28/01/2009 - 22:00

World in transition on energy options

28/01/2009 - 22:00

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Australia is at a crossroads with regard to its energy policy and faces some tough decisions in coming years.

AUSTRALIA has viable options to improve the stability, security, volume, ecological quality and economic competitiveness of its energy supply. While not running out of energy sources just yet, we find ourselves at a strategic crossroad.

Energy decisions will impact on the future of Australia's energy usage over the next 20 to 30 years. Australia must make important decisions on the type and source of energy we will consume, as well as what infrastructure is needed to support those same energy decisions.

The world faces an energy options transition period characterised by the cost of energy, concern over greenhouse gases and the need for energy security. Australia is part of this global energy framework and ignoring our options is done at our peril.

Future Directions International (FDI) believes that, as the cost of energy supply and its security increases, investment in, and expansion of, energy projects is inevitable. Several new energy alternatives are becoming viable, though fossil fuels will remain critical in the short to medium term.

It is likely nuclear energy will play a more important role in the future, as renewable forms of energy cannot alone solve all our energy problems. For these reasons, FDI recommends the following as part of any national energy policy.

- Australia should insulate itself from sudden transport fuel shortages by encouraging oil shale and coal liquefaction projects and greater exploration. Also, greater fuel efficiency options for motor vehicles should be promoted and the option to readily convert to natural gas as a transport fuel should be ensured.

- Sophisticated surveillance technologies need to be installed to secure Australia's vital offshore oil and gas platforms. The federal government must improve its rapid response capability for such facilities to protect against either hostage situations or intentional destruction. An enhanced program of incident response exercising should be instituted by the Australian Defence Force and security organisations.

- Investment in ultra-clean coal and other associated forms of clean coal technology should be prioritised so that coal can continue as an important power source. Australia should take greater advantage of existing coal reserves and utilise ultraclean coal (UCC) and other technologies. Coal is a major export earner and the fact that some of Australia's coal resources are less polluting than others should be turned to Australia's advantage. Carbon sequestration is but one example of how the coal industry can adapt itself to continue to be relevant in the 21st century. Australia needs to focus on the development of UCC technologies, which would contribute to minimise environmental concerns as well as helping ensure that the Australian coal industry could benefit from some vertical integration, or value-added, aspects of the market.

- Australia must undertake a review of new nuclear technologies, such as thorium-based and pebble-bed reactors. Government policies to once opt out of conventional nuclear power generation may have been feasible, but the efficiencies and potential benefits of new forms of smaller reactors for the decentralisation of power generation cannot be ignored. A review of new and safer nuclear power generation options offered by thorium-based reactors and pebble-bed reactors is needed to exploit our proven large resources of thorium and uranium. This could give the nation a major strategic advantage.

- Federal and state governments should undertake a complete review of the entire nuclear life cycle. Australia must, in parallel with a study of new nuclear technologies, reconsider all aspects of the nuclear life cycle. This includes the extraction and refinement of both thorium and uranium as well as the question of responsible nuclear waste storage. Globally, this industry will expand with or without Australia.

- Federal and state governments should consider implementing appropriate zoning concessions for biomass refineries, as well as specifically targeted tax incentives for primary producers producing biomass inputs within an economically feasible distance from these refineries. With a significant agricultural industry, Australia should pursue fuel sources derived from agricultural production.

- Research into hydrogen as an alternative transport fuel should continue. Australia should continue research into hydrogen though a comprehensively hydrogen-based economy is unlikely to be a reality in the next 10 to 20 years and should not be viewed as a silver bullet to resolve all our energy needs.

- Governments must maintain regulatory oversight of the energy market. However, once the strategic direction is set, they need to allow the market to select the best, and most efficient, approach to implementing energy solutions. FDI concludes that the marketplace, and the emerging new technologies and practices, are demonstrably and more naturally geared far more to safety, environmental considerations, efficiency, and investment considerations than are the traditional technologies. This is not to deny government its vital oversight and regulatory functions in the energy marketplace, but to highlight the fact that change -- both for the purposes of efficiencies and ecology -- is more rapid and responsive in the private sector. There is strong evidence that state-controlled energy distribution has proven incapable of the required flexibility, not because of a lack of competent leadership or staffing, but because political considerations have lagged behind market demand.

- Governments should encourage research and development into energy by providing tax incentives and subsidies for new technologies so that Australia remains at the forefront of the next generation of energy technology such as new nuclear technology, biomass refining, and other areas.

Australia's energy options cannot be isolated from international developments. When formulating a national energy policy, Australia's position in the international environment will give policymakers contextual clarity.

n Craig Lawrence is chief executive at Future Directions International, a Perth-based think-tank.

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