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Australian energy market in state of flux

While some long term trends in the Australian energy market continue – such as strong growth in Queensland and Western Australia – the sector is undergoing rapid change.

Increasing use of natural gas has stalled, especially in electricity generation, to be replaced by increasing consumption of coal (mainly brown coal).

According to ABARE, total energy consumption in Australia is estimated to have grown by around 3.6 per cent a year between 1993-94 and 1997-98, largely as a result of strong growth in gross domestic product.

Energy consumption in the electricity generation sector rose by an annual average of over 5 per cent in this period and by over 9 per cent in 1997-98, making it the largest and fastest growing energy consuming sector for the year.

Developments in Queensland and Victoria underpinned the strong growth.

Total energy consumption in Australia is projected to grow at an average annual rate of 1.4 per cent between 1997-98 and 2014-15 to reach 6087 petajoules.

Extensions of the natural gas pipeline network continue to open up large markets particularly in mining, manufacturing and electricity generation sectors.

The proposed natural gas pipeline from the Kutubu gas fields, in Papua New Guinea’s southern highlands, to Queensland would provide significant impetus for the development of energy intensive industries and gas fired electricity generation capacity.

Over the medium-to-long term, natural gas consumption in the electricity generation, mining, manufacturing and commercial sectors is expected to rise significantly.

Natural gas consumption is projected to grow by an annual average of almost 4.3 per cent over the outlook period, well above the projected growth rate for total energy consumption.

The natural gas share of total consumption is projected to increase to almost 29 per cent by 2014-15.

Crude oil is projected to account for almost 34 per cent of total energy consumption in 2014-15.

Combined shares of black coal and brown coal are projected to decline from 42 per cent in 1997-98 to around 32 per cent by 2014-15.

In contrast, a modest rise is expected in consumption from renewable energy sources, with annual growth averaging 0.7 per cent to 2014-15.

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