Professor Chris GreigDirector, UQ Energy Initiative

Comparing Energy (& Climate) Policies

in the US & Australia

Today’s Presentation

• US energy context

• Australian energy context

• The Energy Trilemma

• Comparing Policies & Outcomes in the US & Australia

• Threats to coherent policy

Security & Reliability

Affordability

Energy Policy

Environment & Climate

Energy in the USA• Domestic Energy Use• 1973 Arab Oil Embargo• Bush Administration: National Energy Plan

• Obama Administration:

– 1st Term: Economy + Stimulus = Green Jobs

– 2nd Term: Climate Policy

• Energy Mix dominated by traditional resources– Petroleum, Natural Gas, Coal

– Nuclear

– But growing investment in Wind, Solar, Hydrogen/Hybrids

– And Biofuels - 1st & 2nd Generation

Energy in Australia

• Rich in non-renewable energy resources

• Major Energy Exporter (Coal, LNG, Uranium)

• Investment in fossil energy production central to Australia’s economic resilience

• 88% of electricity is generated from fossil fuels (including 75% coal)

• Nuclear power prohibited

• Biofuels negligible

• Policy wise3 Prime Ministers in 4 years3 shifts in energy & climate policy

The Energy Policy Trilemma

Security & Reliability

Affordability

Energy Policy

Environment & Climate

Energy Policy ought to manage the inevitable trade-offs

Australia over the last decade has jumped between priorities

The USA seems better able to manage trade-offs although Energy Security prevails

On Energy Security & Reliability

In the US talk of future Energy Independence dominates -

• Especially Petroleum

• U.S. net Oil Imports falling to 20 year lows from a peak of 12.5 M bpd in 2005 to 7.4 M bpd in 2012

• Driven Primarily by Resources, Fracking & ‘Reservation’

• The IEA has declared that the US will be a Net Exporter by 2020

But in Australia …

Energy Security remains a low order policy priority• Partly because we are rich in resources relative to population

• Partly because the natural resource exports underpins the economy

Priority Issues for new Energy White Paper 2014• regulatory reform;

• workforce productivity;

• the development of both traditional and new energy sources;

• maximising export opportunities for energy commodities, products, technologies and services.

Australia’s Future is tied to Asia

Demand growth for Australia’s energy resources is likely to be enduring

China’s energy consumption by source (annual average 2002-12)

The US on Environment & Climate

Over the past eight years, the United States has reduced our total carbon pollution more than any other nation on Earth. But we have to act with more urgency – because a changing climate is already harming western communities struggling with drought, and coastal cities dealing with floods.

When our children’s children look us in the eye and ask if we did all we could to leave them a safer, more stable world, with new sources of energy, I want us to be able to say yes, we did.

US on Climate & Environment

• Pledged reduction of 17% CO2(e) below 2005 levels by 2020

• US environment & climate policy is heavily focussed on cleaning up / eliminating coal power plants

• Key policies– CO2 standard on new fossil plants (NGCC equivalent)

– CAFÉ standards

– State based RET’s

– California ETS

– Biofuel targets (1st and 2nd Generation)

Australia on Environment & Climate

“Climate Change is the greatest moral, economic

and social challenge of our time”…• Pledged 5% CO2(e) below 2000 levels by 2020

• Proposed cuts to GHG emissions by 80% before 2050• An expanded mandatory Renewable Energy Target

20% by 2020• An Emissions Trading Scheme proposed in 2008

commenced with a Carbon Tax in 2012• “Accelerating” clean energy deployment

• ARENA & Clean Energy Finance Corporation

• Strong support for CCS

Kevin Rudd in 2007 Australian Prime Minister

Heralded an era of certainty for investors to decarbonise the energy sector

And a new political reality

New Prime Minister Tony Abbot campaigned

on Australia’s suffering under the weight of

“world’s biggest carbon tax” and has

promised to repeal it.

And the Clean Energy Finance Corporation

To be replaced by Direct Action Policy

Much more focus on Affordability

Little on security and environment

And on affordability (electricity)

US largely remains affordable while Australian residential electricity prices have more than doubled since 2005.

And affordability of gas

• Geology + Domestic Price + Innovation + Infrastructure + Capability

US Shale gas (& oil) revolution

Lots of low price gas has revitalised US manufacturing

But Australia’s gas revolution is very different

But in Australia, a strong export price signal drove development of offshore and onshore resources

The domestic enablers not so present

Domestic gas prices likely to range from $8-10 per Million Btu

The growing threat to stable, coherent policy

The Australian coal industry - adding value to the economy

Coal - Safe clean power for the world

Cleaner EnergyCreating JobsGrowing Communities

Environmental activism and (in response) industry advocacy hijack sound long term policy