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Australian launch of the IEA World Energy Outlook 2011: Speech, Canberra



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Minister for Resources and Energy, Minister for Tourism

Australian Launch of the IEA World Energy Outlook 2011 12 December 2011

Canberra

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International Energy Agency (IEA) Chief Economist Fatih Birol, distinguished guests, ladies and gentlemen.

Good morning and welcome to Canberra.

It is a pleasure to be here today at the launch of the IEA's World Energy Outlook (WEO) for 2011 in Australia.

In October I was fortunate to chair the IEA Governing Board meeting in Paris which brought together Energy Ministers and delegates from 37 countries.

If there was one thing I took away from that meeting it is that all countries, despite their different set of national circumstances, are facing the same challenge.

The challenge of how to provide a reliable source of energy for their citizens, including the most impoverished in society, while seeking to meet community expectations regarding affordability and environmental goals - including emissions reduction.

In the case of Australia, we are no different.

Growing energy demand

Globally, Australia has a unique role as one of only three OECD net energy exporting countries.

With the global population reaching 7 billion people, and projected to increase to 8.6 billion in 2035 - Australia can play a key role in ensuring these people can get access to a reliable source of energy.

At present 1.3 billion people - or 20 per cent of the global population - are without access to electricity.

More than 95 per cent of these people are located in Sub-Sahara Africa and Asia.

Access to energy is fundamental to lifting people out of poverty and improving their standard of living.

The IEA predicts that 90 per cent of the projected growth in energy demand is expected to be in non-OECD countries, mainly China and India.

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China, because it is the world’s largest energy consumer, and India, because it is forecast to be the world's most populous country by 2035.

Situated in the Asia-Pacific region, and as a stable and reliable energy supplier, Australia is well positioned to assist in meeting this growing demand.

Australia as an energy exporter

Australia is currently the world's largest exporter of coal and fourth largest exporter of LNG, and growing - with Australia forecast to rival Qatar for the number one spot by 2016 due to our rapidly growing offshore and coal-seam gas industries.

We have the world’s largest Reasonably Assured Resources of uranium.

Our resource base is capable of meeting both domestic and export demand for coal and gas, and export demand for uranium well into the future.

At current production rates our proven reserves of black coal are sufficient to meet demand for around 90 years, brown coal for 490 years, uranium for 140 years and gas for at least another 60 years.

The capacity of the Australian economy combined with our natural resource endowment has allowed us to respond to the changing dynamics of global energy export markets.

When looking globally, coal has accounted for half of the growth in energy demand in the last decade and under current policy settings, coal is set to continue to be the world's fastest growing energy source.

Australia continues to expand its coal production and exporting capacity to meet this growing demand.

However, Australia also continues to stay focused on the next big opportunity.

As countries look for ways to reduce their carbon emissions, the 2011 WEO forecasts a golden age for gas.

Indeed, gas is the only fossil fuel for which demand rises in all three WEO scenarios.

In my view, natural gas will increase in importance as an energy source, because it is safe, reliable and cleaner than many alternatives.

Presently, Australia exports around 20 million tonnes per annum of LNG out of the North West Shelf and Darwin - representing around 9 per cent of world LNG trade.

There are a further six LNG projects under construction and another project likely to take a final investment decision shortly.

These projects involve the production of LNG from conventional offshore gas; floating LNG; and onshore coal seam gas.

If all these projects proceed, Australia’s LNG production capacity could more than quadruple by 2016-17.

Total investment of over $140 billion has been committed since 2007 on these major LNG projects.

If, as the IEA predicts, there is a 'golden age for gas' then Australia is well positioned to take advantage of it.

Australia as a clean energy technology developer

I also see another emerging role for Australia in the global energy supply chain - as a growing developer of clean energy technologies.

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Just recently the Australian Government passed legislation putting a price on carbon from the middle of next year.

The Government's package includes two new clean energy bodies: the $10 billion Clean Energy Finance Corporation and the $3.2 billion Australian Renewable Energy Agency.

Together these bodies will drive investment in the research and development, and commercialisation and deployment of renewable energy, energy efficiency and clean energy technologies, with the aim of driving down their costs.

This is in addition to Australia's bipartisan 20 per cent by 2020 expanded Renewable Energy Target.

These policy and funding support mechanisms, combined with Australia's skilled workforce and leading education and research sector, mean we have the expertise and the market framework in place to develop and deploy innovative clean energy technologies.

And importantly, Australia will be in a position to maximise the intellectual property value of these new technologies.

And of course potential benefits exist not just in export opportunities but also in reducing the cost of transitioning our energy sector domestically.

The challenge for Australia’s energy sector is not small. We are a country that today relies on coal as the fuel source for around 75 per cent of our electricity generation.

But we can be assured that any decision to invest in new generation capacity will now have to factor in the associated carbon emissions, leading to cleaner forms of electricity generation over time.

The importance of CCS

Coal is a dominant feature of the Australian economy - both in terms of our reliance on it for our electricity and as a major source of our export revenue.

Carbon capture and storage is therefore not only an important technology to Australia but to the world.

As the WEO points out, the overall cost of reducing carbon emissions will be much more expensive without the widespread use of CCS.

Through the $1.68 billion CCS Flagships Program and establishing the Global CCS Institute, the Australian Government continues to recognise the importance of CCS to Australia's and the world’s future energy mix.

The Global CCS Institute is another example of the role Australia is playing globally - in seeking to drive international collaboration and share knowledge to help progress solutions to common challenges.

Conclusion

In closing, I simply say that Australia is a leader in the global supply of energy both in terms of our upstream energy export capacity and downstream technical expertise.

To ensure Australia's market-based economy can continue to be responsive to emerging challenges, tomorrow I will release the Government’s draft Energy White Paper which outlines the Australian Government's energy policy framework.

The framework is intended to give investors, consumers and planners a clear sense of direction and confidence in Australia's energy future.

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In doing so, I am confident that Australia will continue to be a responsible and reliable supplier of energy to meet the growing global demand for energy.

Thank you.

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