continue its work in advancing Australian renewable, storage and related technologies.
Gas led recovery
In September 2020, the federal government also announced their position that there is a key role for natural gas in re-establishing a strong economy. The prime minister announced a number of high-level inter-related steps and ambitions to expand the scope and scale of the east coast gas industry. The outcomes of which could reshape the gas industry for decades.
The announcement included the following components:
- A vision to create a transparent Australian gas hub supplying gas from potentially five new basins and interconnecting with new gas pipelines on the east coast to lower gas prices.
- Reaching new agreements with LNG export projects to retain a proportion of their gas domestically. The current agreements expire at the end of the year.
- Enforcing a ‘use it or lose it’ policy for the holders of gas licences that do not adequately develop projects
Queensland renewable energy investments
At a speech in August 2020, the Queensland premier made an announcement in relation to renewable energy development. The premier announced that the state government would invest $145 million to assist in developing three Queensland renewable energy corridors in North Queensland, Central Queensland and Southwest Queensland.
These renewable energy zones would focus on areas with large users in areas such as manufacturing, hydrogen development, aluminium and smelting industries and agricultural production. The aim is to assist in providing competitive electricity prices, increased energy security and jobs.
Victorian renewable energy auction – market sounding
In 2018 the Victorian government successfully completed its first renewable energy auction as a key strategy to support the achievement of its renewable energy targets. The first auction delivered 928 MW of new renewable energy projects in Victoria.
In September 2020 the Victorian government commenced a market sounding process to test industry interest and capacity for a second renewable energy auction to invest in new solar, wind and other renewable energy projects. This auction is aiming at securing at least a further 600 MW of new capacity.
A key difference with the first auction is that this process will also explore the potential for electricity-reliant industries and businesses to buy renewable energy along with the government. This is aimed at assisting businesses with procuring cheaper renewable energy by leveraging the buying power and capabilities of the government.
There will undoubtedly be more announcements and investment commitments from federal and state governments as the year progresses and budgets are released. These investments and reforms will have clear aims in reducing energy prices for businesses and consumers more broadly.
This should present new opportunities for businesses to explore renewable energy or other ways to reducing their energy costs.
If you have any questions or need advice on the opportunities presented by an energy led recovery, please contact your Energy Action account manager.