15/10/2008 - 22:00

State energy policy debate timely

15/10/2008 - 22:00

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WITH energy issues firmly fixed on the public agenda after the events in recent months, the time is right for the development of a state energy policy which, at its heart, has a vision for Western Australia's development to 2050 and beyond.

State energy policy debate timely

WITH energy issues firmly fixed on the public agenda after the events in recent months, the time is right for the development of a state energy policy which, at its heart, has a vision for Western Australia's development to 2050 and beyond.

The Varanus Island incident and the national emissions trading debate have made Western Australians acutely aware that energy underpins WA's economy.

In particular, the state's mineral processing and extraction industry and energy exports, which produce around $53 billion of commodities every year, rely on a secure, reliable, competitively priced energy supply.

The Chamber of Minerals and Energy believes that a comprehensive energy policy for the state is vital to ensure security of energy supply to meet the ongoing needs of the expanding domestic economy, while facilitating growth in energy exports.

The nature of Western Australia's economy and our isolation from other energy markets highlight the critical importance of long-term energy planning which takes particular account of the state's needs.

Given resources companies can make investment decisions out to 2050 and beyond, long-term planning is the key and will underpin Western Australia's economic wellbeing into the future.

So what would a Western Australian state energy policy look like?

The Chamber of Minerals and Energy strongly supports a preference for market solutions in energy policy, subject to the important role of government in setting policy, regulations and removing barriers to new investment.

The chamber has supported the splitting of Western Power into separate businesses to create greater competition and investment in the wholesale electricity market, and has concerns that a recent proposal by the government to re-merge Synergy and Verve Energy would undermine advances made.

More than two years on from the split of Western Power, it is timely to assess the results, revisit how the market is working and address issues that have arisen.

However, it is also important to maintain certainty and confidence for new investors looking to enter the market and ensure that new investments are not put at risk.

A number of new investments have been made and are in development, and significant resources have been invested getting to this point.

Through taking independent advice and a comprehensive approach to energy policy, measures can be put in place to address issues within the market without compromising competition.

In addition, appropriate electricity and gas tariff structures and regulation must underpin the future market and allow the market to operate freely in providing solutions for energy requirements.

The Chamber of Minerals and Energy believes that a state energy policy should also be firmly based on an understanding of the state's primary energy resources, taking account of current and future energy demand.

Fuel diversity will be a key driver of a competitive market and secure, stable and competitively priced electricity for consumers.

Access to resources will change the mix of energy resources over the next 40 years.

The development of new technologies, including renewable energy technologies and energy efficiency improvements will also provide options for carbon efficiency and investment decisions.

The state energy policy must ensure that energy infrastructure is adequate to meet future energy demand at both regional and local level.

The state can best facilitate this by ensuring a clear and consistent long-term investment climate including reduced costs of entry to the market and tariffs that provide appropriate pricing signals.

Finally, streamlined and transparent risk-based approvals processes and reporting requirements that incorporate sustainability and emissions considerations will also be a fundamental part of a state energy policy.

Development of emissions targets and verification, efficient national carbon capture and storage legislation, and efficient national and international emissions trading schemes will profoundly impact the competitive and sustainable growth in Western Australia's energy and resources sectors.

Carbon pricing policies will have significant impacts on the future growth of the Western Australian economy and it is essential that the state's trade-exposed emissions intensive industries are protected until international competitors have similar carbon cost imposts.

Given growing cost challenges in Western Australia, maintaining a safe, efficient and reliable energy supply is critical for the long-term competitiveness of industry and for the wellbeing and long-term viability of the greater community.

Clear and consistent policy is critical to energy market participants and assists the efficient development of resources and supply of energy to the state.

An overarching integrated position statement would be useful to clarify the state's vision for the total energy solution for the future needs of the state.

This then allows markets to operate freely in the provision of energy to industrial, commercial and residential users.

The CME welcomes the debate on energy market reform. It is hoped that contributions from all interests will add to the development of a comprehensive energy policy that will underpin WA's continued economic success.

- Reg Howard-Smith is chief executive of the Chamber of Minerals & Energy of Western Australia.



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