September 23, 2014 / 7:13 AM / 5 years ago

Australia energy industry blueprint sees large scale deregulation

SYDNEY, Sept 23 (Reuters) - Australia on Tuesday said it wants to dramatically deregulate its energy industry, boost domestic gas supply and cut renewable energy subsidies as it prepares to ramp up exports of liquefied natural gas.

In a draft policy blueprint, the conservative coalition government unveiled a range of policy proposals - most involving scaling back government interference - that it said would keep the country’s energy industry competitive amid dwindling demand and investment.

“The Australian energy market has undergone significant transformation in recent years as a result of declining demand and changing patterns of consumption,” industry minister Ian Macfarlane told a mining conference in the city of Melbourne.

“We cannot afford to just coast along because we are blessed with such a diverse energy resource.”

Australian energy resource exports in 2013 were worth about A$69 billion or nearly a quarter of the country’s total exports, with more than half of those exports coal, making it the world’s No.2 coal exporter.

But profit from coal exports is slowing because of lower coal prices and a relatively high Australian dollar, the paper warned, and energy investment has “peaked and is entering a downturn” as companies shift from construction to production.

Australia will become the first country to develop coal-seam gas for LNG export in late 2014, and “must remain at the forefront of industry innovation...to secure its share in growing global LNG markets”, it added.

It said governments must streamline workforce and environment laws between states, “rationalise” subsidies for households which return unused solar power to the grid, introduce “smart metres” so consumers can use appliances at cheaper times, and speed up gas supply so prices don’t rise as gas exports begin.

The government, swept to power a year ago partly on promises to repeal an unpopular carbon emissions tax, published the so-called “green paper” after taking 260 submissions over a previous draft document. It will take submissions on the document before unveiling an official policy later this year.

The new energy measures should benefit the country’s largest energy retailer, Origin Energy Ltd,, which plans to export LNG from Queensland state to Asia, and No.2 retailer AGL Energy Ltd which plans to fill the domestic supply gap left once Origin and others sell gas offshore.

About 80 percent of Australia’s power is produced by coal-fired power stations, making it one of the world’s biggest carbon emitters on a per capita basis.

Last month, a government-commissioned report recommended Australia effectively end its Renewable Energy Target (RET), a scheme designed to ensure that 20 percent of its electricity would be generated from renewable sources by 2020.

Australian Greens Senator Larissa Waters criticised the energy paper as “cling(ing) to last century’s ideas by focusing on fossil fuels while the world calls for action on climate change”, a reference to the United Nations Climate Summit 2014 taking place in New York.

But the Energy Networks Association, which represents grid companies, said it supported the proposal to change “unfair cross subsidies between users”. (Additional reporting by Melanie Burton in MELBOURNE; Editing by Michael Perry)

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