The Business Council of Australia (BCA) welcomes the opportunity to provide comment on the design and implementation of the proposed suite of reforms recommended in the Gas Market Review Report.
Among the most important challenges and opportunities facing our nation is facilitating an orderly energy transition to net zero by 2050 — one that best serves our economy and our community. How we transition our electricity and gas markets will have a strong bearing not only on our emissions levels, but on our productivity growth, our international competitiveness and living standards over the longer term.
In signing the Paris Agreement, Australia has committed to doing its part to limit global temperature increases to well below 2.0°C (and pursue efforts to limit temperature increases to 1.5°C) by reducing its emissions and achieving net zero by 2050. The BCA fully endorses Australia’s participation in the Paris Agreement and fully supports Australia’s climate legislation enshrining this participation.
An opportunity for enduring reform
The range and significance of gas market reforms over the past decade, including the proposed suite of Gas Market Review reforms, speaks to the enormous challenges faced by the gas sector as a critical part of Australia’s broader energy system and energy transition.
We are now presented with a window of opportunity to address these challenges decisively and more effectively than in the past. Getting the design and implementation of the proposed suite of Gas Market Review reforms right, will usher in an era of policy and regulatory stability for the sector that balances the interests of gas users, gas networks, gas producers and the broader economy. The current conflict in the Middle East is a salient reminder of the importance of having a resilient domestic energy system and an optimal set of energy market policy and regulatory settings.
The Future Gas Strategy is a solid foundation
The BCA reiterates its supports for the Commonwealth Government’s Future Gas Strategy priorities and principles, as the broader context for the design and implementation of the proposed suite of Gas Market Review reforms.
- Australia is committed to supporting global emissions reductions to reduce the impacts of climate change and will reach net zero emissions by 2050.
- Gas must remain affordable for Australian users throughout the transition to net zero.
- New sources of gas supply are needed to meet demand during the economy wide transition.
- Reliable gas supply will gradually and inevitably support a shift towards higher value and non substitutable gas uses.
- Gas and electricity markets must adapt to remain fit for purpose throughout the energy transformation.
Australia is, and will remain, a reliable trading partner for energy, including Liquefied Natural Gas and low emission gases.
Key takeaways
- The range and significance of gas market reforms over the past decade speaks to the enormous challenges faced by the gas sector and this Review is an opportunity to address these challenges decisively and more effectively than in the past.
- Getting the design and implementation of the proposed suite of Gas Market Review reforms right, will usher in an era of policy and regulatory stability for the sector that balances the interests of all market participants and helps to improve Australia’s energy affordability, energy security and international competitiveness.
- We are now at the ‘pointy end’ of the policy development process, where i) the regulatory ecosystem ii) careful policy calibration and iii) workable policy design will be all important getting the reform settings right.
- Policy makers need to continue to undertake genuine and close consultation with industry participants on all proposed gas sector reforms and take a holistic view of the regulatory ecosystem so that undue risk and uncertainty are minimised.
- The calibration of an appropriate domestic reserve proportion must be guided by long term competitive market equilibrium in the domestic gas market (as the policy objective) supported by rigorous and comprehensive gas sector modelling.
- Successful gas market reform requires long term stability and equity, flexibility in meeting obligations, addressing oversupply risk and sustainably affordable gas price outcomes.