The Business Council of Australia says the Federal Government’s proposed east coast gas market reforms will need to be carefully designed to avoid unintended consequences for future investment and long-term supply.
Business Council Chief Executive Bran Black said while a prospective, well designed gas reservation policy is supported by the BCA, there are many implementation details still to work through, including how to manage the risk of potential structural oversupply.
“We support a prospective gas reservation policy, however if the design is wrong there will be unintended consequences, which will impact future gas supply and prices,” Mr Black said.
The Gas Market Review found that adequately supplying the domestic market at lower prices ‘will require new supply, ongoing investment, and a more efficient, streamlined regulatory framework’.
“We remain committed to working with the Government to address these challenges, particularly how future supply requirements will be assessed and how the proposed 20 per cent obligation will operate in practice.”
Mr Black said the BCA welcomed the Government’s decision to streamline overlapping gas market regulation, including the replacement of the Australian Domestic Gas Security Mechanism and Heads of Agreement.
“Opening up new supply is critical, and so we also welcome new exploration licences being granted and considered in Victoria and Tasmania.
“If we’re serious about addressing supply risks, we must also ensure bilateral agreements to accredit states and territories to assess and approve projects under the EPBC Act are established as a matter of urgency.”
Mr Black said that despite conflict in the Middle East and volatility in global energy markets, Australia’s east coast domestic gas prices have remained relatively stable, reinforcing the importance of policy settings that support long-term supply and investment confidence.